Commercial and Corporations Law Assignment Solution - LAW 8500

This document presents a comprehensive solution to a Commercial and Corporations Law assignment. The assignment addresses two key legal issues: the certainty required for the creation of a valid trust and the liability of a company for the actions of its managing director under agency law. The first part of the assignment analyzes the principles of certainty of intention, subject matter, and object, drawing on the case of Knight v Knight and others, to determine the validity of a trust involving shares. The second part explores the concept of agency, including express, implied, and ostensible authority, and assesses the liability of a company for the actions of its managing director in dealings with a third-party architect firm. The solution provides detailed legal analysis, applying relevant case law and legal principles to the given factual scenarios to arrive at reasoned conclusions. The assignment demonstrates an understanding of the legal concepts and their practical application in commercial and corporate contexts, offering a valuable resource for students studying law.

Running head: COMMERCIAL AND CORPORATIONS LAW
COMMERCIAL AND CORPORATIONS LAW
Name of Student
Name of University
Author Note

1COMMERCIAL AND CORPORATIONS LAW
Table of Contents
Answer 1..........................................................................................................................................2
Issue.............................................................................................................................................2
Rule..............................................................................................................................................2
Application..................................................................................................................................4
Conclusion...................................................................................................................................4
Answer 2..........................................................................................................................................5
Issue.............................................................................................................................................5
Rules............................................................................................................................................5
Application..................................................................................................................................6
Conclusion...................................................................................................................................7
Reference.........................................................................................................................................8

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Answer 1
Issue
In this case the main issue is finding if there is sufficient certainty for the creation of a
trust.
Rule
An express trust can be defined as a trust that has not been imposed by the court rather
has been created for a specific purpose. The trust can be seen as an arrangement of a property
controlled by a person for the advantage of people. The person controlling the property is called
a trustee and the people for whom the advantages are made can be called the beneficiaries. The
creator of a trust can be known as trustor, settler or grantor. There is another type of trust that can
only be created by the court’s operations. This type of trust is known as implied trust.
The trust law of Australia can be seen to be developed from the English Trust law . Under
the trust law a trustee is required to manage and hold property for another person within a legal
agreement as provided by the trust deed. A trustee is under the obligation to be acting in
accordance with the deed even though is the legal owner of the property on behalf of the
beneficiaries. The Australian trust law follows the three certainty rules which can be seen to be
originated from the English trust law. In the famous case Knight v Knight (1840) the principles
of three certainties in the English trust law have been laid down. In this case it was decided that
in order for creating a valid trust the trust instrument should be following three principles of
certainty. These principles are certainties of intention, certainties in relation to subject matter and

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certainties of object. The principles of certainty was further seen to be discussed in the case
Palmer v Simmonds (1854).
The principle of certainty of intention has been discussed in the case Jones v Lock [1865]
and in Wright v Atkyns (1823). In the case it was decided that for the determination of the
certainty of intention or words can be done by the consideration of the nature of the language
that has been used in the agreement. The intention of the trustor needs to be clear to be creating a
trust. However the word trust is not needed to be mentioned.
The next certainty is the principle of subject matter certainty. This principle has two main
conditions that needed to be fulfilled. The first condition is that there shall be certainty regarding
the part of the property fixed for trust and the second condition is the certainty of the extent of
the interest of the beneficiaries. It is important for a trustee to have the knowledge regarding the
composition and constituents of the trust. There may be a result in breach of trust by the trustee if
the trustee is seen to be failing in dealing with the property of the trust. In furtherance the
certainty in the knowledge for the beneficial interest of each beneficiary can help the trustee have
clear ideas about the amount of benefit a beneficiary is entitled to by the way of distribution of
trust and the amount of income needed to be collected or paid. This principle was discussed in
the case Boyce v Boyce (1849) and Re London Wine Co (Shippers) Ltd [1986].
The most crucial criteria is the certainty of object. The certainty of objects defines that for
the interest of the beneficiaries under the trust must be clearly expressed by enabling for the
trustees to be determining. The trustees can be held personally responsible for and liable for
replacing the assets if they are found to be distributing the profits or benefits of the trusts to any
non-object.

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Application
It can be observed in the case that Basil, a registered holder of almost 950 shares in the
Basil Electrical Co that has issued a share capital of 1,000 shares, had orally been declaring
himself to be the trustee in relation to the 5% of the share capital issued. There were no
identification of the 50 shares that were remaining.
In the current case two conditions are needed to be taken into consideration. The first
condition the contract term of any trust would be held enforceable among two or more parties in
case of any findings of the trust. The second criteria is there has been no difference in the
treatment of th fifty shares that were subjected to the trust. As can be seen in the case Re London
Wine Co Ltd (1986) for the validation of the constitution of the trust the separation of non-trust
property from the trust property is necessary.
It can be seen that 950 of the 1000 shares were owned by Basil and he did not have any
intention to create the trust of that 50 shares for himself. The need of certainty can be seen to be
met in this case and there was a creation of valid trust. The creation of a valid trust was firstly
because of the need to enforce the terms of employment in the contract and secondly the
declaration was validly made. Hence it can be said that no tangible difference between the trust
and the shares can be held as void because of the lack of segregation of the shares. Thus it can be
seen that the shares in this case were all similar and the lack of segregation could not make the
trust to be invalid.
Conclusion
It can be concluded in this case that because of the presence of certainty the validity of
trust was present.

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Answer 2
Issue
In this case the main issue is whether the company that has been established by Susie and
Tina can be held liable for the fees that are needed to be paid to the architecht.
Rules
An agency can be defined as the relationship between two parties considered as the
principal and the agent, wherein the agent can be seen to be acting on behalf of and under the
principal’s control. While dealing with other parties an agent can be seen to be acting for or
represent the principal under the authorization of the principal. Therefore it can be seen in the
agency that there are two types of contract being created one is between agent and the principal
and other between the principal and 3rd party through the agent.
An agency can be seen to be created in three ways by the way of express authority,
implied authority and ostensible authority. As seen in the Hely- Hutchinson v Brayhead Ltd
(1968) the extent and nature of th authority under the express actual authority is provided by the
principal. The principal cannot be held liable for the act of the agent if the agent is found to be
acting beyond the principal’s authority. However for the protection of the 3rd party’s interest the
common law can extend the scope of the authority of the agent while making the principal to be
binding to the 3rd party.
In implied actual authority, an agency can be presumed to be created by the actions or
conducts of the principal where it is implied by the actions or conducts of the agent that the agent
has the authority to act on the behalf of the principal while the action or conduct of the principal

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has been ratified. This can be seen in th case Sweeney v Boylan Nominees Pty Ltd [2006] HCA
19; (2006) 226 CLR 161; (2006) 227 ALR 46; (2006) 80 ALJR 900 (16 May 2006). In this type
of agency it can be seen that the principal can be held to be bound by the actions or conducts of
his agents by his own express authority.
It is considered by the law in ostensible authority to give the agents authority to be
performing on behalf of the principal even though no consent has been given to the agent by the
principal. This authority was discussed in the case Crabtree-Vickers Pty Ltd v Australian Direct
Mail Advertising & Addressing Co Pty Ltd (1975) 133. An ostentible authority can be seen to be
arising in two circumstances firstly if by his words or actions the principal has been seen to be
making the 3rd oarty believe in the authority of the agent to acton behalf of him. Secondly if it is
seen that the agent had previously received authority but after the lapse of the authority the 3rd
party was not informed. In both cases the principal would be responsible for the actions of his
agent.
Application
In the present case it is seen that Susie and Tina had formed a company for land
acquisition and development. The board of directors consisted of the two of them and Tina was
the managing director of the company hence she can be regarded as the ostensible agent.
Tina employed a 3rd party that is an architect firm for the designing of the plans. On the
company’s behalf Tina is seen to be transacting with the firm. The bill issued by the firm in
company’s name for the services rendered was left unpaid and the firm was seen to be suing the
company.

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The company can be seen as the principal and the firm is the 3rd party with whom Tina
was dealing as the managing director. It was never acknowledged to the firm that Tina was never
appointed to the position of the managing director. As there was no declaration by the company
to the 3rd party thus Tina can be considered as the ostensible agent of the company.
Conclusion
It can be concluded that the company can be held responsible for the actions of Tina and
will be liable to pay the fees to the architect firm.

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Reference
Boyce v Boyce (1849) 16 Sim 476
Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975)
133
Jones v Lock [1865] 1 Ch App 25
Knight v Knight [1840] 49 ER 58
Palmer v Simmonds [1854] 2 Drew 221
Re London Wine Co (Shippers) Ltd [1986] PCC 121
Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; (2006) 226 CLR 161; (2006) 227 ALR
46; (2006) 80 ALJR 900 (16 May 2006).
Wright v Atkyns (1823) Turn & R 143