Business Law Case Study Analysis

0Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Table of Contents
Question 1..................................................................................................................................2
Issue 1A..................................................................................................................................2
Issue 1B..................................................................................................................................4
Issue 1C..................................................................................................................................6
Question 2..................................................................................................................................8

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Question 1
Issue 1A
Issue
The issue is to determine whether any of the Directors have breached their duty as
Director under the Corporations Act 200.
Law
Section 180 of the Corporations Act 2001 lays down the care, duties and diligent
Directors need to carry out in Australia1. Subsection 1 of this section states that a director or
an officer must carry out his duties with utmost diligence and care, like a man of reasonable
prudence would2. While the subsection 2 of the same section lays down that the directors who
are under the obligation to take business judgments or decisions:
 must make them in good faith for a proper purpose;
 should not intend to have personal gains that would influence their judgement;
 should inform the others about a particular business decision that needs to be taken;
 the directors must believe that such business judgement or decision is for the best
possible interest of the company.
Section 181 of the Act clearly lays down that the directors or any officers must do their
duties and carry out their powers in good faith for the best possible interest of the corporation
and such duty must serves a proper purpose3. Section 182 of this Act states that a director,
officer or a secretary of a corporation should not strive to make use for their positions
improperly to:
1 S 180 of Corporations Act 2001(Cth)
2 Corporations Act 2001 (2018) Legislation.gov.au <https://www.legislation.gov.au/Details/C2018C00275>.
3 S 181 of Corporations Act 2001(Cth)

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 have an advantage for themselves or for others; or
 tarnish the reputation of the company4.
Section 191 (1) of the Act strictly directs a director to notify other directors about his
personal interest when there is a conflicting idea concerning the company and its best
interest5.
Application
In the given case study, there is a gross violation of duty by Dion in the capacity of an
Executive Director (under section 191(1) of CA 2001) of Food Works Ltd as he suppressed
the facts about doing personal business with Organica Ltd through his own solely owned
company named Lifestyle Today Pty, which is giving a tough competition to Food Works
Ltd. It is the first and foremost principle in a business that the members should not indulge
into a competitive business. Therefore Dion’s involving with Organica is unjust and unfair.
Additionally, Dion, Larry and Vance have somewhat breached their duty as directors
and can be held responsible for pushing the company to its dead end (section 181 of CA
2001). However, in this matter there are legal provisions under CA 2001 which would defend
them for their actions taken toward the best interest of the company.
Conclusion
Dion can be sued by the other directors for his misconduct and breach of duty for
suppressing such vital information from the other directors.
4 S 182 of Corporations Act 2001(Cth)
5 S 191(1) of Corporations Act 2001(Cth)