LAW504 Company Law Questions and Answers


Question 1: 

ISSUE: Whether the mortgage issue binds Sail away by ABC finance?

LAW:  Section 75, Australian Corporation Act 2001

Section- 124, 125, 128, 129, 131, 132 and 133 of the Australian Corporation Act 2001(Cth)

Cases: Royal British Bank v Turquad

Northside Development Pty Ltd v Registrar-General

Bay V Illawarra Stationery Supplies Pty. Ltd

Erlanger v New Phosphate co

Thompson v London, Midland and Scottish Railway Co

APPLICATION: S 124 of CA 2001 provides the legal capability of an individual or a company by embrace the power of contract. On the other hand, s 125 efficientlyoffersthe performance of those capabilities, which encourages the individual or the company to enter into the contract.

The finance company lend loan to the lender must have the provided clauses; they must provide a prior notice of 30 days. The amount of credit and percentage must be included at the time of contract and the amount if not payable at time then the finance company can recompense the amount.

The mortgage in the given scenario stood as misconception. The contract with conditions and other charges are not always fully protected under the Contract Law of Australia. As there arises unilateral variation clauses in contract. Unilateral clause depends on the conditions and terms of the contract and the loan given to the concerned party. Unilateral Clause indicates that any finance company or bank those who lend loan to company or individuals can change the terms and conditions at any time without providing any prior or proper notice to the lender. The main mottos of these finance companies are to float their respective rate of interest against the original loan amount. The finance company can claim floating rate of interest from the lender. Thus, no company or individual can take actions against the finance company because they follow the unilateral variation clause.

Unilateral contract or clause is nothing but an offer created and accepted by one company for the other depending on the contract performances. Unilateral variation clause is the permission clause of one party for the other with terms and consent for the contract.

The organization is under the association type of business keep running by two individuals. It is additionally noticed that Alan holds the situation of executive and offers of another organization, which is named as Broad sections of land pvt ltd. To get the required reserve Alan took a credit of $1.5 million from ABC fund and exhibited Sailway Pvt ltd as the underwriter for the advances by taking a manufacture mark of bill. As indicated by the contextual investigation, it is realized that Alan and Bill are the investors and chiefs of Sailway Pvt Ltd. In the present case, Alan plays out a break of agreement under the organization demonstration, which is culpable under the law. He is likewise obligated to be held as liable for taking a fashioned mark, which is an offense of rupture of trust and is culpable under the law. In this circumstance SailwayPvt ltd cannot be altogether considered capable as it bound by contract as Bill who is likewise the another executive of the organization is unconscious of the home loan and advance taken by the Alan from ABC financing organization. As per the Section 75 of Consumer Credit Act, ABC finance can assert for their obligation from Alan who is incompletely capable and will be sued in the courtbecause of the forgery done by him, which has risk the organization presence. However, it is noted to increase pointless favourable position of one organization Broad Acres Pvt Ltd Alan has kept danger of another association where Bill who is honest has been hurt and he has the privilege to sue Alan for his demonstration of carelessness of tort.

S 128(3): The supposition might be made regardless of whether an officer or specialist of the organization demonstrations deceitfully or fashions a record, regarding the dealings. S131(2) Liability for harms if organization does not confirm or enlist inside the time consented to by the gatherings to the agreement or if there is no concurred time-inside a sensible time after the agreement is gone into a man is subject to pay is the sum the organization would be at risk. S 129(4): Officers and specialists legitimately play out their

S129 (5): Document appropriately executed. Alancannot evade individual obligation. S 131-133 Corporations Act, the organization winds up bound by the agreement and qualified for its advantage if the organization, If a man goes into, or indicates to go into, an agreement for the benefit of, an organization before it is enlisted, or an organization that is sensibly identifiable with it, is enrolled and sanctions the agreement. Inside the time consented to by the gatherings to the agreement. S132 This Part replaces different rights and liabilities. In spite of any administer of law or value, the individual does not have any privilege of repayment against the organization in regard of the individual's risk under this Part. This Part replaces any rights or liabilities anybody would somehow or another has on the pre-registration of the contract. S 133 along these lines, legitimately, unveil the circumstance to the board after the deal, toreceive his sanctioned contract, and be discharged from obligation. Sailaway can contend on two angles that it is not bound by the home loan. ABC Finance "knows or suspects" that they are off base, so ABC Finance cannot depend on S128, S129, S128 (3): The suppositions might be made even is an officer or operator of the organization demonstrations falsely, or manufactures a report, regarding the dealings. S128 (4): A man is not qualified for make a suspicion in S129 if at the season of the dealings they knew or suspected that the supposition was inaccurate. Sailaway can give confirmations. This is so regardless of whether the individual was acting, or implying to act, as trustee for the organization.


The arrangement replaces any rights or liabilities anybody would somehow or another has on the pre-registrationof the contract. Tom had been engaged with past managing Sailaway and realized that it was not in the matter of property improvement. Alan depended on the agreement and the agent of the ABC fund. In this manner, the agreement is invalid because of Sailawayis not bound by the mortgage and forged signature. Alan did not have any express definite authority to execute the mortgage.


You may also like Taxation Law Assignment Help


Question 2: 


ISSUE: a) Who can be appointed as director of the company?

          Consequences ASIC’s recordwill have against Conrad?

LAW:  Australian Corporations Act 2001(Cth)


In the first part of the question, Conrad, Marcia and Roger want to establish their own new company named No-Tax Agents Pty Ltd and for that, they have hired Prisy Financial Advisory Services who can provide them advices and legal services.

Therefore, as per the given scenario Conrad has mentioned that he is not willing to be appointed as director or secretary of the company. Moreover, he advised that instead of him his family company can be appointed as director of the company. Further, the company will not have any company secretary.  

Later it has been discovered that Marcia will also be unavailable for attending meetings as she has been on conviction as she had falsifying company accounts.

According to the provided case study, the new company is going to establish, therefore, as per the section 141 of Corporations Act 2001, the entire newly formed Australian companies can automaticallyapplies Replaceable Rules if they have not explicitly adopted the constitution. Moreover, this section will not apply to companies who have sole director and sole shareholder in that case sections 198E and 201F of the Corporations Act 2001 will apply. However, as per the replaceable rule internal management of the company can be governed by either of the following:

  • The constitution
  • Provisions and sections of the Corporations Act 2001, which will apply to the company - acknowledged as Replaceable Rules.
  • Combination of both.

The Replaceable rules are regarded as basic set of rules that are mentioned in Corporations Act. These rules help in managing the company in proper manner. However, these rules are only applicable, if the company is not willing to adopt anyconstitution.

Moreover, it has been depicted that proprietary company are kept outside the preview of Replaceable rules. The Replaceable rule only outlines the details of which, sections are applicable on the company. Moreover, all the contents of the applicable sections are applied as Replaceable rules. 

Further, if the promoters of the company wants to remove or change the Replaceable rules then it is mandatory for them to adopt the constitution that will specifies that changes.

In addition to this, the question requires establishment of new company. Therefore, there are several steps that requires to be implemented while, forming the company under Corporation Act 2001. The steps are illustrated below:

  • Firstly, there is requirement to decide which form of company will need to be formed.
  • Selection of the company’s name is the next procedure.
  • Next the promoters will decide that how they will operate their company. This can be done by either adopting the constitution or Replaceable rules.
  • Deciding the share structure is also the crucial part of formation of the company. Along with this, selection of directors and secretary is also mandatory.
  • General obligation of all the officeholders needs to be outlined.
  • All the necessary consents are required to be obtained before registering the company.
  • All the paper works needs to be completed before all the necessary forms must be filed with the officers and lawyers.
  • Lastly, the company comes into existences.

According to the Corporation Act, Company is an artificial legal person that is created by law having its own legal existences. However, being an independent legal personality, company is unable to work without the support of its members and directors.

Therefore, as in the given scenario, Conrad is not willing to be appointed as director of the company instead he is referring his family company to be appointed as director of the company which is logically possible. As per the law, a legal corporation or the company can be appointed as director of another company.

However, the company solely cannot be able to handle the affairs of another company therefore, and there is requirement of natural person who can be able to manage all the affairs of the company. The natural person is required to manage the daily affairs of the organization. Therefore, Conrad suggestion is not acceptable to appoint the family company as the director as because Marcia will also not be available to manage the affairs of the company as she has been convicted for filing the false company accounts.


As per the case scenario, it has been advised that the natural person shall also be appointed as director of the newly formed company along with Body Corporation or company, as company solely will not be able to handle all the affairs of the organization. Therefore, Conrad should also be appointed as director of the company as he will able to take all the important and significant decision on behalf of the organization.

You may also like Law Case Study Help


ISSUE:The family company of Conrad is going for liquidation. Therefore, what

LAW:  Australian Corporation Act 2001 (Cth)


In the second part of the case scenario, it has been observed that the family company of Conrad has been liquidated. Even the liquidator has sent his report to ASIC, that report has mentioned that, secured creditors of the company has been paid in full.  Although, the unsecured creditors will not be able to receive 20 cents in the dollar. Moreover, the liquidator of the company has also stated that there was not any kind of unfair business, which, was being conducted by any other director of the company or Conrad. 

In case of any financial distress that is being facing by the company, creditors, shareholders and court can apply for liquidation in their own discretion. For the liquidation of the company INFO 45 is required to be filled which, will provide the general information.

Therefore, in the provided case study, the family business of Conrad has liquated as they were facing financial distress. Although, they have paid their secured creditors in full but were unable to pay their unsecured creditors in full. The class of unsecured creditors includes Employees of the company so therefore, they do not hold any kind of interest security on the assets of the company. Moreover, there is not any kind of misconduct that has been conducted on part of directors. Therefore, Conrad have a fair records in the process of liquidation and ASIC do not have any kind of ramification against Conrad.


It has been concluded that the family company of Conrad was liquated in the appropriate process although, secured creditors was paid in full. The class of unsecured creditors includes Employees of the company so therefore, they do not hold any kind of interest security on the assets of the company. Therefore, there was no action or charge against Conrad and he will not face any consequences from ASIC as he possesses fair records.  Conrad should also be appointed as director of the company as he will able to take all the important and significant decision on behalf of the organization.

You may also like Criminal Law assignment help

No Need To Pay Extra
  • Turnitin Report

  • Proofreading and Editing

    Per Page
  • Consultation with Expert

    Per Hour
  • Live Session 1-on-1

    Per 30 min.
  • Quality Check

  • Total


New Special Offer

Get 25% Off


Call Back