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Contract Execution in Business Associations

   

Added on  2020-03-28

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LAW OF BUSINESSASSOCIATION[Pick the date]
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LAW OF BUSINESS ASSOCIATIONQuestion 1IssueThe key objective is to ascertain if an enforceable contract has been enacted between the company and John in relation to the sale of motorcycle considering the applicable sections of the CorporationsAct 2001 (Cth).Relevant RuleIt is noteworthy that in accordance with s. 124(1) Corporations Act, a company possesses therequisite legal capacity to enact contracts and documents. This power is implemented through theauthorised agents1. However, Corporations Act highlights the exact manner in which the documents or contracts need tobe executed. In this regards, s.127 is critical since it highlights the manner of execution ofdocuments. The execution of documents may be done using a common seal or without the same.Section 127(1) covers the procedure to be followed if the contract is to be implemented without thecompany seal2.In accordance with s. 127(1), the document would be considered as legally valid if the same has beensigned by either of the officials combinations outlined s follows3.Company’s Directors (minimum two)A company director along with a company secretaryWhen dealing with proprietary company in which the only company director exists, then thedocuments could be signed by the sameSection 127(2) deals with documents executed using company seal (or common seal) while section127(4) highlights the power of the company constitution to outline alternative mechanisms fordocument execution4.Once a contract has taken place as s. 127(1), then it is binding on thecontracting parties and non-confirmation with the mutual obligations would amount to breach ofcontract5.1Barkoczy,Stephen, Foundation of Taxation Law 2015, (North Ryde, CCH, 2015)2Marc Hertz, ‘Importance of execution of contracts by companies’, Thomson Reuters CLEARDOCS (online), February 2015<https://www.cleardocs.com/clearlaw/company-registration/execution-of-contracts.html> 3Amanda Seaton and Jarrod Wilksch ‘Putting pen to paper – execution under section 127’, Johnson Winter & Slattery(online), July 2015 < https://www.jws.com.au/en/acumen/item/660-putting-pen-to-paper-execution-under-section-127>4Deutsch, Robert, et. al., Australian tax handbook. (Pymont, Thomson Reuters, 2015)5Gilders, Frank, et. al., Understanding taxation law 2015. (LexisNexis, Butterworths 2015)
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