Reference no: EM133215987

Case: Mercy Aged Care Services Ltd ('Mercy') is an ASX-listed company that owns and operates a number of aged care facilities throughout NSW, Victoria and the ACT. Mercy's board of five directors has decided to outsource the company's property maintenance and cleaning operations to an external provider and has requested the CFO, Oscar, to obtain three quotes from property maintenance firms. Mercy's board has set its annual budget for property maintenance at $5 million but would like to engage a provider for under this amount if possible. Oscar contacts three property maintenance firms (Firm One, Firm Two and Firm Three) to obtain quotes. Firm Three is owned by Oscar's cousin Patricia (with whom he part-owns an investment property). When meeting with Patricia to obtain a quote for providing property maintenance services, Oscar mentions Mercy's proposed annual budget of $5 million.

One week later, members of Mercy's board meet and Oscar presents the three quotes he obtained from the property maintenance firms: Firm One, $6 million; Firm Two, $6.5 million; and Firm Three, $3 million. The brochures he received from the three firms indicated that Firms One and Firm Two had more experience in property maintenance than Firm Three. After presenting these quotes, Oscar strongly recommends that Kenmore contract with Firm Three. Following a brief discussion, Kenmore's Chairman Zachary remarks, 'Well, I think we can all agree that Oscar has convinced us that Firm Three is the best value option, so let's go with that firm.' The other directors agree and the board resolves to contract with Firm Three.

Question: Discuss whether Oscar has adhered to his obligations under Part 2D.1 of the Corporations Act 2001 (Cth) in this scenario. You do not need to consider directors' duty of care in your presentation.