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Jack is the managing director of Beanstalk Ltd. The company has a constitution which states that the company may

only sell agricultural products grown in Queensland. The board of directors have implemented a company policy that all transactions over $100,000 require board approval. 


Jack attends a trade fair in Victoria and is so impressed with the quality of the beans grown on a Victorian farm by Giant Ltd that he signs a $150,000 purchase agreement.


The board of directors of Beanstalk Ltd decide that this purchase will undermine the company's marketing campaign promoting Queensland products. They advise Giant Ltd that the company will not make payment under the purchase agreement as:

a)             Jack did not have authority to sign the contract and in any event it is above $100,000; (3 marks)

b)            Beanstalk Ltd had no legal capacity under its constitution to buy any produce from outside Queensland so the agreement cannot be enforced against it; (3 marks)

c)             The constitution of Beanstalk Ltd was available in the public record and Giant Ltd had a responsibility to know its contents and comply with it. (1 mark)



Advise Giant Ltd on the issues above. To support your answers, you must not only reference your textbook but you must also refer to the Corporations Act and cases where appropriate.

Hint: The best practice question to use from workshops is one of the parts from the question from workshop Two Question 4 about "Tipsy Ltd". Only write maximum ¾ page to answer this


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