The process of registration as per the rules and regulations lay down by the Corporation Act 2001

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Contents
Solution 1....................................................................................................................................................2
Issue........................................................................................................................................................2
Law..........................................................................................................................................................2
Application..............................................................................................................................................4
Conclusion...............................................................................................................................................6
Solution 2....................................................................................................................................................6
Issue........................................................................................................................................................6
Law..........................................................................................................................................................6
Application..............................................................................................................................................7
Conclusion...............................................................................................................................................8
Bibliography................................................................................................................................................9

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Solution 1
Issue
i. Whether Canberra sue Heritage for the amount of $300,000 for the sale of 3 top of the
range armored vans at a cost of $ 100 000 each?
ii. Whether heritage can recover the value of diamonds given to Mary by No Worries?
Law
Whenever a company is formulated by following the process of registration as per the rules and
regulations lay down by the Corporation Act 2001 and the Australian Securities and Investment
Commission, then, the company is a separate legal entity in law. As per (Salomon v A Salomon
and Co Ltd, 1897), a company is an artificial person and thus requires real persons to run the
company effectively. (Krawitz, 2002)
The officers are the persons who carry out the act for the company in the name of the company. a
company director is the most prominent officer who has the authority to bind the company by his
actions. A director is a person who acts like a director and is inclusive of de facto and shadow
director as pet section 9 of the Act and as held in (Deputy Commissioner of Taxation v Austin ,
1998). (Latimer, 2012)
Directors are considered to be the agents of the company and the acts that are carried on by them
within their authority are held to be valid and binding upon the company. Thus, on the basis of
authority, the authority that is possessed by every company agent is bifurcated into to broad
heads: (Gibson & Fraser, 2012)
I. Actual – when the principal himself delegates authority upon the shoulders of his
agent, then, such an authority which is governed by an agent is called an actual
authority and is held in (Freeman and Lockyer v Buckhurst Park Properties (Mangal)
Ltd , 1964). Actual authority can be delegated to an agent in two forms:
A. Express – As per (Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd ,
1985), when an over expression is used by the principal to delegate the authority,
then, it is an actual express authority, that is, by words, written form or by
conduct.

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B. Implied – As per (Bell v Australian Eagle Insurance Co. Ltd , 1990)The authority
that is possessed by an agent as part and parcel of the express authority is
considered as implied authority. This author is attributed to an agent by
implication.
II. Apparent/Ostensible – as per (Panorama Developments (Guildford) Ltd v Fidelis
Furnishing Fabrics Ltd , 1971), when the Principal does not actually grants authority
to an agent, rather, makes a representation to the third party who makes the third
party believe that the agent holds the requisite authority to bind the principal, then;
the authority that is possessed by an agent is called an apparent/ostensible authority.
But, as per (Ogden & Co Pty Ltd v Reliance Fire Sprinkler Co Pty Ltd, 1973), if the
third party is aware of the fault in the authority of an agent, then, there cannot be any
ostensible authority that can be granted to an agent to bind the principal by his
actions.
Thus, every company agent can bound the company by his acts provided the acts are within his
authority.
As per section 125 of the Act, if the acts of the agent are found to be in not compliance with the
object clause of the constitution, then, such acts are still not regarded as null and have the ability
to bind the company by the acts of the agent. (Latimer, 2012)
Further, section 128-129 are the two important provisions which are framed in order to protect
the interest of an outsider.
As per (Gye v McIntyre , 1991), section 128 (1) submits simply states that an outsider has the
power to make assumptions laid down under section 129 of the Act. As laid down in (South
London Greyhound Racecourses Ltd v Wake [, 1931), these assumptions can be made even in
cases of forgery (section 128 (3) of the Act. however, as per section 128 (4), if the outsider is
aware of the defect, then, there cannot be any assumptions that can be raised. (Chapple & Lipton,
2002)
The first presumption that can be made by an outsider is that all internal governance of the
company are comply with (section 129). As per (Crabtree-Vickers Pty Ltd v Australian Direct
Mail Advertising & Addressing Co Pty Ltd , 1975) and (Vrisakis v Australian Securities

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Commission , 1993), an outsider can assume that directors are adequately appointed and have the
authority to bind the company by their actions. (Jane, 2015)
As per section 125, an assumption can be made that all company documents are genuine. As per
section 127, all documents (with/without seal) are genuine if signed by a secretary and director
OR 2 directors and is rightly analyzed in (Pyramid Building Society v Scorpion Hotels Pty Ltd ,
1996)
Also, as per the Indoor management rule laid down in (Royal British Bank v Turquand , 1856), if
any agent of the company who enters into a contract (who does not have the authority) with an
outsider then such a contract is valid and is binding upon the parties provided that the outsider
has an honest belief that the agent with whom he is entering into contract is the authorized
representative of the company and has no knowledge of the indiscrepancies in the authority of
the agent. But, as per (Morris v Kanssen , 1946), the rule cannot be applied if the outsider is not
acting with honesty. (Harris, 2015)
Application
The law is now applied to the facts of the case.
Issue 1
Heritage Pty Ltd (Heritage) is a company that deals with custom made jewellery, badges and
pins and runs from rented premises. Peter, Paul and Mary are its three directors/shareholders
with equal shareholding. Mary is also the Transport Manager as per the constitution of the
company.
The company does not have a common seal. The constitution submits that any contract above
$50,000 requires the approval of the board.
Thus, all the directors of the company are authorized to enter into contracts for the company but
of the value of the contract is more than $ 50,000, then, their authority is curtailed and they are
required to seek the approval of all the other directors of the company before undertaking any
contract and making it bound upon the company.