Legal Responsibilities in Relation to the Parties | Company Law

Running head: COMPANY LAW
COMPANY LAW
Name of the Student
Name of the University
Author Note

COMPANY LAW1
Introduction
This paper discusses the various legal responsibilities in relation to the parties. This
answer discusses responsibilities of directors such as performing actions in good faith, with
adequate diligence and care, and proper utilization of resources. This paper also discusses certain
fiduciary responsibilities of partners. This paper has also discussed the violations that may have
been caused by the parties in relation to their legal responsibilities with the help of several cases.
Finally, this paper has forwarded a discussion regarding what may be the legal consequences in
relation to the violation that have been caused by the parties in the given scenario. The aim of
this paper is to deliver a proper analysis regarding the aforementioned issues.
Question 1
Introduction
The primary issue is what may be the legal responsibilities regarding the parties.
Discussion
Section 180 as provided in the Corporations Act enforced in the year of 2001, states that
it shall be the responsibility of any particular officer or any particular director of an organization,
to perform their obligations with adequate diligence and care as a practical individual would, in
relation to the organization1.
Section 181 as provided in the Corporations Act enforced in the year of 2001, states that
it shall be the responsibility of any particular officer or any particular director to perform their
1 Corporations Act, 2001 (Cth)

COMPANY LAW2
obligations in good faith. The director or the officers should also direct their obligations in
relation to the organization for a proper purpose2.
Section 182 as provided in the Corporations Act, which has been enforced in the year of
2001, states that an improper utilization regarding the position must not be done by any
particular officer or any particular director of an organization, in order to achieve private
advantage or an advantage for anybody else. Such improper utilization regarding position should
also not be done by such officer or any director that may cause damage to the organization3.
Section 183 as provided in the Corporations Act that has been enforced in the year of
2001, mentions that if any particular officer or any particular director receives any kind of
information or data, then it shall be the responsibility of such officer or the director to not utilize
such information or data in an improper manner, in order to achieve a private advantage or an
advantage for anybody else. Such improper utilization relating to the information or data should
also not be done by the officer or the director that may cause damage to the organization4.
As per section 588G as provided in the Corporations Act of the year 2001, it may be
stated that when an individual fails to prevent an organization form incurring a debt, that
individual may cause a contradiction of this particular section, if that individual contain
knowledge as any rational individual would, relating to such debt, depending on the
circumstances of the organization5. Under this section, it has also been mentioned that an offence
may be committed by an individual, if that particular individual is the director during the time
when the organization incurs a debt, and such debt results in the insolvency of the organization.
2 Ibid
3 Ibid
4 Corporations Act, 2001 (Cth)
5 Ibid

COMPANY LAW3
As per the fiduciary responsibilities of partners relating to partnership businesses, it may
be said that the partners has the legal responsibility to perform actions that would be in the best
interests of the business. The partners shall be legally and privately accountable regarding the
obligations in the partnership business. It must be mentioned that a partner shall be held to be
accountable regarding the contracts, which are entered upon by the other partners. It is essential
that partners should perform actions in an honest manner and must always show good faith and
fairness towards the other partners. As per the duty to care, partners must perform their actions in
a rationally prudent manner while directing and managing the business. It is also mandatory that
a partner should fully disclose any probable risks or benefits to other partners that would assist
the other partners to give effect to informed decisions6.
Analysis
In the given scenario, Rosa and Sam are considered as the only shareholders and the
directors of the organization named SRT Pty Ltd. they are also the beneficiaries in relation to the
trust named Tipping Trust. The Trust continues with a business relating to locksmith. On the
other hand Mia and Charlotte are the partners in relation to their wholesale business. Rosa and
Sam afterwards sold shares and utilized a small part of the revenue to tour the nation of
Australia. Regarding Mia and Charlotte, their business became the wholesale supplier relating to
the locksmith business of Rosa and Sam. Without informing Mia, Charlotte altered tax invoices
and added ten percent extra charge. The payment of the extra amount is made in bank account of
Charlotte. Rosa and Sam hired their niece named Phillipa to run SRT Pty Ltd. Phillipa took
certain financial decisions to better the situation of the organization, even after knowing the bad
6 Kornelsen, Derek, et al. "Reciprocal accountability and fiduciary duty: Implications for indigenous health in
Canada, New Zealand and Australia." AILR 19 (2015): 17.