A1 Distributors Pty Ltd is a wholesale distributor business which acts as agent for distribution electronic products. Alex, Sue and Peter are three directors of the company and equal shareholders in the company. Sue recently represented the company at a marketing seminar in Japan. During the seminar she was introduced to a leading distribution company which is looking to acquire business in Australia. Sue was told the Japanese based company would pay 4 times the current value of the shares in A1 Distributors and to start the relationship would supply at a substantial discount on a line of fridges. Sue advised that A1 Distributors would not have the capacity to take on the line of fridges but put forward her family company Sue’s Electronics Pty Ltd as a service provider who could deliver on the contract. When Sue returned to Australia she offered to buy Alex’s and Peter’s shares at 2 times their current market value. Once she acquired their shares she then sold them to the Japanese company for the agreed 4 times value. Alex and Peter discovered what Sue had done. 

a) Provide advice on the rights of A1 Distributors Pty Ltd have against Sue. 

b) Discuss whether Sue has a fiduciary relationship with respect to Alex and Peter in acquiring their shares in A1 Distributors Pty Ltd.

Answer rating: 100% (QA)

a The directors of A1 Distributors Pty Ltd would have a claim against Sue for breach of fiduciary du... View the full answer