The Centre for Corporate Law Free-Samples- Assignmenthelp.com

Questions: 1.Is the Company bound by the Contract? Would it make any difference to your answer if Harry were only acting as Managing Director, never having been appointed to the Position? 2.If Maria fails to meet Payments under the loan agreement, can the bank enforce the guarantee against the Company? Answers: 1.Issue To analyze the status of the contract established by William? Whether the status of the contract would have been changed if Harry was not the Managing Director (MD) of the company? Legal principles In Australia, the company is an entity which is incorporated under law and is separate in the eyes of law, that is, it has separate legal personality and the company officers and directors are distinct from the company. The company has the capacity to sue or be sued in its own name. Once a company is registered then through it is an artificial person but it requiring personnel for its working and organization. The Directors are the company officers who are appointee to carry out these important tasks. (Chapple Lipton, 2002) The company appoints a person as the position of the director as per section 9 of the Corporation Act 2001 and includes all such people who are carrying out directorial duties whether they are formality appointed at that position or not (Natcomp Technology Australia Pty Ltd v.Graiche(2001). Thus, a simple agent of a company can be considered to be company director of he is performing all the directorial functions on behalf of the company (Deputy Commissioner of Taxation v Austin(1998)). (Australian Master Family Law Guide, 2009). However, a person can only become a director if he financially sounds. It is specifically laid down under section 206B (3) of the Act that no person who is bankrupt is capable enough to become the company director (Re Ansett (1991). (The Law HandBook, 2017) The company is managed under the direction of the Managing Director and he has the capacity to delegate some of his managerial functions to his agent (Hely-Hutchinson v Brayhead Ltd [1968]). Thus an agent can only perform the directorial functions provided the same are delegated to them by the MD of the company. Thus, an MD can delegate by two ways, that is, (Tarr, (2001)) Firstly, the MD can delegate his functions to his agent by actually undertaking acts on such behalf. He can expressly state to an agent that he is capable to take actions or enter into contract on behalf of the MD or an MD can impliedly submit by his conducts or actions which portray that the agent does have the power to bind the company and MD. This kind of authority is actual nature (Bell v Australian Eagle Insurance Co. Ltd , (1990); secondly, it is a kind of authority which is granted by an MD to his agent not directly or actually but is granted by way of representation which he carries out in front of third party to make them believe that the agent has the power to bind the MD and the company by his actions (Thames Cruises Ltd v George Wheeler Launches Another, [2003]). This is called ostensible authority. In such scenario, if the third party contracts with the agent on a good belief that the agent is authorized to bind the company then any such contract which is framed is lega l and valid and is enforceable. (EGERT, G, 2007) The third party can rely on the validity of the contract which are framed and are based upon ostensible authority provided the third party is not aware of the defects which exist in the authority of the agent. If an agent enters into a contract but does not have authority and the third party makes a contract believing that the agent posses authority then the believe must be made in good faith. (Greig, D. W., 1988) These laws are now applied. 2.Issue To analyze the status of the guarantee that is provided by Maria to the Bank? Legal principle When any outsider is dealing with the company, then, it will very harsh to expect that the outsider must be aware of all the internal proceedings of the company, especially when the outsider has no source to make enquiries and to check the internal proceedings of the company. In such situation, the law has granted power to an outsider to make few assumptions while making any contractual relationship with the company. The power is granted under section 128 (1) of the Act as per which an outsider is eligible to make assumption of section 129 of the Act and is rightly held in Gye v McIntyre (1991). These assumption can also be availed even if forgery is incurred by the company officers and is held in section 128 (3) of the Act and is discussed in South London Greyhound Racecourses Ltd v Wake [1931. These presumptions are only valid provided the sake is made with good faith and no knowledge of the previous discrepancies on the part of the outsider (section 128 (4). The assumptions includ e: (Chapple Lipton, 2002) Section 129 (1) - The company must have fulfilled all of its provisions under law. Section 129 (2) That all provisions must have been comply with and the directors and officers are appointed legally (Vrisakis v Australian Securities Commission (1993); Section 129 (3) and section 129 (4) f an agent is appointed that all legal provisions are comply with and is held in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising Addressing Co Pty Ltd (1975). (J Power, 2015) Section 125 (5) - (7) The document which are issued by the company are legal and valid whether excited with or without common seal but must be signed by two director OR a director and secretary Pyramid Building Society v Scorpion Hotels Pty Ltd (1996). A private company with sole director and shareholder can make a document binding by signing the same. (J Power, 2015) These laws are now applied. Application of law 1.The contract that is established by William with the outsider is enforceable in law. This is because, the company (Harry MD) has appointed William and has granted an actual authority wherein he can negotiate contract with the third party. However, Harry has made a representation in front of the third party that William is authors to make contract. this representation is made through a letter which is given by Harry to the outside company. On such representation and in good faith the outside company has entered into a contract with William, thus, by applying the rule in Ogden Co Pty Ltd v Reliance Fire Sprinkler Co Pty Ltd, (1973, it is submitted that though the actual authroty of William was limited but the same was extend by Harry through ostensibel authority. Now, the outside comoany believing on such ostensibel authority has entered into a contract with Willaim and thus the contract has validity in law and is enforceable. 2.Even if Harry was not an MD of the company but the acts of Harry were in compliance to the position of an MD and thus he must be treated as an MD as per section 9 of the Act and thus if William was delegated the authority by Harry (as deem MD) still the position of contracts made by William will remain unchanged and the contract are still valid. As per the facts of the case, Maria and David are the company shareholders and directors. Maria is in need of money and she wished to borrow the same from the bank. The money is required for the needs of the company and for the personal requirements of Mari. Now, the bank is willing to provide the money but it requires a guarantee from the directors of the company. The bank as per section 128 (1) can make assumptions that the document that are signed by the company are genuine. The assumption by bank is valid provided it has no knowledge of the discrepancies as per section 128 (4). Now, Maria has forged the document by signing the name of the David along with her name. now, the bank as per section 1128 (3) can make the assumptions under section 129 even when the document are forged provided section 129 (7) is comply with. Now, the document contains the signature of both Maria and David, thus, the document is signed by the two company directors and thus fulfill the requirements of section 129n (7). So, the document can assume to be genuine and is validly executed by the company. But, the bank in no circumstances must6 be aware of the discrepancies in order to rely on the assumptions lay down under section 129 of the Act. Conclusion The contract amid William and the outside company is valid in law. The contract will still remain valid even if Harry was a not an MD but he will be deem MD as per section 9 and has authority to delegate his powers to William. It is thus submitted that the document that is executed by Maria though is forged but must be considered as genuine by the bank by relying on the assumption that are provided under section 129 of the Act. Reference List Books/Articles/Journals Australian Master Family Law Guide (2009) CCH Australia Limited. EGERT, G. ((2007) ). DEFINING A PARTNERSHIP: THE TRADITIONAL APPROACH VERSUS AN INNOVATIVE DEPARTURE ? DO QUEENSLAND APPEAL COURT DECISIONS POINT TO THE NEED FOR A REVIEW OF THE TRADITIONAL APPROACH TO INTERPRETATION ADOPTED BY AUSTRALIAN COURTS? . Bond Review. Greig, D. W. (1988), Commercial law. Butterworths. Chapple Lipton (2002) Corporate Authority And Dealings With Officers And Agents, The Centre for Corporate Law and Securities Regulation. Power J, (2015)Courage to move beyond the past: Common law and canonical structures for the governance of Australian congregational schools in the 21st century, University of Notre Dame Australia. Tarr, J. A. ((2001)). Information Disclosure: Consumers, Insurers and the Insurance Contracting Process. iUniverse.Case LawsBell v Australian Eagle Insurance Co. Ltd , (1990) Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising Addressing Co Pty Ltd (1975) 133 CLR 72. Deputy Commissioner of Taxation v Austin(1998). Gye v McIntyre (1991) 98 ALR 393 at 403. Hely-Hutchinson v Brayhead Ltd [1968] Maynegrain Pty Ltd v Compafina Bank, [1982]. Natcomp Technology Australia Pty Ltd v.Graiche(2001). Re Ansett (1991) 9 ACLC 277. South London Greyhound Racecourses Ltd v Wake [1931] 1 Ch 496. (Thames Cruises Ltd v George Wheeler Launches Another, [2003]. Vrisakis v Australian Securities Commission (1993) 11 ACLC 763. Online material The Law HandBook, Disadvantages of Bankruptcy, (2017) https://www.lawhandbook.sa.gov.au/ch04s03s02.php. (Accessed on 8th May 2017).