Question One
John is the factory manager of Alpha Ltd, a company that manufactures computer keyboards. John is absent on annual leave when Mickey visits the factory. Mickey is a sales representative for Solder Ltd a supplier of soldering equipment. Mickey asks the receptionist for the factory manager but as John is absent, Harry (a clerk in the factory office) is called to reception.
Harry just introduces himself by his name. Mickey informs Harry about his company's products and Harry is so impressed he places an order for a large number of soldering irons.
The soldering irons are delivered after John returns from leave and he immediately rejects them as the manufacturing process is soon to be automated using robots. Solder Ltd is informed that there is no agreement as Harry did not have authority to enter into the contract on behalf of Alpha Ltd.
REQUIRED:
Analyse and discuss the above facts examining the possibility that the contract may or may not be enforceable. Your answer should include an analysis of any types of authority that could be relevant to these facts and any cases or sections of the Corporations Act that would be applicable.
Question Two
Larry is instructed by his employer Huge Ltd, to register a company which is to sell educational assistance to commerce students. Larry is to become Managing Director of the new company. Before the new company (Lifesaver Pty Ltd) is registered, Larry signs a purchase agreement on behalf of the proposed company to buy educational equipment.
Lifesaver Pty Ltd is later registered and at its first directors' meeting the ratification of Larry's purchase is considered. The other directors consider the equipment Larry purchased is unsuitable and refuse to approve the transaction.
REQUIRED:
(a) How does corporate law classify the role undertaken by Larry leading up to the registration of Lifesaver Pty Ltd? What are the duties that such a person owes and to whom are they owed?
(b) What is the effect on Larry, and on Lifesaver Pty Ltd, if the directors decide not to ratify Larry's lease.
(c) Describe the sources from which a company of Lifesaver's type can raise funds. In your answer include any limitations that the Corporations Act imposes on proprietary company fundraising.
(d) What additional fundraising opportunities would be available if the company was "Lifesaver Ltd"?
Question Three
Figment Ltd wishes to raise $11 million through a share issue but does not want to prepare a prospectus. The company secretary has advised the board of directors that to raise such a large amount of money, the company has no alternative but to prepare a disclosure document which is the same as a prospectus. Discuss the company's options and in your discussion include whether the company secretary's advice is correct. Use the CA to support your answer.