Reference no: EM13341678

Question 1

Melanie and Carol conduct a beauty salon business. Melanie is responsible for performing the beauty treatments and Carol is solely responsible for providing and packaging the beauty products for sale. Polly, a friend of both Melanie and Carol's, agreed to lend them $10,000 to get the business started. Profits are to be shared between Melanie and Carol equally.

Claire purchased a beauty lotion from the business recently. She complains that the lotion she bought has caused her severe facial burns, leaving her unable to work for several weeks. Tests have revealed that the lotion contains chemicals likely to cause harm if applied directly to human skin. Unfortunately, when Carol was preparing the lotion for bottling she allowed a quantity of corrosive industrial cleanser to be mixed into the lotion. Claire is seeking $150,000 damages to cover medical expenses, lost wages and considerable pain and suffering. Carol has no money and Claire wants to claim against Melanie and Polly. Melanie and Polly claim that the negligence and breach of contract is solely the responsibility of Carol.

Discuss whether Claire has an action against either Melanie or Polly. (10 marks)

Question 2

Brodie Pty Ltd is the trustee of the Brodie family trust. The trustee operates a liquor retail store at a building owned by Brodie Pty Ltd as trustee for the family trust. Recently, the sole director of Brodie Pty Ltd, Larry, ordered $15,000 worth of wine and spirits for the store from Winits Pty Ltd. This purchase was made even though the store was seriously in debt and the trust had insufficient cash reserves to service its existing loans. In signing the contract, Larry made it clear that he was signing 'as trustee of the Brodie family trust'.

The family trust business has failed due to a downturn in consumer demand and cannot meet its debts. The $15,000 owed to Winits Pty Ltd has not been paid, and there are outstanding mortgages and many other debts.

From whom (if anyone) can Winits Pty Ltd recover the $15,000?

Question 3

In April 2007, Jones and Watson were authorised by the committee of the USQ Netball Club, an unincorporated association, to sign a lease for five years for netball court facilities situated in West Street, Toowoomba. The premises were owned by Toowoomba Sports Centre Ltd and were used by the club after the lease was executed. The lease was executed in the form:

USQ Netball Club

Karen Wright

President

Jane Waddell

Treasurer

In July this year, the current Secretary of the USQ Netball Club gave the lessor notice terminating the lease. Both Karen and Jane are no longer Committee members or in fact members of the USQ Netball Club, having completed their studies at USQ.

The lessor seeks your advice as to the enforceability of the original lease.

Question 4

Adrian, the managing director of Landforce Pty Ltd organises a loan of $250 000 from Whichbank Ltd on behalf of the company. Adrian is a long-standing officer of the company and has dealt many times with this particular bank. The company’s constitution stipulates that any borrowing exceeding $100 000 must first be approved by the board of directors. Adrian has not sought the appropriate approval from the board and he directs that the loan funds should flow into a special account that only he has access to.

During the negotiations to arrange the loan, a bank official asks Adrian why the funds are going into the special account rather than to the company account. Adrian assures him that this is the new arrangement sanctioned by the company. One week later the money from the bank and Adrian have disappeared. The company is refusing to pay back the loan to Whichbank Ltd.

Is Whichbank Ltd able to recover the loan from the company?