Corporate Act 2001 and Business Law: Case Studies and Legal Analysis

This report examines business law through the lens of the Corporate Act 2001, focusing on two case studies. The first case involves Michelle and Tim, owners of Motorbikes Pvt Ltd, and a contract dispute over a motorbike purchase. The report analyzes the directors' duties under the Act and the potential consequences of breaching a contract. The second case features Gerard and Sylvia, who purchase a cake shop from George. The report addresses whether George can reclaim the shop after the sale, considering the legal implications of the Corporate Act 2001. The report concludes that both companies and individuals are bound by the contracts they create and that breaching the corporate act can lead to penalties. The report references various books and online resources related to business law.

Law of business association

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
QUESTION 2...................................................................................................................................2
CONCLUSION................................................................................................................................3
REFRENCES...................................................................................................................................5
.........................................................................................................................................................5

INTRODUCTION
Business entities are structured in a variety of legal forms, including corporations,
partnerships and limited liability companies within others (Heffron And et.al., 2018). Moreover,
Business associations are formed as well as governed largely under state law and this guide
therefore focuses primarily on state law resources. This report is based on two case study of
Michelle and tim as well as another one is Gerard and Sylvia. Both will going to discuss about
Corporate act 2001 as well as their will also resolve on the basis of respective act.
QUESTION 1
Issue - Given case study is of Michelle and Tim who are passionate towards motorbikes.
They owned an organisation named as Motorbikes Pvt Ltd. In this Michelle is the director and
Tim is company secretary (Swanson and Frederick, 2016). They purchase and sell motorbikes as
well as repair them. John is the person who want to sell bike so he approach Tim and he agree to
purchase for $5,000. thus, Michelle and Tim both sign contract for buying motorbike but two
days later, Michelle think they are paying much amount to John and want to come out of the
contract. Although, in this case major issue is related to breaching of contract because Michelle
feel that they are paying high amount for motorbike. Thus, by implementing Corporate act 2001
contract case between John, Michelle and Tim will be solve.
Rule - Corporate Act 2001 is an act of the commonwealth of Australia that set out laws
and regulation for business entities. Respective act mainly deals with companies but also with
other entities like partnerships as well as other managed investment schemes. The act is primary
basis of Australian corporations law. Apart from this there are some general duties of director
given under Corporate Act 2001 in relation to business judgement (General Duties of Directors -
Corporations Act 2001 (Cth), 2019). Are as follows:
 Have to take decision in good faith as well as for proper purpose.
 Should not involve personal material in the subject matter of decision process.
 Rationally accept that the judgement is in the best interests of the corporation
(Gottschalk, 2018).
 Inform themselves about the subject matter of the judgement to the extent they
reasonably believe to be appropriate.
1

Analysis - Thus, according to the Corporation act 2001 Motorbike Pvt Ltd is bound by
the contract made by Tim and Michelle (Allen and Kraakman, 2016). Breaching of contract is an
illegal activity and Michelle as an director of Motorbikes Pvt Ltd. Is liable for bounding of
contract. If Michelle breach contract then John will sue him and court can impose heavy fines in
relation to breaching of the Corporation Act 2001 as well as have the ability to send officeholder
i.e., Michelle and Tim to prison. Because corporate regulators of Australia investigate
organisations as well as directors for any potential corporate crimes like breach of contract.
Conclusion - From the entire discussion it has been concluded that, Michelle is bound for
the contract and they have to purchase bike within the amount fix in advance (Callison, 2015). If
contract will not completed by the company then John can Sue Michelle and Tim both in case of
breaching of contract as well as heavy fine will be impose by court. For instance, X and Y are
two person who are passionate about cars so they open their organisation cars Pvt. Ltd.. one day
G is the person who come to Y and wish them to sell their car for $ 10,000 and he get agree. As
well as contract of this made by X and Y but after few days X think that they are paying high
amount for cars and want to get out of the contract. But as per the Corporate Act 2001, X and Y
cannot come out of the contract because it is their legal duty to fulfil it and purchase car from G
on the agreed amount. Thus, in the case of Michelle he have to purchase motorbikes from John
as per the legal contract make by them because breaching of contract is illegal activity for which
John and sue both of them in the court.
QUESTION 2
Issue - Gerard and Sylvia are the two person who love cakes and they recently decided to
purchase cake shop from George. They both finally register an organisation which is named as
“cakes Pvt Ltd” with Australian Securities and Investment commission (Kapottos and Youngner,
2015). Then, after get registered Gerard is listed as an director of respective cake company and
Sylvia is the company Secretary. On the day of signing contract in relation to purchasing of Cake
shop from George, Gerard sign contract with stamp of Cake Pvt Ltd as an witness as well as
another witness is Sylvia. After few day of contract, he should not have to sold their cake shop
now he want it back. Thus, major issue in the case is that George want to take cake shop back
from Gerard and Sylvia after selling legally to them.
Rule - Corporation Act 2001 refers to an act of Commonwealth of Australia that sets out
laws dealing with organisations at both interstate and federal level. This law mainly deals with
2

those business entities which are deal in partnership as well as managed investment schemes.
Therefore, it regulates matters of such companies which includes formation and company's
operation, takeovers and fundraising etc. As per this law, private organisations which have not
more than 50 shareholders are not able to attract public investors (Merry, Davis and Kingsbury,
2015). While public companies through offering shares can raise their capital as well as there is
no restriction for them on number of shareholders. Therefore, public organisations are considered
to be more stringent disclosure than proprietary companies and reporting requirements as per the
Corporations Act 2001. It generally includes four type of companies that are- Public no liability
company; Unlimited company with share capital; Organisations limited by share; Public
enterprises that limited by guarantee.
Analysis - According to Corporate Act 2001, George is bound for the contact and he
cannot take shop back from Gerard and Sylvia. Because an individual who has sell their property
to other are no more owner of it (Reardon, 2015). Thus, George now cannot take any decision for
Cake Pvt Ltd as well as not able to take back shop from Gerard and Sylvia without their
permission. For example X is owner of a bakery shop, G and H are two person who have interest
in Baking they want to purchase shop from X. After some discussion about it X get agree to sell
his shop to them. By going through entire legal process ownership of shop has been transfer to G
and H. after some days X think that decision of selling Bakery shop was not correct and he want
to take that again. But according to corporate act 2001, X is no more owner of the Bakery shop
and cannot take any decision in relation to it.
Conclusion – From above discussion it has been concluded that, in relation to the
respective case of George, he cannot take shop from Gerard and Sylvia without their permission
because legally Cake Pvt Ltd is their now (Baskerville and Baskerville, 2018). As well as George
cannot pressurise to them for selling their shop according to the legal bodies of Australia.
CONCLUSION
From the above discussion of case study first of Tim and Michelle it has been identified
that, contract between John and Motorbikes Pvt Ltd will not breach because if it happen then
John case sue both of them. Moreover, for breaching of Corporation law court can charge fine as
well as also have ability to send officeholder i.e., Michelle and Tim to prison. Thus, Tim and
Michelle are bounded for the made by them of purchasing bike. Apart from this, on the basis of
3

case study second it has been concluded that George is bound for the contract done by him with
Gerard and Sylvia. Because he sell his shop by doing proper contract with this as well as legal
formalities relates to that are also done due to which he cannot take shop back without
permission of George. According to corporate Act 2001, an individual is no more owner of any
property after selling it to other. .
4

REFRENCES
Books and Journal
Heffron, R.J. And et.al., 2018. A treatise for energy law. The Journal of World Energy Law &
Business, 11(1), pp.34-48.
Allen, W. T. and Kraakman, R., 2016. Commentaries and cases on the law of business
organization. Wolters Kluwer law & business.
Kapottos, M. and Youngner, S., 2015. The Texas advanced directive law: Unfinished
business. The American Journal of Bioethics. 15(8). pp.34-38.
Reardon, K. A., 2015. Computerized writing assessment technology: Business law students
weigh in on its use in the college classroom for developing workplace-ready
writing. Computers and Composition, 38, pp.32-44.
Baskerville, D. and Baskerville, T., 2018. Music business handbook and career guide. Sage
Publications.
Callison, J. W., 2015. Seeking an Angle of Repose in US Business Organization Law: Fiduciary
Duty Themes and Observations. U. Pitt. L. Rev., 77, p.441.
Gottschalk, P., 2018. The Investigation Business. In Investigating White-Collar Crime (pp. 213-
237). Springer, Cham.
Swanson, D. L. and Frederick, W. C., 2016. Denial and leadership in business ethics
education. Business ethics: New challenges for business schools and corporate leaders,
pp.222-240.
Merry, S. E., Davis, K. E. and Kingsbury, B. eds., 2015. The quiet power of indicators:
measuring governance, corruption, and rule of law. Cambridge University Press.
Online
General Duties of Directors - Corporations Act 2001 (Cth), 2019.[Online].Available
Through:<https://lawhandbook.sa.gov.au/ch05s04s02.php>
5