HI6027 Business Law: Analyzing Intention & Director's Responsibilities

This assignment provides a case study analysis of intention to create legal relations, referencing Kleinwort Benson Ltd v Malaysia Mining Corp Bhd, and director's duties, referencing ASIC v Stephen William Vizard. It explores the presumption of legal intention in business agreements and the statutory duties of directors under Section 183 of the Corporations Act 2001, particularly regarding the use of confidential information for personal gain. The analysis focuses on whether a letter of comfort constitutes a legally binding agreement and whether a director breached their duties by using confidential information for personal profit, contravening the Corporations Act 2001. Desklib provides students with access to similar solved assignments and study tools.

Intention to create Legal
Relation and Directors Duties
1. KLEINWORT BENSON LTD V
MALAYSIA MINING CORP BHD [1988]
1 WLR 799
2. ASIC v Stephen William Vizard [2005]
FCA 1037

Intention to create Legal Relation
An agreement has been reached in the course
of business affair and not in social or
domestic context it is presumed that the
contractual parties have intended to create
legal relations.
The party who is rebutting the presumption
has to show that there was a mere moral
obligation and not an enforceable contract.

KLEINWORT BENSON LTD V MALAYSIA MINING
CORP BHD [1988] 1 WLR 799
There was an agreement between the
plaintiff bank and the defendant to provide a
loan facility extending up to 10m to the
wholly owned subsidiary of the defendant.
The subsidiary had traded in Tin with respect
to the London Metal Exchange.
The subsidiary was subjected to liquidation
and the plaintiff made a claim against the
holding company.

Issue, Rules used and Decision
The issue in this case is to analyze the validity of
the letter of comfort. The case also analyzes the
presence of Intention to create a Legal relationship
Edwards v Skyways Ltd [1964] 1 All ER 494
Esso Petroleum Co Ltd v Mardon [1976] 2 All ER 5
A letter of comfort provided by the parent company
to a lender containing the clause that the policy of
the parent company in relation to the subsidiary
being in the position to meet its liability at all times
in relation to the loan which is to be provided did
not have any form of contractual effect

Directors Duties
Section 183 articulated in the CA 2001 provides
for one of the statutory duties owed by the
directors to the corporation which has provided
them with the power to manage its operations.
The section expresses that any person who
acquires information because of being or they
had been an officer or director or employee of a
corporation should never use the information
improperly in the pursuit of gaining advantage
for themselves or any third party or subject the
corporation on context to a disadvantage or loss

ASIC v Stephen William Vizard [2005] FCA 1037
The defendant was a non executive director in the
company Telstra Corporation Limited.
He had himself established the corporation with the
name of Creative Technology investment Pty Limited.
In this company the sole director and shareholder was Mr
Lay.
In this case it has been found by the court that the
dependent director had entered into three transactions
during 2000 as a result of obtaining confidential
information with respect to his capacity as a non
executive director of Telstra through which he got the
knowledge that the transactions are going to be
profitable.

Issue, Rules used and Decision
The issue in this case is whether there has
been use of confidential information on the
part of the director of the company for the
purpose of making personal gain and
contravening the provisions of Corporations
Act 2001 (Cth).
Section 183 articulated in the CA 2001
Section 1317E of the CA.