Overview of Business Law - Questions

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

BUSINESS LAW1
1st Question
The main issue is to go ahead and highlight by referring to applicable clauses contained
in the Corporations Act of 2001, whether a contract of a binding nature is seen to exist between
two entities, an individual by the name of John and a company, known as Motorbikes Private
Ltd. The issue concerns the use of a motorcycle.
Relevant Rule
The company constitutes a separate or exclusive legal entity as per the provisions that are
contained in Section 124 (1) and reinforces the common law that has been established in
Solomon versus Solomon, a case where it was established with clarity that the company is a legal
entity.1 A necessary corollary in the given scenario lies in the fact that the other parties to the
contract are not seen to fulfill their legal obligations, agents on behalf of the concerned company
and also on the basis of the provisions that are contained in Section 126 of the Corporations Act
of 2001, may enact the contracts. Some of the entities that can perform such acts are individuals
such as company secretary, or the person who is directing the company or any agent who has
been given authority by the company directors to enact contracts with external or outside
parties.2 What is important and needed is that the contracts be fulfilled or implemented in
keeping with the provisions that are contained in section 127 of the Corporations Act of 2001.
The relevant rule that is applicable for contracts that are implemented or enacted without using
common seal is the provisions that are contained in section 127.
1 Latrobe university lecture and Australian Corporat Law 6th edition (page 215)
Solomon v Solomon &Co Ltd (11897)Ac 22 that the corporation is a separate legal entity.
enacting contract. Ferguson v Wilson (1866)LR App 77
2 Pathinayake, Athule, Commercial and Corporations Law, (Thomson-Reuters, 2nd ed., 2014)

BUSINESS LAW2
The company that acts in accordance with the clauses of Section 124 (1) may be regarded
as an exclusive legal entity. It has the capacity to enact contracts and if the provisions contained
in section 126 are anything to go by, agents will enact such contracts on the company’s behalf.
This can be undertaken by a number of specific entities, namely, the secretary or director of the
company as per the constitution, and agents who are provided authority by the company to go
ahead and enact such contracts. The contracts will have to be enacted in keeping with or by
adhering to the clauses that fall under section 127 of the Corporations Act of 2001. The relevant
rule that is applicable for contracts that are enacted without what may be termed as common seal
use is the provisions that fall under Section 127 of the Corporations Act of 2001.3
What is also mentioned under the provisions that are contained in section 198 of the
Corporations Act of 2001 is that companies may be legally bound in contract. Actual authority
can be implied or be expressed. For instance, as per the replaceable rule which is contained in
section 198 Clause 2 it is the director who possesses the capacity to handle the company’s
business affairs.4 In the event that the execution of the legal instrument takes place in keeping
with the terms that are contained in section 127 (1), then it will be possible for the other party to
make assumptions with regard to the execution of the contract as per the provisions that are
contained in section 129 (1) of the Corporations Act of 20015. If there is an absence of
significant material that is capable of highlighting internal assumption violation, then the other
party in the concerned situation will have the right to go ahead and assume that all the terms and
conditions of the concerned contract have been executed in the manner that was expected and
3 Marc Hertz, ‘Importance of execution of contracts by companies’, Thomson Reuters CLEARDOCS
(online), February 2015< https://www.cleardocs.com/clearlaw/company-registration/execution-ofcontracts.
html>
4 Latrobe university lecture and Australian Corporat Law 6th edition (page 239)
5 Amanda Seaton and Jarrod Wilksch ‘Putting pen to paper – execution under section 127’,
Johnson Winter & Slattery (online), July 2015 < https://www.jws.com.au/en/acumen/item/660-
putting-pen-to-paper-execution-under-section-127