Corporate Law: Enforcing Mortgage and Breach of Director's Duties

Running head: CORPORATE LAW
CORPORATE LAW
Name of the Student
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Author Note

CORPORATE LAW1
Answer 1
Issue
The issue that is to be discussed in this part is considered to be whether the bank has the
authority to enforce the mortgage over the building.
Rule
The sec 129 of the Corporations Act, 2001 (Cth) discusses the presumptions that can be
made under sec 128 of the afore-mentioned Act. It is in agreement with the Constitution and the
replaceable rules that are laid down in the Constitution. The directors or the secretaries of that
company agree upon it. An individual makes an assumption that anyone who appears to be on
the part of a company by the knowledge of that individual where the information is provided to
the individual through ASIC that the person is considered to be acting as the director of the
company or the secretary of the organization who has been properly appointed by the company
and carries out the operations or functions of the company by exercising their powers and
authorities as a director or the secretary of the company. In case of an officer or the agent of the
company is considered to be a part of the company and an individual can assume such a person
to be the officer or agent of the company if the officer or agent is duly appointed as an officer or
agent of that organization or exercises the functions or duties of the company. There needs to be
a proper performance of the duties in the company. An individual also have the right to assume
that there has been a document which has been properly executed by the company if the
document of the common seal has been properly executed under section 127(2) and the fixing of
the common seal has been observed with accordance to the section. It can be seen in the
scenario of Bank of New Zealand v Fiberi Pty Ltd(1994) 12 ACLC 48. It can be seen in the case

CORPORATE LAW2
of Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd [2014] SASCFC 103 if the section
127 of the above-mentioned act is executed then can the documentation be considered to be
valid.
Under the section 128 of the Corporation Act discusses that any person has the right to
assume in terms of the dealings which are considered to be a part of the corporation and the
person involved in the dealings of the corporation are having the authority to do so because of
the position the person holds in the corporation. Under section 128(4) of the above-mentioned
Act a person or an individual does not have the right to assume under the section 129 of the Act
if during the time of the dealings of the organization the individual has any kind of suspicion
related to the position of the person who is considered to be dealing on the part of the
organization. This is similar to the doctrine of indoor management where it can be understood
that the outsider is not supposed to know the internal management of the company that can be
understood in the case of Royal British Bank v Turquand (1856) 6 E&B 327. Therefore, the bank
if there is any kind of suspicion on the person who is exercising the powers of the dealings of the
company then the individual is not supposed to assume.
Application
In the present scenario it can be understood that Mr. Jones and Mrs. Jones are the owners
of a hardware store where the owner of the company is considered to be Mrs. Jones and the
secretary and the director of the company is considered to be Mr. Jones. Mrs. Jones visits the
BNZ bank which is considered to be the bank of the company for a long period and applies for a
loan of 300,000 dollars where the purpose stated by Mrs. Jones is considered to expand the