CASE SCENARIO Mark is a Director of Happy Pets Pty Ltd, a retail company that provides...

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CASE SCENARIO Mark is a Director of Happy Pets Pty Ltd, a retail company that provides pet supplies both online and in-store. His best friend, Jordan, owns Pawfect Fur Pty Ltd, a dog food manufacturer that trades under the business name 'Pawfect Fur'. The pandemic has caused financial hardship for Pawfect Fur because the company has not been able to sell its products overseas. Jordan offers Mark a $50,000 commission if he arranges for Happy Pets Pty Ltd to enter a supply agreement with Pawfect Fur. Mark recommends the proposed supply agreement to Chloe, the other director of Happy Pets Pty Ltd. Chloe explains that she does not have any knowledge about dog food and that she will let Mark make decisions in that area. Mark enters the supply agreement with Pawfect Fur on behalf of Happy Pets Pty Ltd although he is aware that Pawfect Fur dog food has a reputation for being a low-quality product. The shareholders of Happy Pets Pty Ltd are not happy with the new supply agreement and threaten to take legal action against the Directors of Happy Pets Pty Ltd. Jean is a customer of Happy Pets Pty Ltd. One day she visits the store's website to purchase dog food. She notices that there is a promotion for Pawfect Fur dog food that says "try before you buy" which will give her one week to try the dog food before she decides to complete the purchase by making payment. Payment will be processed until after her confirmation of the purchase or after the one week trial period expires. Jean trials the Pawfect Fur dog food but decides not to complete the purchase, choosing instead to return the product. Happy Pets refuses to accept the returned product because the one week trial period has already expired which they claim means that Jean is now the owner of the product and must therefore pay for the product. Happy Pets also provides a dog grooming service which is located inside the store. Jack is a customer and goes into the store to purchase dog food. He is in a hurry and as he runs to the food aisle, he slips and falls on the wet floor around the dog grooming area. There were no signs placed anywhere in the store to warn visitors that the floor around the dog grooming area was wet. Jack breaks his leg in the fall and is not able to work for several months. QUESTION 1 - COMPANY LAW (15 Marks) Use the IRAC method to advise the shareholders of Happy Pets Pty Ltd if the Directors (Mark and Chloe) have breached their Director's Duties and if they have any defences. CASE SCENARIO Mark is a Director of Happy Pets Pty Ltd, a retail company that provides pet supplies both online and in-store. His best friend, Jordan, owns Pawfect Fur Pty Ltd, a dog food manufacturer that trades under the business name 'Pawfect Fur'. The pandemic has caused financial hardship for Pawfect Fur because the company has not been able to sell its products overseas. Jordan offers Mark a $50,000 commission if he arranges for Happy Pets Pty Ltd to enter a supply agreement with Pawfect Fur. Mark recommends the proposed supply agreement to Chloe, the other director of Happy Pets Pty Ltd. Chloe explains that she does not have any knowledge about dog food and that she will let Mark make decisions in that area. Mark enters the supply agreement with Pawfect Fur on behalf of Happy Pets Pty Ltd although he is aware that Pawfect Fur dog food has a reputation for being a low-quality product. The shareholders of Happy Pets Pty Ltd are not happy with the new supply agreement and threaten to take legal action against the Directors of Happy Pets Pty Ltd. Jean is a customer of Happy Pets Pty Ltd. One day she visits the store's website to purchase dog food. She notices that there is a promotion for Pawfect Fur dog food that says "try before you buy" which will give her one week to try the dog food before she decides to complete the purchase by making payment. Payment will be processed until after her confirmation of the purchase or after the one week trial period expires. Jean trials the Pawfect Fur dog food but decides not to complete the purchase, choosing instead to return the product. Happy Pets refuses to accept the returned product because the one week trial period has already expired which they claim means that Jean is now the owner of the product and must therefore pay for the product. Happy Pets also provides a dog grooming service which is located inside the store. Jack is a customer and goes into the store to purchase dog food. He is in a hurry and as he runs to the food aisle, he slips and falls on the wet floor around the dog grooming area. There were no signs placed anywhere in the store to warn visitors that the floor around the dog grooming area was wet. Jack breaks his leg in the fall and is not able to work for several months. QUESTION 1 - COMPANY LAW (15 Marks) Use the IRAC method to advise the shareholders of Happy Pets Pty Ltd if the Directors (Mark and Chloe) have breached their Director's Duties and if they have any defences.

Answer rating: 100% (QA)

IRAC Analysis of Directors Duties in Happy Pets Pty Ltd Issue Did Directors Mark and Chloe breach th... View the full answer