Reference no: EM13498336

Q) 1 Tesco supermarket V Nattrass[1972] AC 153 (House of lords)

Facts: Tesco supermarket (one of the largest supermarket chains in England) advertised Radiant washing powder on special at a reduced price of 2/11 rather than the normal price of 3/11. The reduced price was marked on the packet and displayed in posters in the shop window. A Tesco shop ran out of the packets marked with the special price and a shop assistant restocked the shelves with packets marked at the normal 3/11 prices. The assistant did not tell the store manager of this and did not remove the poster, which advertised Radiant soap powder on special ay 2/11. A pensioner saw the poster but could only finds packets marked at higher price. When he took it to the cash register he was told that the shop had run out of the specially marked packets and he had to pay 3/11.He complained to the relevant authority and the company was fined $25 and cost for breaching the Trade Description Act 1968(UK) which prohibits any misleading statement about the price at which goods are being offered. Tesco's appeal ultimately went to the House of Lords.

Q2)  ASIV V Adler (2002) 168 FLR 253 (NSW SC)
(Largely affirmed on appeal (2003) 179 FLR 1)

Fact: On 15 June 2000, HIH Casualty & General Insurance Limited  (HIHC), a wholly owned subsidiary of HIH insurance compony limited (HIH), advanced $10 million to pacific eagle Equity PTY Ltd (PPE), a newly registered company controlled by Rodney Adler.Adler was a non- executive director of HIH (but not a director of HIHC). The advance was supposed to be used in making profitable investment for HIHC. This payment was made at Adler's request and organised by Williams (the CEO of HIH) and Fodera(the finance controller) without any documentation and without the knowledge of the other directors of HIH. During the next two weeks PEE bought $ 3.9 million worth of share in HIH on the stock market. In early July 2000, Australian Equities Unit Trust (AEUT) was formed with PPE as its trustee. In August and September 2000 AEUT bought shares in unlisted technology and interest companies from Adler Corporation (controlled by Rodney Adler and his wife) resulting in loss of $3.8 million. Later in 2000 AEUT made unsecured loans of more than $ 2 million without adequate documentation to companies and funds associated with Adler:

After the collapse of HIH, ASIC brought civil penalty proceeding against Adler, Williams and foderabreaches alleging of directors duties including

S 180 (1) (duty of care and diligence
S 181 (duty to act in good faith and for a proper purpose:
S 182- 183 (improper use of position and improper use of information

Other allegation included:
Contravention of the provision regulating related party transaction (Ch. 2 E)
Contravention of the provision regulating financial assistance

Critical thinking

Discuss the major issues and ruling in the above 2 case studies?