Law For Commerce

Law For Commerce

Table of Contents
Case study-1...............................................................................................................................2
Case study-2...............................................................................................................................2
Case study-3...............................................................................................................................3
1

Case study-1
a) Under section 588 g of the corporation act 2001, it has been stated that it is the duty of the
director to prevent insolvent trading by the company. This section applies if the director of
the company incurs debt knowing that the company is insolvent or the company becomes
insolvent because of the debt incurred by the director and the director had knowledge of the
fact that the company is insolvent or will become insolvent after incurring the debt. Serena
the director of Rafa borrowed money by using credit. Buying stocks allows one to leverage
the gains from those stocks. However, leverage can be dangerous if the stocks go down in
value. Serena being the director of the company was well aware of the company's financial
conditions and took this drastic step of buying stock on credit and consequently, the company
goes into liquidation. Section 588 g has clearly stated the fact that if after knowing the
company's insolvency the director incurs any loan he will be prosecuted under the act.
b) The Victorian court of appeal has upheld the decision of the Supreme Court of Victoria
regarding the prosecution of Serena as she has been found guilty of insolvent trading. The
corporation act 2001 has prospective effect. Serena is guilt as her conduct has enhanced the
insolvency condition of the company. In the future, the courts of Australia can use this case
as a reference to decide other cases based on the same issues. The previously decided cases
constitute the precedent and precedents of the superior courts are binding on the inferior
courts.
Case study-2
Issue
In this particular case Jane was the one who offered Andrew to buy her book for $80 and had
specifically mentioned in her post on facebook that if Andrew is willing to purchase the same
he can revert back with a message. However, Andrew called her up and dropped a message
proposing to buy the book at $70 during her shift time which annoyed Jane. Jane afterward
rejected his offer. Andrew then tried his luck of finding out another second-hand book but
was unsuccessful. Andrew again contacted her for the book to which Jane has replied that she
has sold her book.
Rule
2