Eco Ltd (Eco) has been set up as a joint venture by Enviro Ltd (Enviro) (a non-profit company that promotes education and research into environmentally friendly products) and WP Pty Ltd (which operates a waste paper collection service). Eco's constitution restricts its activities to the production of recycled paper products and “such activities as are reasonably incidental thereto”. Eco enters into a contract to provide a glass and paper collection service to the City of Kuarna. Enviro had previously refused to deal with this Council because of its poor environmental record. 

Can Enviro, as a shareholder of Eco, have the contract set aside? 

Does the contract breach the objects clause in Eco’s constitution; and if it does, what are the consequences when a third party is involved — ie, can a member get a concluded contract set aside?

Answer rating: 100% (QA)

Enviro as a shareholder of Eco may have limited grounds to have the contract set aside based on the breach of Ecos objects clause in its constitution ... View the full answer