Reference no: EM133230229

Question 1

Zoe, Sophie and Alex decide to start a pet walking and grooming business to make some money. They decide to use the name Happy Pets. They all agree to invest money to start the business, they each invest $2000. They rent out a shop with a big yard to carry out the business. They think there will be about $1000 profit per fortnight from the business. Sophie is in charge of grooming the pets. Zoe is in charge of organizing walking the pets. Alex is good with accounting and is in charge of the financial side of the business. Zoe, Sophie and Alex agree that they can each make purchases up to $300 individually and anything more than this amount requires approval of all of the three.

In IRAC format using legislation and case law answer the following questions:

a. Are Zoe, Sophie and Alex partners?

Sophie sees the professional Nimbus pet clippers advertised for $400 from Petpro Ltd. They normally cost much more so Sophie places an order with Petpro for one of the clippers telling them she is a partner in Happy Pets.

b. Does Sophie have actual authority to purchase the Nimbus pet clippers?

c. Are Zoe and Alex responsible for the clipper order made by Sophie?

Question 2

Sunpower Pty Ltd (Sunpower) is a company that manufactures, sells and installs solar panels for both residential and commercial properties in Victoria. Nicholas is the managing director of the company from 2018 to current.

The board of directors of Sunpower in 2022 are:

Nicholas who is also a licensed electrician, accredited solar installer as well as experienced manager. Rebecca, Nicholas' wife. Rebecca doesn't attend many meetings as she is too busy painting and creating art. Rebecca hasn't attended any meetings in 2022. Connor is an accountant.

The Sunpower board of directors is responsible for approving all major transactions and setting policies for Nicholas to carry out in his role as managing director. In August 2022, Sunpower board voted for Sunpower to purchase a luxury jet for $78 million. After they purchase the jet, they realise some of the new jet software is not fully functional. The jet will need another $2 million dollars to replace the software.

a. Have the directors of Sunpower Ltd breached their duty of care and diligence?.

(Use IRAC format, legislation and case law for this question)

b. Briefly explain some of the potential outcomes if the duty of care and diligence is breached.

c. Briefly explain what a member of a corporation is and what are some rights members may have.