Company Law Assignment

Topics: Board of directors, Contract, Rachel Green Pages: 27 (3033 words) Published: May 16, 2013
LAWS2301 | Take Home Assignment | Sandy Goh (20806534)

*Note: Unless otherwise mentioned, all sections mentioned in this essay are from the Corporations Act1.

PART A (i) – whether Monica/ GE will be liable Under s12.1(1) of the Criminal Code Act2 (CCA) criminal liability may be imposed on GE due to Monica’s actions. A criminal offence consists of physical elements and fault elements (s3.1 CCA). The physical element is attributed to GE (s12.2 CCA) as Monica, who is a defacto Managing Director (MD) (s9), bribed an ASIC employee during her scope of employment. The fault element is attributed to GE because Monica, as MD of GE, intentionally, knowingly and recklessly engaged in the bribery (s12.3(2)(b) CCA). GE cannot prove that it had ‘exercised due diligence to prevent’ (s12.3(3) CCA) the bribe and thus, s12.3(2)(b) CCA will apply. In Lennards3, the court ruled that the director’s knowledge attributed to the company. This means that GE will be liable for the bribe. As GE is not a physical being, s4B of the Crimes Act4 states that instead of imprisonment, the company pays a fine as penalty.

 Corporations 2

Act 2001 (Cth)

Code Act 1995 (Cth)
  Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705  

 Lennards 4

Act 1914 (Cth)

LAWS2301 | Take Home Assignment | Sandy Goh (20806534)

PART A (ii) – actions GE can take against Ross and/or FP Action taken against FP Ross breached the clause in his contract by competing with GE while he is employed by it. He can argue that FP is a separate legal entity (s124) from him, and is not bound by the contract he entered into with GE. Ross is a hiding behind FP to avoid legal obligations as shown in Gilford Motor5. As the directing mind and will behind FP, Ross has defrauded GE by making FP compete against GE intentionally, as shown in similar cases Bestobell6 and Re Darby7. In this case, the corporate veil may be lifted under the common law and Ross will be made liable. Action taken against Ross On behalf of GE, Monica is able to impose liability on Ross for breaching his duties owed to GE as a promoter. Ross is a promoter to GE as he was actively involved in the formation of GE, like in Tracy v Mandalay8. Ross has a conflict of interest as he referred GE’s customers to FP and making big profits with confidential information (client list) from GE. Some common law remedies available to GE will be an injunction against Ross and FP, the right to obtain an account of profits from FP, as well as rescission. FP may also be liable in damages for torts under s12 CCA.

 Gilford 6
 Green 7

Motor Co Ltd v Horne [1933] Ch 935
  v Bestobell Industries Ltd [1982] WAR 1

Darby [1911] 1 KB 95
  v Mandalay [1953] 88 CLR 215


LAWS2301 | Take Home Assignment | Sandy Goh (20806534)

PART B (i) – whether contract with Bordeaux Barrels is binding Ross can indirectly bind GE to this contract (s126) if he had actual authority as an agent. As an individual director, Chairman or wine consultant of GE, Ross had NO express actual authority to enter into this contract. He had NO implied customary authority either, unless expressly given as shown in Northside Developments9. Ross DID NOT have ostensible authority because he did not fulfill the 3 requirements in Freeman10: 1. No representation made by the company that Ross had customary...
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