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Question: Ford, Harvey, and Suzuki are the directors of Bishop Pty Ltd, a company that imports bicycles from Europe for resale in Australia. Harvey and Suzuki authorise Ford to enter into contracts, on behalf of Bishop Pty Ltd, with European bicycle suppliers. Ford signs a supply agreement with European bicycle supplier, Zoe Ltd. Bishop Pty Ltd places an order with Zoe Ltd for the supply of 500 bicycles to meet anticipated demand in Australia during the upcoming summer months. Zoe Ltd terminates the agreement and refuses to ship the bicycles. The directors of Bishop Pty Ltd are all shocked and disappointed because the company has already spent over $10,000 in advertising to market the bicycles in Australia. They threaten to sue Zoe Ltd for breach of contract but are directed to a clause in the agreement that states: "This written agreement is not intended to be a formal or legal agreement, but a honourable pledge between Zoe Ltd and Bishop Pty Ltd." Harvey and Suzuki cannot believe Ford could be so careless as to sign an agreement containing a clause like this. They are also concerned that their reliance on Ford may also amount to carelessness on their part . Explain if Ford, Harvey or Suzuki have breached their director's duty to exercise their powers with care, skill, and diligence and if so, what defences may be available. Use the IRAC structure to organise your answers.
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