Assessment: Events R Us Ltd Contract Enforcement Analysis

This assignment analyzes whether Ultimate Computer Programs and the City of Sydney can enforce contracts against Events R Us Ltd. The analysis addresses issues of agency, authority, and the Corporations Act, focusing on the validity of contracts created by agents of the company. The assignment applies legal principles such as actual and ostensible authority, the indoor management rule, and statutory assumptions under section 129 of the Corporations Act. The analysis differentiates between contracts created by Michael and Jenny, considering limitations imposed by the company's constitution. The conclusion determines the enforceability of each contract based on the scope of authority and compliance with internal procedures, ultimately determining that one contract is enforceable while the other is not.

Discuss whether Ultimate Computer Programs and the City of Sydney can enforce the
contracts against Events R Us Ltd.
Issue: There is question the issue is if Ultimate Computer Programs and the city of Sydney can
enforce the contract created by Michael and Jenny on behalf of their company can be enforced
against Events R Us Ltd.
Rule: it has been provided by the corporations that a company enjoys its own separate legal
identity. This has been mentioned in section 124 of the Act. But it also needs to be noted in this
context that people have to enter contracts on behalf of their companies. Is that sometimes issues
may arise if the contract created by an agent of the company can be considered to be binding
against the company (Bostock, 2012). In this regard, it takes to be mentioned that the law does
not require that all the contract should be created in writing, however for the purpose of ensuring
that a contract created in writing is going to be valid and enforceable against the company is to
follow the requirements of section 127 related with the creation of a contract by a company. In
this context, it can be presumed that the signatures of all relevant person(s) have been obtained.
In accordance with section 127 and in such a case, the law provides that either party can rely on
the statutory assumptions (Banerjee, 2008). These assumptions have been made available to the
third parties entering into a contract with the company for providing protection to the outsiders
when they are dealing with a company. Hence, it has been provided by the Corporations Act that
is available to an outsider dealing with the company to assume that the requirements prescribed

by the company's constitution as well as any other replaceable rules are complied with. This
provision is presented in section 129 of the Act (Morrison, 1996).
It also needs to be mentioned in this context that the authority conferred on the agent falls under
the category of actual express authority (Freeman & Lockyer v Buckhurst Park Properties
(Mangal) Ltd., 1964), actual implied authority and the ostensible authority of the agent. The
relevant rule in order to deal with this situation is the indoor management rule (Crabtree-Vickers
Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd., 1975). This rule has
been provided by the court in Royal British Bank v Turquand, 1856.
The purpose of indoor management rule is to protect the outsiders while dealing with the
company regarding any irregularities that could be present in the internal management of the
company (Morrison, 1996).
Application: after going through the facts of this question, it appears that a contract has been
created by Michael on behalf of his company with Ultimate Computer Programs Ltd. . The
contract was for $50,000. On the other hand, it has been mentioned in the Constitution of the
company, Events R Us that if any person is going to enter into a transaction about $40,000, such
person will require to take the approval of the board of the company. However, Ultimate
Computer is not aware that such a condition has been imposed by the constitution of Events R
Us. There were no reasons for Ultimate Computer to suspect the rules of management of Events
R Us have not been complied with by entering into the transaction. Under the circumstances, and
in view of the provisions mentioned above, Ultimate Computer can rely on the statutory
assumptions that have been able to the outsiders while dealing with the company. Therefore
Ultimate Computers can believe that while entering into the transaction with Michael, all the
rules prescribed by the internal procedures of the company have been complied with. This has

been provided by the statutory assumptions mentioned in section 129, Corporations Act,
2001.
In case of a contract that has been created by Jenny with the mayor of Sydney, it needs to be
stated that according to another clause that has been mentioned in the company's constitution, it
has been provided that Events R Us will be organizing humans only in Western Australia.
Therefore, a limit has been imposed on the ability of the company to enter contracts regarding
the events that take place outside Western Australia. In view of this restriction, the contract
created by Jenny with the mayor of Sydney can be described as beyond the scope of authority
that is available to the company and the agents acting on behalf of the company.
Conclusion: in view of the legal rules that have been discussed above, it can be concluded in this
question that the contract that has been created by Michael with Ultimate Computer Programs
can be just as valid contract and therefore it is legally enforceable against Events R Us. However,
the same conclusion cannot be made regarding the contract that has been created between Jenny
and Sydney's mayor. The reason is that it is beyond the scope of authority of the company and its
agents to enter into a contract related with an event that is going to take place outside Western
Australia in view of the restriction imposed by the company's constitution.

References
Banerjee, P. (2008). Delegating Authority to a Dishonest Agent. SSRN Electronic Journal.
doi:10.2139/ssrn.814825
Morrison, D. (1996). The Continued Role of the Common Law Indoor Management Rule Due
Inquiry Exception. QUT Law Review, 12(0). doi:10.5204/qutlr.v12i0.409
Bostock, T. (2012). The Corporations Act 2001. Amicus Curiae, 2002(39).
doi:10.14296/ac.v2002i39.1303
Morrison, D. (1996). The Continued Role of the Common Law Indoor Management Rule Due
Inquiry Exception. QUT Law Review, 12(0). doi:10.5204/qutlr.v12i0.409
Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975)
133 CLR
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480
Royal British Bank v Turquand (1856) 6 E&B 327