1COMPANY LAW Table of Contents Issue.................................................................................................................................................2 Rule..................................................................................................................................................2 Application......................................................................................................................................3
2COMPANY LAW Issue The main issue in the case is whether Ultimate Computer Programs and the City of Sydney can enforce contracts against Events R Us Ltd. Rule As per the provisions of the section 125 (2) of theCorporations Act2001 the objects of a company might be set up by the constitution of a company, however the act of the company could not be held invalid just because the act is in contradiction to any of the objects set in the constitution of the company. As per section 126 of theCorporations Act2001 under the express or implied authority of the company or on behalf of the company and individual can be exercising the company’s power for making, varying, ratifying or discharging any contract. As per the provisions of section 140 of theCorporations Act2001the constitution of the company and any other replaceable rules applying to the company would be effective as a contract to all the members, directors and the company secretary. By the judgment of the caseNews Ltd v Australian Rugby Football League Ltd[1996] it is seen that any act in contradiction to any prohibition, restriction or statement of object included in the constitution of the company would not be invalidated. However in the judgment of the caseANZ Executors & Trustee Co Ltd v Qintex Australia Ltd[1990] it was held by the judges that the any breach of the constitution of the company would affect the powers of the director and the shareholders in the company.
3COMPANY LAW Application In the current case it was seen that the company’s constitution had two object clauses present. The first object clause was seen to be stating the company would only organize events in Western Australia only and the second object clause was seen as stating that for any transaction over the amount of $40,000 the approval of the boards is needed. Applying the provisions of the section 125 (2) of theCorporations Act2001in the current scenario it be seen that although Michael’s action of purchasing a computer program that would be saving both time and money and would be delivering a better and more professional services than the competitors of the company for $50,000 and Jenny’s action of entering into a contract with the Mayor of Sydney for the company to organize a fashion week in Sydney are in contradiction to the object clause yet both these actions could not be held as invalid. Applying section 126 of theCorporations Act2001Sarah has the complete authority as a managing director to discharge of the contract made by Jenny and Michael. According to this section under the express or implied authority of the company or on behalf of the company and individual can be exercising the company’s power for making, varying, ratifying or discharging any contract Applying the provisions of section 140 of theCorporations Act2001in the current scenario it can be said that the constitution of the company and the objective clause would be effective as a contract to Sarah, Michael and Jenny. Applying the judgment of the caseNews Ltd v Australian Rugby Football League Ltd [1996] in the current scenario it can be observed although both Michael and Jenny’s actions were in contradiction to the objects clauses of the constitution of the, it would not however be invalidated.
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4COMPANY LAW Applying the judgment of the caseANZ Executors & Trustee Co Ltd v Qintex Australia Ltd[1990], where it was held by the judges that the any breach of the constitution of the company would affect the powers of the director and the shareholders in the company, it can be held in the current case that for the breach of the objects clause of the constitution of the company Michael and Jenny would be held liable. Thus from the above discussions it can be concluded that Ultimate Computer Programs and the City of Sydney can enforce contracts against Events R Us Ltd, however Sarah as the managing director of the company can discharge those contracts. In furtherance Michael and Sarah would be held liable for their breach of the objects clause present in the constitution of the company. Conclusion Thus from the above discussions it can be concluded that Ultimate Computer Programs and the City of Sydney can enforce contracts against Events R Us Ltd.
5COMPANY LAW Reference Corporations Act 2001 News Ltd v Australian Rugby Football League Ltd [1996] ANZ Executors & Trustee Co Ltd v Qintex Australia Ltd [1990]