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Law - Case Study On Question & Answer

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Northumbria University

   

Law (LA 3105)

   

Added on  2020-03-04

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In this document, we will discuss the Law case study question & answer. Also, we cover the various creditors as to their rights to recover their debts and the company is bound to perform its obligations of management under the contract.

Law - Case Study On Question & Answer

   

Northumbria University

   

Law (LA 3105)

   Added on 2020-03-04

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Running Head: Law 1Law
Law - Case Study On Question & Answer_1
Law2Answer 1According to Section 197 of the Corporation Act 2001, in case director of the company incurs any liability while acting as trustee, then director is liable to discharge whole or part of the liability if:Company fails to discharge the whole or part of the liability, and Company is not able to pay the liability from trust assets, because trust was breached by corporation, corporation’s conduct its operations outside the scope of its powers and any provision of the trust deny the right of the corporation to be indemnified against the liability. This section further states that, directors of the company are not responsible for the liability incurred by the company, on the ground that assets of the trust are not sufficient to meet the liabilities of the corporation1. In the present case, Section 197 is applied because corporation fails to discharge its liability. Directors of the company fails to act within the scope of their powers because of which corporatefails to indemnify the liability against the trust. This can be understood through the landmark case law Hanel v. O’Neill2. After considering above facts, it is clear that director of the corporation is liable towards the creditors of the company. Therefore, Creditors can claim for their debts against the directors of the company because they are personally liable for the debts. 1 Corporation Act 2001, Section 197. 2 Hanel v. O'Neill, (2003) 48 ACSR 378; (2004) 22 ACLC 274; (2003) SASC 409 (SC of SA 2003).
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