Crashing Waves Pty Ltd (Waves) operates three surfing stores on the Gold Coast. On 8 June 2020
Question:
Crashing Waves Pty Ltd (Waves) operates three surfing stores on the Gold Coast. On 8 June 2020 Patrick was appointed to the position of Managing Director of Waves for a period of two years. A return was lodged with ASIC indicating his appointment as a managing director on that date. Patrick was not formally reappointed after 8 June 2022, but he has continued to act as a managing director. Part of the terms of Patrick's appointment were set out in Waves' constitution. These included a restriction to the effect that he was not to commit the company to borrowing transactions in excess of $50,000. Any such transaction was to remain subject to the approval of the board of directors. Crashing Waves Pty Ltd (Waves) operates three surfing stores on the Gold Coast. On 8 June 2020 Patrick was appointed to the position of Managing Director of Waves for a period of two years. A return was lodged with ASIC indicating his appointment as a managing director on that date. Patrick was not formally reappointed after 8 June 2022, but he has continued to act as a managing director. Part of the terms of Patrick's appointment were set out in Waves' constitution. These included a restriction to the effect that he was not to commit the company to borrowing transactions in excess of $50,000. Any such transaction was to remain subject to the approval of the board of directors. The board has since discovered the loan contract and stopped all repayments on the loan. Bank of East has called in the loan and is suing Waves for the principal amount, together with all outstanding interest.
Is Waves legally bound by the loan contract signed by Patrick? Give reasons and cite relevant Australian legislation and case law
Financial Accounting Reporting Analysis And Decision Making
ISBN: 9780730313748
5th Edition
Authors: Shirley Carlon, Rosina Mladenovic Mcalpine, Chrisann Palm, Lorena Mitrione, Ngaire Kirk, Lily Wong