You must answer the two problem-type questions below, using the ILAC (Issues, Law, Application, Conclusion) format, a worked example of which is in the Resources folder.

Please note that the word limit of 2 000 words is a total for both questions (ie, it is not 2 000 words for each question). This is a firm limit - assignments with greater than 2 000 words will lose 1 mark for excessive length. I would however expect that students should be able to answer both questions in far less than 2 000 words. Your bibliography is not included in the word limit but in-text references are.

**In this subject, assignments are marked on-line, using Word. You therefore MUST submit your assignment in Word format, NOT as a PDF document. If you submit in PDF it will not be able to be marked.**

Question 1 (10 marks)

In the wake of the COVID19 outbreak, worldwide demand for oxygen cylinders increased dramatically, but their weight makes them expensive to transport, which in turn pushes up prices. Richard Court, who graduated with a BSc in chemistry from the University of Western Australia, discovers a new way of designing hardened plastic cylinders which are far lighter than the old metal ones.

Richard decides to commercialise his idea, and on 3 July registers with ASIC a company called Light Gas Pty Ltd. Richard is the sole shareholder and Managing Director of the company.

The type of plastic that Richard has developed requires special chemicals which themselves take a significant amount of time to manufacture, and in anticipation of this, on 30 June Richard had signed a contract with Chemical Man Ltd in terms of which Chemical Man would manufacture 5 000 litres of a chemical called hydroxone. The contract specified that both payment and delivery would take place on 25 July. Richard signed this contract as Richard Court, Managing Director, Light Gas Pty Ltd.

On 6 July, Richard signed a contract to buy a gas compression machine costing $ 2 million from Compression Solutions Pty Ltd. He signed this contract as Richard Court, Managing Director, Light Gas Pty Ltd. The contract required Light Gas Pty Ltd to pay for the machine in three instalments of $ 300 000, the first instalment falling due on 1 August. The compressor was delivered and gas production began.

Richard finds that the gas manufacturing business is far more costly than he anticipated and so, in order to improve his fortunes, he does two things:

First, in order to raise more capital for Light Gas Pty Ltd he persuades a number of relatives to invest in it. Because he issues a large number of shares, Richard ends up no longer having a majority holding in the company, and on 15 July the shareholders elect a new board, consisting of Anne, Roy and Liam. Anne is elected as the new Managing Director, replacing Richard. The new board holds its first meeting on 20 July and decides not to proceed with the contract with Chemical Man Pty Ltd as they believe that they can source hydroxone more cheaply from another supplier. They sent a letter to Chemical Man informing that company that Light Gas would not pay for, or take delivery of, the hydroxone.

Second, Richard decides to branch off privately into the business of making pharmaceuticals. The manufacture of pharmaceuticals requires a licence, and the relevant legislation prohibits the granting of a licence to any person who has a criminal conviction involving drug possession. Unfortunately, Richard had been convicted of drug possession during his student days, so he registers another company, General Pharmaceuticals Pty Ltd, of which he owns 99 shares and his wife, Elizabeth, 1 share, with himself as Managing Director and his wife as Company Secretary. He asks Elizabeth to lodge an application for a licence on behalf of the company with the Pharmaceutical Control Board.

Unfortunately, things do not turn out well:

On 10 July, the employees at Light Gas Pty Ltd go on strike, and because this means its income was severely reduced and it was unable to pay the $ 300 000 instalment to Compression Solutions Pty Ltd. Meanwhile, General Pharmaceuticals Ltd has received a letter from the Pharmaceutical Control Board refusing the licence application, citing Richards previous conviction as its reason.

Richard has now approached you for legal advice in relation to a law suit by Chemical Man Pty Ltd for breach of contract, a law suit from Compression Solutions Pty Ltd claiming $ 300 000, and the letter received by General Pharmaceuticals Pty Ltd refusing the licence.

In answering this question, you should confine your research to the law in Topic 14 only.

Question 2 (10 marks)

Auto Spares Pty Ltd makes parts for motor vehicles. The company is owned by four sisters Anne, Mary and Jane each own 30% of the shares, while Sarah owns 10%. They elect a motor vehicle expert named John as Managing Director along with several other directors. John asks you for advice about the following:

The companys constitution specifies that five named individuals will be directors of the company for 10 years at a salary of $ 10 000 per annum. Each director also has an individual contract of service with the company specifying the same terms. Five years has elapsed since the company was founded. One of the directors, Margaret, has consistently failed to attend board meetings. At a shareholder meeting in May, a special resolution, conforming to all the requirements of the Corporations Act2001(Cth) was agreed to by all four shareholders removing Margarets name from the list in the constitution and dismissing her as director.

The constitution also states that all the companys IT requirements must be sourced from a person named David Thomas. The company has not yet set up its IT system, but the board members note that a very competitive service is being offered by Canberra Connect IT Services Ltd, and has decided to enter into a contract with that company rather than with David.

Another meeting of shareholders was held in August. Due to an administrative error, Jane did not receive notice of the meeting. At the meeting two resolutions were passed:

The first was to change the company logo from a silver wheel to a blue spanner.

The second resolution was to prohibit the board from allowing the company to trade with Moldova because of that countrys poor human rights record. Both resolutions were agreed to by all three sisters who attended the meeting.

Margaret is threatening legal action over her dismissal, David says that he has a right to a contract to supply IT services, and Jane is contesting the validity of each of the resolutions passed at the shareholders meeting held in August.

Advise John on the legal position arising out of these facts, citing statutory and case law authority.

In answering this question you should confine your research to Topics 16 and 17 only.

As in all problem questions, you should assume that the facts are true and provable in court.

**Please check that your assignment complies with the rules in the Style Guide (which appears after the marking rubric for Assessment 2) before you hand it in.**

Close

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Assessment item 4 - Final Exam

60%Value:60%Due Date:To be advised. Your exam timetable will be released via the Student Portal. Check dates for the exam period and your responsibilities.Reading time is 10 minutes Duration (excluding Technology Allowance):2 hours + 10 mins reading time

No technology allowance

Exam Type:Online exam

Submission method options:Interact2

Invigilated:Yes

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