Case Study on Breach of Contract and Corporate Law

Running Head: Case Study
CASE STUDY
Name of the Student
Name of the University
Author’s Note

CASE STUDY1
Assignment 1:
Issue:
The first issue in the case is whether Michael is liable for the breach of contract with WA
Lithium Refineries Pty Ltd.
The second issue in the case is whether Michael is responsible for 250000$ to AES Ltd.
Rules:
Common Law cannot be referred for the ratification of the pre-registered contracts
because the process of ratification has a retrospective effect and common law principles
recognizes the contract with the prospective effect of contractual obligations in return or
exchange of consideration between the parties (Teacher Law 2013). The provisions related to the
efficacy of the corporations and the pre-registration contracts entered into has been covered by
the Corporations Act 2001 (Lipton, Hershberg and Welsh 2014).
Section 131(1) of the Corporations Act 2001: the provision states that if a person
enters into any pre-registration contract for the benefits of the company, then the company shall
be bound by its terms (Commonwealth Bank of Australia v Australian Solar Information Pty
Ltd (1986) 11 ACLR 380). However, such binding is not absolute in nature. The company that
entered into the contract before its registration has the right to identify and ratify the same within
the time period agreed between the parties as per the contract or in case the time period is not
specified in the terms of such contract, then the reasonable time assessed after the registration of
the company shall be taken into consideration for such ratification (Aztech Science Pty ltd v
Atlanta Aerospace (woy woy) Pty Ltd [2005] NSWCA 319).

CASE STUDY2
Section 131(2) of the Corporations Act: the provision of the Act states that the
person shall be personally liable to pay for the damages incurred by the other party in case of
pre-registration contracts, or the contracts entered into even after the registration of such
company but fails to ratify within the stipulated reasonable time-period. Such payment of
damages should be within the time-period as agreed by the parties or reasonable time period after
the contract has been entered in to by the parties (Bottomley 2016). In other words, it can be
explained that if the contract made before the registration of the company is not ratified after its
registration, then such contract shall be personally binding the party who entered as a non-
registered company giving his or her guarantee for the authenticity of such company.
Section 131(3) of the Corporations Act 2001: the provision of the law states that in
case the proceedings for the recovery of the damages has been brought against the party, due to
breach after the registration of the company but does not ratify such pre-registration contract,
then the court may order any of the following decisions with one or more orders:
o Pay the damages in full or in half which is a part of his or her incurred liability.
o Transfer of property to the other party and such property was received as a part of
the benefit from the contract entered into by the parties with each other.
o Payment of the amount demanded by the other party.
o If the company ratifies the pre-registration contract but fails to perform the
requirements related to the same in part or in full, then the court may order to pay
for the damages incurred by the other party due to non-performance of the
ratification of the contract. Such payment can be ordered to be paid in part or in
full depending upon the facts and the circumstances of the case.