This presentation discusses two parts of Business & Corporate Law. Part A focuses on negligence and the duty of care in a bus accident case. Part B discusses the statutory and common law positions of directors. It covers the fiduciary duties, breach of duties, and liability of directors.
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BUSINESS & CORPORATE LAW
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ISSUE Whetherjennycansuccessfullysue the Hunter Bus line for damages for herinjuryandforthelossof enjoyment of her holiday.
RULE To establish a claim under negligence, claimant must prove that his claim include all the essential elements toconstituteNegligenceasheldinDonoghuev Stevenson[1932] AC 562. A person would be charged with negligence only when: •a) he had aduty of caretowards another; •b) he failed to carry out such duty and hence there is a breach of duty of care; •c) suchbreach caused an injuryto another person; •d) such event causing the injury wasforeseeable; •e) the person causing the injury and the aggrieve person were in aproximate relationto foresee the risk.
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RULE (CONTD..) Exclusion Clausemight be citedby the defendant as a defence. Strict Liabilitycannot be avoided by defendant. Pure Economic Lossis not entertained by the Court.
APPLICATION The Bus line owes its passengers a certainduty of care; to protect the passengers from any probable danger that might occur in the course of their journey in the bus. The bus line failed to provide safety precautions for the passengers which could be held as abreach of their duty of care. The accident was of a general nature which was quite common and therefore could be marked asforeseeable. The bus line or its employees and Jenny, a passenger areinsuchcloseproximitythattheycouldhave predicted the foreseeable risk and could have prevented it from happening.
APPLICATION (CONTD..) The Bus line could defend itself by citing the ‘Exclusion Clause’ for giving a written word of caution to Jenny. However, in this case, duty of care was in the nature ofstrict liability which was unavoidable.
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CONCLUSION Jenny would be able to recover damages pertaining to her injury sustained from the accident. But no damages would be awarded for loss of enjoyment as it falls under the rule ofPure Economic Loss.
RULE Thefiduciarydutiesofthe directorsrequire the directors: •to carry out their duties and responsibility to the best interest of the business, •not to do anything that could prove to be detrimental to the company. •toretaindiscretionpertainingtothe decisiontakenbytheotherdirectorsand shareholders of the company
RULE (CONTD..) Statutory Duty of directors under Corporations Act 2001 (Cth) include: •section 180(1):duty to exercise powers and discharge duties with due care and diligence •Section 181:to execute their powers and discharge their duties in good faith and for a proper purpose •Section 182: not to misuse their position for gaining advantage for themselves or for someone else, causing detriment to the company •Section 183: not to improperly use the information that he may have obtained for their position as a director of the company, for gainingadvantageforthemselvesorforsomeoneelse,causing detriment to the company •Section 191: to give notification to the other directors pertaining to his personal interest in relation to the affairs of the company, in case any conflict of interest arises
APPLICATION Vesna took all the important decisions on behalf of the company on her own; however, making Mikhail and Zvaid agreed to Vesna’s decisions blindly. Vesna can be held liable for breaching her director’s duty as laid down under the Corporations Act from section 180 to 184 and section 191 of the Corporations Act
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APPLICATION (CONTD..) Ilyychhad also breached his director’s duties by signing a deal with another competing company; not sharing such critical information with the other shareholders at times of conflict of interest. Mikhail, Zvaid and Sergey did not exercise their fiduciaryduty to retain discretion pertaining to the detrimental decisions taken by Vesna and Ilyych.
CONCLUSION All directors held liable for breach of director’s duties. Mikhail, Zvaid and Sergeywould face civil prosecution for not retaining discretion under common law. Ilyychwould face civil litigation for signing a deal with a competing company while being a director and shareholder of Borisda Builder Pty Ltd. Vesnawould face civil as well as criminal prosecutions under the Corporations Act.
REFERENCES Journal Articles/Books •ANDREW. KEAY, L. L. B.DIRECTORS'DUTIES. JORDAN Publishing Limited, 2016. •Bruner, Christopher M. "Is the Corporate Director's Duty of Care a Fiduciary Duty-Does It Matter."Wake Forest L. Rev.48 (2013): 1027. •Spamann, Holger. "Monetary Liability for Breach of the Duty of Care?."Journal of Legal Analysis8.2 (2016): 337-373. Case laws •Anns v Merton London Borough Council(1978) AC 728 •ASIC v Rich(2003) 44 ACSR 341 •Donoghue v Stevenson[1932] AC 562 •Lamb v. London Borough of Camden[1981] QB 625 Legislation •Corporations Act2001 (Cth)
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