[Essay Help]: BLO2205 Corporate Law

BLO2205 Corporate Law.


Jackson and his girlfriend Jenna agree to enter into a partnership to run a café business.Jackson takes out the lease of the café and pays all the set up costs but does not take an active role in the running of the café. As part of setting up the business, Jenna enters into a contract to buy a coffee making machine from Coffee Machines Pty Ltd (Coffee Machines). The machine was worth $12,000 but Jenna purchased it for $6,500 as part of a package under which Coffee Machines supplies coffee to the business for the first 12 months.

Jackson and Jenna have a disagreement about the contract with Coffee Machines as Jackson thinks he could have obtained a better deal through a friend of his. Jenna runs the business for about 5 months but the issue about the coffee machine is not resolved which leads to a breakdown of their relationship. As a result their partnership and the future plans for running the café business come to an end after Jenna just walks out of the business leaving Jackson to run the business himself. Jackson terminates the contract with Coffee Machines to save costs.

Jackson finds that he cannot cope with running the business because of his lack of experience and other commitments so he decides to sell the café. When Jenna finds out about what Jackson proposes to do she sues Jackson claiming they are partners.

Advise Jackson and Jenna whether there is a partnership and of the liability for terminating the contract with Coffee Machines. Your answer should refer to the provsions in the Partnership Act 1958 (Vic) and the relevant case law.


Eastfarmers Ltd is a listed public company conducting various businesses including a supermarket chain, coal mining and an insurance business. Its share capital is currently comprised of six million $5 ordinary shares and three million $10 preference shares. The board of directors of Eastfarmers Ltd have decided on the following courses of action to protect the company’s interests in the current economic conditions.

Proposal One:

To issue additional shares to the general public on the ASX (Australian Securites Exchange) to the value of $15M (fifteen million dollars).

The directors seek your advice as to whether a disclosure document must be prepared on behalf of Eastfarmers Ltd before the shares are issued. If so, what type of disclosure document is required and what are the content requirements?

Proposal Two:

As part of the share issue outlined in proposal one, new preference shares to the value of $8M (eight million dollars) will be offered. The directors intend to rank the newly issued preference shares equally with the existing preference shares. Advise the directors of Eastfarmers Ltd of any legal procedures under the Corporations Act 2001 that must be complied with before issuing the new preference shares.

Proposal Three:

The directors of Eastfarmers Ltd also believe a restructuring of the existing share capital of the company should be considered. They believe a share buy-back would be appropriate, although this would lead to a reduction in the company’s share capital. The directors are of the opinion that the reduction in share capital will be offset by the issue of new shares, as outlined in proposal one. The share buy-back will be offered to all holders of ordinary shares and the company will offer to buy-back 15% of each ordinary shareholders’ shares. Advise the directors of Eastfarmers Ltd of the legal procedures under the Corporations Act 2001 that must be complied with to accommodate the share buy-back.

1.That the right to attend general meetings of the company be suspended for all shareholders holding 5% or less of the issued share capital effective immediately;

2. That an AGM of the company be held every two years and not each calendar year as required by S250N(2);

3. That the directors be paid a 25% salary bonus each year before a declaration of dividends, if any, on shares.

David and Olivia are minority shareholders each holding less than 5% of issued shares. They are not pleased with the resolutions passed by the directors. In relation to all resolutions passed by the board of directors, advise David and Olivia of the statutory remedies that would be available to them as shareholders under the Corporations Act 2001.

Before the conclusion of the March 2017 board meeting, Vic was instructed by the board to investigate TS Pty Ltd as a potential supplier and report at the next board meeting, due to be held a month later. He failed to have a random selection of the company’s products tested and he did not undertake a company search to discover more about TS Pty Ltd. Just prior to the next board meeting he puts together a very sloppy and inadequate report, wherein he recommends that a contract be entered into with TS Pty Ltd on a trial basis over the next 12 months. When the next board meeting is held in April 2017, the directors fail to question the report and vote in favour of trialling TS Pty Ltd’s products. Kate is absent once again, as she rarely attends board meetings.

Unfortunately, TS Pty Ltd’s products prove to be of inferior quality. TW Ltd receives endless complaints from the major hardware chains and purchasers of water tanks, as the faulty products cause the tanks to leak. TW Ltd finally recalls all tanks fitted with the tubing and seals supplied by TS Pty Ltd. The recall of the tanks proves costly for TW Ltd and its annual profits drop by almost 50% (fifty per cent).

You Are Required To Answer The Following Questions:

(i) In relation to each of the directors of TW Ltd, are they in breach of any directors’ duties owed to the company? Discuss fully.

(ii) If the directors were in breach of their duties, how would your answer be different if you discovered that at a general meeting, held in May 2017, the company’s shareholders unanimously consented to the directors’ actions?

(iii) In relation to the contract with TS Pty Ltd, were there any disclosure requirements and prohibitions imposed by the Corporations Act that should have been complied with before the contract proceeded? Advise.

BLO2205 Corporate Law

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