Question 1 [10 marks] Kruger is Heavy Machinery Sales Manager of JCI Ltd. He has frequently negotiated and signed contracts on behalf of JCI Ltd with Oppenheimer, Managing Director of Anglo-American...

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Question 1 [10 marks]

Kruger is Heavy Machinery Sales Manager of JCI Ltd. He has frequently negotiated and signed contracts on behalf of JCI Ltd with Oppenheimer, Managing Director of Anglo-American Corporation Ltd. Kruger and Oppenheimer have been in negotiations over the supply of an ore smelter by JCI to Anglo-American. On Friday 5 July at 10.00 am Kruger phones Oppenheimer and says “We will offer to sell you the ore smelter for $ 3.5 million. I’ll be at your office at 3pm to sign a contract.”

At 1 pm, Oppenheimer is having lunch at the Rand Club with Rhodes, who is another executive of JCI. During the lunch Rhodes says “Things are awful at JCI. Kruger has been making too many mistakes this year, his department hasn’t been trading profitably, and I heard he was going to get a nasty surprise at our lunchtime Board meeting. Frankly, I can’t see him surviving”. Oppenheimer goes back to his office and mentions the lunchtime conversation to Jameson, a fellow Anglo-American executive, saying that he (Oppenheimer) thinks that Kruger may have been ousted. Jameson says "Look, we're getting a good deal here, don't worry about what is going on at JCI". At 3pm Kruger arrives and signs the deal to sell the machinery to Anglo American for $ 3.5 million.

However on Monday the Financial News carries an article headed “JCI Heavy Machinery Sales Manager Fired at Board Meeting Last Friday”. Anglo American has tendered a cheque to JCI for $ 3.5 million, and has demanded delivery of the smelter, but JCI refuses to deliver it, saying that Kruger had no authority to sell the smelter because he had been fired at 1.30pm. Advise JCI as to their legal position, citing statutory and case law authority.

Question 2 [10 marks]

John, Paul and Ringo and George are musicians who operate out of a garage in Melbourne.They initially form a partnership, but then decide to incorporate, and register a company called New Beatles Pty Ltd of which John, Paul and Ringo own 30% each and George owns 10%.The business of the company is to play music, hold concerts and record CDs.All four brothers are also directors.Things go well for a year, but then disputes occur.Ringo comes to you and asks you advice in relation to the following:

Ringo has found out that a meeting of shareholders was held without giving notice to him and that at the meeting an ordinary resolution to change the company logo from a silver guitar to a red trumpet was agreed to by all his brothers.Ringo tells you that he objects to this step.

By another resolution – also agreed to by the other three brothers - the actual constitution of New Beatles Pty Ltd was changed so as to insert a provision which limits the company’s activities to Australia.Ringo tells you that he objects to this, as he believed the company should start touring overseas.

Ringo also discovered that over the past couple of years Paul has been giving his (Paul’s) girlfriend Sarah $ 500 per week from company funds, and that in total the company has suffered a loss of $ XXXXXXXXXXbecause of these payments.When Ringo raised this at a board meeting and proposed that the company’s lawyers be asked to initiate action against Paul and Sarah to recover the money, the other three directors voted against the proposal.

Finally, Ringo tells you that since he confronted his brothers about Paul’s conduct, they have begun holding board meetings without telling him (Ringo).

Advise Ringo as to what remedies he can obtain in relation to the above, citing legal authority. [You should assume, and therefore do not need to prove, that the payments by Paul to Sarah are a breach of the duty to act in the best interests of the company under s 181 of theCorporations Act 2001(Cth).]

Answered Same DaySep 13, 2020LAW220Charles Sturt University


Akansha answered on Sep 15 2020
55 Votes
Corporate law assignment
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Question 1 [10 marks]    3
Question 2 [10 marks]    5
Question 1 [10 marks]
The facts of the case are –
1. Kruger and Anglo American are business partners who have conducted business together in the past.
2. Cu
ently the manager of JCL, Kruger and the manager of Anglo American Oppenheimer were negotiating a deal for ore smelter.
3. Kruger the manger of JCL agreed to offer to sell ore smelter for 3.5 million, he also said that he will come to the office to sign the contract for the same.
4. The manager of Anglo American, Oppenheimer received information that the manger of JCL, Kruger had not been performing and will be sacked before the meeting that was scheduled.
5. Oppenheimer mentions that Kruger might be fired, but a colleague advices Oppenheimer that the deal is too good to be passed up upon and he should sign the deal i
espective of whatever has been happening at JCL.
6. Kruger a
ives at Anglo American still in capacity of JCL manager and signs the deal with Anglo American for supply of Ore smelter and takes the cheque to Kruger for JCL.
7. On Monday, the news
eaks that Kruger was fired on Friday.
8. Anglo American asks for the delivery of ore Smelter for which they have given a cheque for 3.5 million. JCL refuses citing that Kruger was fired at 1.30pm.
The issues in this case are –
· Is this a case of misrepresentation as Anglo American were still under the impression that Kruger was signing the contract under the impression that he was the head of marketing at JCL? At no point in the 3 o clock meeting where the contract was signed did Kruger mention that he wasn’t a part of JCL anymore, he acted in representation of JCL. Is Kruger responsible for mis-representation? Can JCL be held responsible for it (SALLANS, 2009).?
· Oppenheimer had an indication that Kruger would be fired, though he didn’t have any idea when Kruger would be fired. Should he have practiced due diligence in ensuring that Kruger had the authority after what he heard? If he hasn’t performed the due diligence, will he be held responsible for the loss to the company?
· What will be the status of the contract now that JCL refuses to acknowledge the contract?
· What will be the legal remedies available to both JCL and Anglo American and can the contract be suspended or is it enforceable at the part of Anglo American?
The concept of Due diligence is standard across all fields of law. It basically refers to the philosophy that anyone agreeing to get into a legal agreement or anything that has legal consequences should perform due care while entering it. One should ensure that the agreement or the party making the agreement has due capacity to enter the agreement and is not using or indulging in fraudulent practices while doing so. The concept of Caveat Emperor or let the buyer be beware is a concept which states that the buyer should ensure things which the buyer has the capacity to check. There should be reasonable investigation done (McKendrick, 2014).
Under the Australian Contract law, the legal capacity to contract is the person’s capacity to enter into a contract. Any contract that is entered without a party having the capacity to contract is infective. When there is a no legal capacity, a contract entered is ineffective. To avoid the contract a party on whom the onus of performing the contract is there has to prove that the other party was aware of the impairment or they should have known about the impairment. In the common law, it is generally assumed that there is capacity to contract unless otherwise proved (Carter, 1996).
Under misrepresentation, the party...

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