The Australian Corporation Act, Assignment

Added on - 01 Apr 2020

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CONTRACTS WHEN BINDING AND WHEN NOTUniversity- KIIT University
2Issue 1:The Australian Corporation Act, 2001 states, under section 124 that a corporation isgiven the same legal capacity as that of an individual which is inclusive of the powerto form a valid contract.Section 125 provides that such agreement which has been entered into by any suchcorporation must perform the promised act even if it is beyond the companiesconstitution.Since both Michell and Tim are authorized authorities under the company they can forma valid contract which has to be performed on behalf of the company being anobligation under the aforesaid sections of the act.Section 126 of the act states, since a company cannot act on its own it has to takedecision through an agent. The agent on its behalf is authorized to ‘make, ratify ordischarge a contract’.Here, Michell and Tim are the authorized authorities who are supposed to act as agentson behalf of the company.Issue 2:Under the Corportation Act, 2001, section 126 states, that a company cannot takedecisions on its own and thus should acts through agents or representatives. The agents/representatives are empowered on behalf of the company to make, ratify or discharge thecontract in which they have entered or about to enter.Here, George intends to sell out his cake shop to Gerard and Sylvia. Under theprovisions of section 127, the agreement to sell the shop will satisfy only if one directorand one secretary provides consent to such agreement. Though Gerard is the nominateddirector he can consent, Sylvia is just a shareholder of the company. She is not thesecretary to provide consent which is necessary to satisfy the requirements under section127. Again, section 126 tells us that if any authorized agent provides consent on behalfof the company to any such document to form an agreement, then such agreement shall
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