Reference no: EM133693344
Fundamentals of Business and Corporations Law
Assignment Questions
Facts
Breville is keen to start a new business with low risk. His friends, Ben, Gary, and Paul are also looking for a new business. They also want to join the new business with Breville. A main objective of the business is to make traditional foods. Ben has previous experience of working in a busy kitchen, but others have no experience. Breville wants to utilise Ben's experience and keep the business confidential.
After an initial discussion, they all met Jude, a student who studied with them in Lynwood Senior High School. Jude advised them that they should start a syndicate so that they can use their individual skills and knowledge. Gary thinks that it is not a good idea to form a syndicate because he does not have any skill in food products. Ben, however, thinks that they should form a partnership business instead of a syndicate. But Paul does not like the idea of a partnership business since he thinks in a partnership, congestion of management would be a big issue. Paul is, also, concerned about any unpaid investment.
REQUIRED:
1. With reference to sections of the Corporations Act 2001 (Cth), advise Breville whether ideas of his friends are right in their individual ideas on a syndicate and partnership. He specifically wants to know if he needs to focus on a different business structure that will meet his requirements.
Facts
Paws Pty Ltd is a company that sells pet food. Clause 7 of Paws Pty Ltd.'s constitution provides that the company's objects are limited to ‘the provision of goods that promote the health and wellbeing of cats and dogs'. Paws Pty Ltd.'s recently appointed purchasing officer, Claudine, loves pet rabbits. Claudine ordered a large amount of rabbit food on behalf of Paws Pty Ltd, From Bunnies Ltd.
The directors of Paws Pty Ltd. are unhappy with Claudine's decision to order the rabbit food, and they advise Bunnies Ltd that Paws Pty Ltd. will neither accept delivery of, nor pay for, the rabbit food ordered by their employee Claudine. They also argue that Bunnies Ltd. should have known about the restriction in Paws Pty Ltd.'s constitution.
REQUIRED:
2. With reference to cases and sections of the Corporations Act 2001 (Cth), advise Bunnies Ltd on whether they can enforce the contract for the provision of the rabbit food against Paws Pty Ltd
Facts
Baffin signed a contract to purchase manufacturing machines with Safi Ltd. on behalf of AZX Pty Ltd. in 2020. The contract price was $200,000,which was to be paid in twentyyears. The company was registered in June 2021.
Baffin did not have any contact with the directors and members of AZX Pty Ltd. as he was awayfor the last few years. The directors, meanwhile, searched for modern machines needed for a new factory of the company. Finally, in early 2023, directors of AZX Pty Ltd.decided to purchase new machines with a cheap price on behalf of the company. Baffin has recently received a written agreement from the vendor, Safi Ltd.of the manufacturing machines in which he put a signature as the agent of the yet to be formed company in 2020.
The vendor, Safi Ltd.made a legal demand for the price of the machines from Baffin. In the notice, the vendor claimed that Baffin must pay the price of the machines as Baffin had the intention to make secret profit by purchasing them from him. This is because the machines had to be in fact purchased by Baffin, whoagreed to purchase the machines signing an agreement for sale. Facts suggest that rather than purchasing the machines for himself, Baffin purchased the machines for the yet to be formed company,AZX Pty Ltd. His intention was to avoid increased price of the machines.
Baffin did not want to comment on this since he did not want this to expose to anyone. Members of AZX Pty Ltd.think that they should remove Baffin as a director or seek remedies from Baffin. Baffin thinks that he is not liable to pay the price of the machines as he purchased the machines for the company.
REQUIRED:
3. With reference to case laws and sections of the Corporations Act 2001 (Cth), advise whether Safi Ltdcan enforce the contract price of the machines against Baffin and whether AZX Pty Ltd can claim anything from Baffin.
Facts
In June 2023, members of Blackies Ltd. made a request to the directors to hold a meeting. Members intended to discuss about changing the constitution of the company and passing a resolution so that the company can issue more shares of the company and discuss whether it is a good idea to invest in the Stock Market. However, directors, Joseph, Kovin, and Blair did not want to follow the request. They argued that investment in the stock market is not a good idea at this stage. But members had been serious about it, and they wanted to hold the meeting at any cost for the best interest of the company.
Later, directors changed their mind. Accordingly, without holding the meeting of members, they organised a directors' board meeting. However, unfortunately after the company had invested money in the stock market, the company fell into financial trouble. Because of the financial trouble and sensing that the company will be wound up soon, directors have paid the outstanding price of the products purchased by their friends avoiding payment to other creditors. In August 2023, the company could not pay its first instalment of the loan taken from Premier Bank.
Facts revealed that the director, Joseph informed the bank before taking the loan that the loan amount would be used to invest in constructing a shopping complex in Joondalup area. Indeed, this was done to avoid delay in releasing money for the company.
Joseph argued that there is no wrong in this false statement since whatever he has done is for the sake of the company. He contends that he has no liability for the loan.
REQUIRED:
4. With reference to case laws and relevant sections of the Corporations Act 2001 (Cth), advise whether Blackies Ltd. directors and/or members will be liable for the loan taken from Premier Bank and for the payment to their friends.
NOTE: You are required to use the 4-step process in answering the above questions. When you answer a question, please focus on a relevant module and relevant area.
Your word limit is 1800 words excluding footnotes. You are not required to add a bibliography of your sources.