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Project On Business Law- Doc

   

Added on  2020-04-01

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Running head: BUSINESS LAWSBusiness LawsName of the studentName of the universityAuthor note
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1BUSINESS LAWSFacts of the caseThe Australian Securities and Investment commission initiated proceedings againstFortescue Metals Group Ltd (Fortescue) along with Andrew Forrest (chairman, CEO andsubstantial shareholder of Fortescue:Forrest) in the Federal Court of Australia. The case was inrelation to the announcement made by the company to the broad market and the media in relationto a number of “Framework Agreements” between three states owned Chinese corporations andFortescue1. The framework was related to financing and building services which were to be given inrelation to Pilbara Iron Ore and Infrastructure Project of Fortescue. There was an allegation bythe Australian Securities and Investment commission that Fortecue and Forrest have violated theprovisions of the CA in the year 2004 and 2005 by giving information to the ASX in relation to afuture mining project in west Australia known as the PIOIP. The project consisted of thedevelopment of a mine in the region of Pilbara located in Western Australia. Letter were sent bythe defendant during August and November 2004 to the ASX along with media release inrelation to such agreements which stated that the defendant had got into a binding contract withChina Harbour Engineering Company CHEC, China Metallurgical Construction (Group)Corporation CMCC and China Railway Engineering Corporation CREC to finance transfer andbuild railway, mine and port in relation to the project. Various other communications had beenmade by the defendant which were in relation to the agreements the defendants had with thethree companies. 1 ASIC v Forrest and Fortescue [2012] HCA 39 at [2]
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2BUSINESS LAWSAccording to the announcement each of the framework was treated as a bindingagreement between the parties. However upon analysis it was found that the terms contained inthe contract were ambiguous and unclear to be made legally binding and be enforced law. Theclaim made by the Australian corporate regulator AISC was rejected by the trail court as JusticeGilmour allowed an appeal of the decision with respect to the full court of the federal court. TheAISC had thus appealed to the full court against the decision of the trial court. After AISC gotthe desired results from the full court an appeal against the order was made by the defendant tothe High court. The AISC had alleged that the company had engaged in an act which accounts to thebreach of section 1041H of the Corporation Act 2001 (Cth). The AISC also alleged that thedefendant had violated section 674 of the CA in relation to disclosure requirements2. In additionit was provided by the AISC that the defendant director did not comply with section 180(1) ofthe CA as he did not discharge his duties and powers with the proper implementation of skill anddiligence.Issue In this case the issue before the court was to determine whether the announcement madeby the defendant company to the target audience who were mainly investors accounted to theviolation of section 1041H of the CA and accordingly the breach of directors duties undersection 180(1) of the CA and section 674 in relation to continuous disclosure obligation of alisted company. 2 ASIC v Forrest and Fortescue [2012] HCA 39 at [8]
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