Fruit Ices Ltd limited is struggling financially. Peter and Betty are two directors of Fruit Ices Ltd. they have had several emergency meeting regarding the current financial situation of the company. Last week Peter announced that he is tackling some health issues and has decided to take a leave of absence in order to attend a health retreat. In his absence a Betty decides it would be a good idea to bring in a restructuring specialist and goes ahead with this. Betty also decides that the company needs to try and expand into other frozen foods. She orders supplies for this, but the company is unable to pay for these. Finally Betty decides that further advertising is a good idea and hires a marketing expert to do this. The company is not able to pay for this either.

Hans is the CFO of Ltd. He is in charge of managing the company’s day to day financial affairs. Although he saw that the financial outlook of the company did not look good he was too distracted by his pet poodle Brittlesnap who just has eight puppies and hasn’t really been attending work or paying to much attention lately. Peter, who was away insists he new little about the company’s financial troubles and Buttercup never read the financial report.

Please advise on Peter, Hans and Betty’s liability. 

B) Hans has set up a company Hans Pty Ltd. The company was set up to deal in sports equipment and has been very successful. Hans and his son Jake are the two directors of the company. Jake thinks it would be good to expand the business and add to it the running of sport events such as social sport teams. In order to minimise the risk, Hans Pty Ltd sets up a subsidiary called Jake Pty Ltd for the purpose of running these sporting events. Both Hans and Jake are directors of Jake Pty Ltd. The initial uptake is great and Jake Pty Ltd make a number of contracts with local schools and community centres to run sporting events. However the demand is more than their capacity and Jake Pty Ltd is unable to meet the obligations under these contracts. Several community centres including the Hooraly Council would like to bring an action. Hooraly Council has come to you seeking advice. Jake Pty Ltd has no assets and therefore is unlikely to be able to meet their monetary obligation should they be awarded compensation. The council would like to know if it is possible to sue either Hans Pty Ltd which has abundant assets or Hans as the director of Hans Pty Ltd. 

C) would your answer be different if Hans Pty Ltd appointed Jake Pry Ltd as an agent for the purpose of running these events? 

Answer rating: 100% (QA)

A Betty may be held liable for the companys debts if she acted recklessly in ordering supplies a... View the full answer