Assignment BULAW2611 Organisations Law Semester 1, 2012 The Business School Purpose The purpose of the assignment is to get you engaged in research into laws relating to company and partnership in...

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Assignment BULAW2611 Organisations Law
Semester 1, 2012
The Business School

The purpose of the assignment is to get you engaged in research into laws relating to company and partnership in Australia and to enable you to apply legal problem skills.
The Assignment is worth 30% of your total mark for the BULAW2611 course.
It is important for you to have time to think through how to structure and present arguments, and to review and discuss what the law is or should be in a particular area. Whilst discussion with others is encouraged, the final piece of work must be your own.
Word Limit
2,300-2,500 in total (assignments exceeding the word limit may not be marked and may be returned to the student for re-writing; assignments less than the required length will risk not covering the topic adequately and may result in a fail). Do not include synopsis, references or bibliography in the word count.
Note: All University of Ballarat rules relating to referencing, citation and acknowledgement must be complied with.
Due Date
Please see your lecturer for submission arrangements. Assignment is due on Tuesday, 22nd May 2012.
ABC Pty Ltd is situated in Australia. It has three directors: David, Sarah and Chen. David had signed a mortgage and guarantee in favour of Easyloan Bank Ltd on behalf of ABC Pty Ltd. The guarantee secured a personal loan made by Easyloan Bank Ltd to David. The mortgage was over ABC Pty Ltd’s land in Ballarat. Both documents were signed by David and appeared to have been signed by Sarah. However, David had forged Sarah’s signatures on the documents and Sarah was completely unaware of the transaction.
ABC Pty Ltd’s constitution provided that such loan agreements could only be executed if authorized by directors’ resolution. No such resolution had occurred, and indeed neither Sarah nor Chen knew about the mortgage and guarantee.
Easyloan Bank Ltd had not undertaken searches to determine whether David and Sarah were directors of ABC Pty Ltd prior to accepting the mortgage and guarantee as security and making the loan to David.
David has failed to repay the loan and has now left Australia. Easyloan Bank Ltd is attempting to enforce the guarantee and mortgage against ABC Pty Ltd.
  1. Discuss whether Easyloan Bank Ltd can enforce the guarantee and mortgage (contracts) against ABC Pty Ltd. You should support your answer with reference to relevant sections of the Corporations Act 2001 and to relevant cases. (20 marks)
  1. Would your answer to question (a) above be different if ABC were the partnership firm of David, Sarah and Chen? Justify your answer. (10 marks)
Answered Same DayDec 20, 2021


Robert answered on Dec 20 2021
3 Votes
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The legal actions which are to be taken against David should be according to the laws and
egulations of the Australian State. The activity done by David, i.e. of taking loan form the
Easyloan Bank ltd after mortgaging a certain amount of assets of the ABC Pty ltd. is illegal and
fraud as he did not have the consent of the other directors of the company. And to the top of it
all, he had forged the signature of other director in order to get the loan. Therefore, the bank can
take a legal action the company and David as well.
As it is being mentioned in the case, the Easyloan bank ltd had provided a loan to the
ABC Pty ltd. company. The Easyloan bank can easily enforce the guarantee against the
Pty ltd Company. It has been mention in the laws of the Australian state, that any
company which is unable to pay back the loan to the bank, strict action can be taken
against the same. In the Section 67 of the corporation act of 2001, in Australia, the lender
of the money (Easyloan bank ltd in the mentioned case) can take the responsibility or the
initiative of enforcing the guarantee that has been given by the bo
ower of the money
(ABC Pty ltd.) Therefore, the action taken by the Easyloan bank is very much appropriate
and also helps them in recovering the amount of loan given by them to the Pty ltd
David was one of the directors of the firm, and he had taken the loan without the
prior consent of the rest of the directors of the company. As per the articles of association of the
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company and also regarding the section 43 of the corporation act, a company or a firm can take
loan from the lender of the money only if there is prior consent of at least 2 directors of the
company. That is what has been done in the case of ABC Pty ltd. There is the signature of only 2
directors. Though, the other director on the case was unaware of the whole transaction, yet the
signature of the same was being found in the contract. David had made sure that he has forged
the signature of at least one of the remaining two directors of the company. No company or a
ank will grant a loan to the person or the official who has been seeking for the same until and
unless, there is signature of at least two directors of the company. David had forged the signature
of Sarah’s signature in the required document and had taken loan from the bank. Sarah the other
director of the firm was totally unaware of this particular transaction. It is wrong in the part
David to not to inform the other two directors about the particular transaction. This loan taken by
David was for his personal use and that is why he had thought not to inform the other directors of
the firm. He had taken the loan in the name of the firm. So, when David was unable to pay the
loan back, the Easyloan bank had to take a strict action against the firm which was not at all
favorable for them. And to the top of it all, David had left Australia, when the Easyloan had
taken the legal action against the firm.
As per the rules of a Pty ltd company or a firm, the action taken by the company will
e considered as the action taken by the directors of the company. And for this reason, it is the
Pty ltd firm which has to face all the difficulties and the problems. As the loan was taken in the
name of the firm, all the legal issues regarding the transaction has to be faced by the same. And
this is why the Easyloan bank had decided to take the action against the company. And also the
mortgaged items of the firm which was now lying with the bank as the guarantee has been
confiscated by the bank. As per the Australian laws of the banks, it is mentioned in the clause 2,
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that if any firm or a company is not being able to pay the required amount installment or the total
loan, the bank should confiscate or seal the items that have been mortgaged by the company or
the fire, in order to take the loan from any respective bank.
According the Division 7 52A, if any transaction has been made by a company, by
making a forged a signature of the other directors, that transaction would be considered to be
illegal. The actual transaction in the mentioned should...

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