tutorial 5 answers and presentation

tutorial 5 answers and presentation - Question 1 Main...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Question 1 Main issues: James’s appointment is invalid James signed the lease contract together with the secretary without the approval of the Board’s and he has given no authority to do so James is discovered that his appointment is invalid Ashbury Railway Carriage’s case P195 Ultra vires (beyond power): the contract was not binding on the company if the contract is beyond the objects clause (a scope of business clause) on the company. The consequence is causing unfairness to innocent contracting third party. The objects clause of the company provided that it was formed to make, sell or hire railway  carriages and wagons. The company entered into a contract for the financing of the construction  of a railway in Belgium. When an action for damage brought against the company, the contract  was outside the scope of it objectives clause.  Applied in James’s case, the prerequisite for the formation of contract is with the approval of the  Board’s contract, although the contract is signed by a director and a secretary, however, the  contract should  not be bound to the company or void as it was ultra vires and the contract is  outside of the objects clause of the company. Ultra vires is no longer valid at common law in 1984 with amendment to Companies Code 1981, which is a predecessor to the Corporation Act. If James’s case happened after year 1984, the company is bound in the contract. However, to  determine whether the contract enforceable against the company by Mandy, we look at the  following cases and provisions of the Corporation Act. Section 198A of the Corporation Act states that the business of a company is to be managed by or under the direction of the directors. Corporation Act S126 : The Company’s power to enter into contracts, for example, may be exercised by an individual acting on the company’s behalf. Corporation is a legal fiction; it’s a mere entry on a piece of paper. It’s incapable of
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/19/2011 for the course FINS 3650 taught by Professor Arnold during the Three '11 term at University of New South Wales.

Page1 / 4

tutorial 5 answers and presentation - Question 1 Main...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online