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company for the business. They agree and instruct their lawyer to register a company, to be called WEAK Security Pty Ltd. It is agreed that Wayne, Erin, Alan and Kirk will each be allotted 100 ordinary shares in WEAK Security Pty Ltd. After the company is registered, they decide to employ Rodger as a receptionist in the office. Rodger is given strict instructions that he is not to enter into contracts on behalf of the company. Wanda works in used car sales and is a good friend of Rodger. Rodger tells Wanda about his new position at WEAK Security Pty Ltd and mentions that he has been instructed not to enter into any contracts on the company's behalf. Wanda tells Rodger that she has been trying to sell a truck and it would be perfect for the security business. Wanda shows Rodger the truck and lets him drive it. Rodger agrees that the truck would be a great addition to the security business and thinks the price Wanda is asking is very reasonable. Rodger agrees to buy the truck on behalf of WEAK Security Pty Ltd. 1. Can Wanda rely on any of the assumptions in s 129 of the Corporations Act in order to enforce the contract against WEAK Security Pty Ltd? 2. Volcano Pty Ltd (Volcano) operates three surfing stores in Queensland. On 8 August 2016, Gao was appointed to the position of managing director of Volcano for a period of two years. A return was lodged with ASIC indicating his appointment as a director on that date. Gao was not formally reappointed after 8 August 2018, but he has continued to act as managing director. The terms of Gao's appointment, which were set out in a contract between him and Volcano and were also in Volcano's constitution, included a restriction to the effect that he was not to commit the company to borrowing transactions in excess of $20 000. Any such transaction was to remain subject to the approval of the board of directors. On 20 March 2019, Gao, purportedly acting on behalf of Volcano, signed a loan contract with Fanning Bank, pursuant to which the bank agreed to lend the company $30 000 in order to establish a website for motorbike enthusiasts. The transaction was not referred to the Board. The bank was not aware of either: 1. the contents of Gao's contract, or 2. the company's constitution. The Board has since discovered the loan contract and has stopped all repayments on the loan. The bank has called in the loan and is suing Volcano for the principal, together with all outstanding interest. 3. What do you think the outcome of this case will be? 4. Would the outcome of this case be different in each of the following scenarios? company for the business. They agree and instruct their lawyer to register a company, to be called WEAK Security Pty Ltd. It is agreed that Wayne, Erin, Alan and Kirk will each be allotted 100 ordinary shares in WEAK Security Pty Ltd. After the company is registered, they decide to employ Rodger as a receptionist in the office. Rodger is given strict instructions that he is not to enter into contracts on behalf of the company. Wanda works in used car sales and is a good friend of Rodger. Rodger tells Wanda about his new position at WEAK Security Pty Ltd and mentions that he has been instructed not to enter into any contracts on the company's behalf. Wanda tells Rodger that she has been trying to sell a truck and it would be perfect for the security business. Wanda shows Rodger the truck and lets him drive it. Rodger agrees that the truck would be a great addition to the security business and thinks the price Wanda is asking is very reasonable. Rodger agrees to buy the truck on behalf of WEAK Security Pty Ltd. 1. Can Wanda rely on any of the assumptions in s 129 of the Corporations Act in order to enforce the contract against WEAK Security Pty Ltd? 2. Volcano Pty Ltd (Volcano) operates three surfing stores in Queensland. On 8 August 2016, Gao was appointed to the position of managing director of Volcano for a period of two years. A return was lodged with ASIC indicating his appointment as a director on that date. Gao was not formally reappointed after 8 August 2018, but he has continued to act as managing director. The terms of Gao's appointment, which were set out in a contract between him and Volcano and were also in Volcano's constitution, included a restriction to the effect that he was not to commit the company to borrowing transactions in excess of $20 000. Any such transaction was to remain subject to the approval of the board of directors. On 20 March 2019, Gao, purportedly acting on behalf of Volcano, signed a loan contract with Fanning Bank, pursuant to which the bank agreed to lend the company $30 000 in order to establish a website for motorbike enthusiasts. The transaction was not referred to the Board. The bank was not aware of either: 1. the contents of Gao's contract, or 2. the company's constitution. The Board has since discovered the loan contract and has stopped all repayments on the loan. The bank has called in the loan and is suing Volcano for the principal, together with all outstanding interest. 3. What do you think the outcome of this case will be? 4. Would the outcome of this case be different in each of the following scenarios?
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1No Wanda cannot rely on any of the assumptions in s 129 of the Corporations Act to enforce the contract against WEAK Security Pty Ltd Rodger was expl... View the full answer
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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