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BLAW 2006 Company Law for Business BLAW 2006 COMPANY LAW FOR BUSINESS SEMESTER 1 OF 2016 - Bentley, Miri, CTI CASE STUDY Tristan Summer and Bo Cheng...

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BLAW 2006 Company Law for Business BLAW 2006 COMPANY LAW FOR BUSINESS SEMESTER 1 OF 2016 – Bentley, Miri, CTI CASE STUDY Tristan Summer and Bo Cheng are carpenters who live and work in the City of Fremantle, Western Australia. They ±rst met in 2010, when they commenced employment with ‘We- Build-It-4-U Pty Ltd’, a business that designs, manufactures and retails wooden outdoor furniture. In early November 2015, both Tristan and Bo resigned from ‘We-Build-It-4-U Pty Ltd’ to set up their own business manufacturing and selling outdoor furniture. Tristan and Bo sought advice on the type of business structure that may be suitable for their needs. Tristan, who owns assets to the value of $500,000, preferred the structure of a company over that of a partnership because of the limited liability of the company’s shareholders. Bo, on the other hand, thought that a company was ideal because it is a separate legal en²ty. Both Tristan and Bo were required to sign non-compete clauses when they commenced employment with ‘We-Build-It-4-U Pty Ltd’. These clauses prohibit them from compe²ng with ‘We-Build-It-4-U Pty Ltd’ post-employment for a period of two years anywhere within the City of Fremantle. Tristan and Bo therefore decided to incorporate a proprietary company called ‘Outdoor Oasis Pty Ltd’, and the company was registered on 25 January 2016. ‘Outdoor Oasis Pty Ltd’ has two directors, Tristan and Bo, and a total of ten shareholders (Tristan, Bo and family and friends of Tristan and Bo) each of whom hold 1000 fully paid shares. ‘Outdoor Oasis Pty Ltd’ has lodged a Cons²tu²on with ASIC. Clause 3 of the Cons²tu²on states that the company’s ac²vi²es are ‘restricted to the manufacture and sale of outdoor furniture’. Clause 4 provides that shareholder Emily Summer, Tristan’s sister, shall become Outdoor Oasis Pty Ltd’s sales manager for life. Eager to get the business started as soon as possible, Tristan and Bo entered into a number of contracts. Tristan nego²ated the lease of a factory unit at 21A Harbour Street, Fremantle, with ‘Coastal Real Estate’. Tristan signed the contract (for the lease of the factory) on 18 January 2016, at a rental of $3000 per month, to commence in May 2016. However, on 29 January 2016, the factory/warehouse in 21B Harbour Street became vacant and is now available at $2000 per month. This unit is much more spacious and convenient. On 2 March 2016, Bo entered into a contract on behalf of ‘Outdoor Oasis Pty Ltd’ to build a wooden bathroom cabinet for Sven Larsen. Unfortunately, Bo underes²mated the cost of the raw materials for the cabinet and is now hoping that there is a way the company can avoid its obliga²ons under that contract. Company Law for Business 2006 Case Study semester 1 2016 © Curtin Business School 1/2 1/2
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Queston One – 15 marks ‘We-Build-It-4-U Pty Ltd’ commences legal acTon to restrain ±ristan, Bo and ‘Outdoor Oasis Pty Ltd’ from engaging in a compeTng furniture business. Bo argues that ‘Outdoor Oasis Pty Ltd’ is a separate legal enTty and that it can do as it pleases. ±ristan is not so sure whether Bo’s view is correct. With reference to the above fact scenario, and using the four-steps-process, discuss whether ‘We-Build-It-4-U Pty Ltd’ is likely to be successful in in its legal acTon. Your answer must include a discussion of relevant cases and secTons of the Corporatons AcT 2001 (Cth), suFciently paraphrased in your own words. Queston Two – 6 marks Emily Summer seeks your advice on whether clause 4 of Outdoor Oasis Pty Ltd’s ConsTtuTon is enforceable against the company. Discuss in your own words the key secTon of the Corporatons AcT 2001 (Cth) Emily needs to consider, and the case from your topic materials that you consider most relevant. Your answer should include citaTon of secTon number(s) and case names. Queston Three – 5 marks Who may be liable under the contract for the lease of 21A Harbour Street, at $3000 per month? Refer to the key secTon of the Corporatons AcT 2001 (Cth) and brie²y discuss one relevant case. Queston Four – 4 marks Outdoor Oasis is registered as a Pty Ltd company. What is the capacity of that type of company upon incorporaTon? Who is (and who is not) liable for the debts of this company? Company Law for Business 2006 Case Study semester 1 2016 © Curtin Business School 2/2 2/2
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Company Law for Business.docx

Running head: COMPANY LAW FOR BUSINESS 1 COMPANY LAW FOR BUSINESS CASE STUDY
A. QUESTION ONE
Legal Issue
In 2010, We-Build-It-4-U Pty Ltd hired both Tristan Summer and Bo Cheng, two employees who...

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