BTC1110 Study Guide - Final Guide: Legal Personality, Apparent Authority, Trading While Insolvent
15 Jun 2018
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Department
Course
Professor
Company law
Since the company was registered as a company, it exists as a separate legal entity capable of entering into contracts
and it can be sued or sues on those contracts. This concept of separate legal entity was established in Salomon v
Salomon & Co Ltd an recognised in s124(1) of the Corporation Act. This means that the company has legal capacity
to…
Company must act through its directors, officers and other agents, thus the first issue is when is the company is
liale for its agets ats?
S129 outlied that a perso dealig ith the opa are etitled to ake assuptios that
(1) The opas ostitutio or replaeale rules hae ee oplied ith
(2) Aordig to A“IC reords details, diretors ad seretar has ee dul appoited ad has authority to
exercise the powers and perform the duties customarily exercised of performed by those in positions
(3) Anyone who is held out by the company to be an agent has been duly appointed and has authority to
exercise power an perform the duties
a. Case – Panorama Developments v Fidelis Furnishings
i. Company's secretary (B) hired cars from P
ii. ithi apparet authorit of the seretar
iii. hae ostesile authorit o adiistratie atters
(4) The agent properly perform duty to their company
(5) The relevant document has been duly signed
(6) The agent has authority to issue a document on its behalf
S128(3) - These assumptions can be made even if the director, officer has acted fraudulently or had forged a
document in connection with the dealing
S128(4) – a person loses the right to rely on s129 if they or suspect that the particular assumptions are not correct
Thus, third party acting in good faith can presume that the person with whom they are dealing has authority to bind
the company and all procedures and documents are in order
The first issue is had the diretors reahed their statutor dut of are ad diligee i relatio to…?
Directors will have acted with due care and diligence if they:
1) Have made judgement in good faith for a proper purpose – s180(2)(a)
2) Have no personal interest – s180(2)(b)
3) Properly inform themselves – s180(2)(c)
4) Rationally believe the decision is in the best interests of corporation – s180(2)(d)
Cases
ASIC v Healey (478)
• Mistake account approx. $4.45 Billion in liability
• Whether in the circumstances, the obligation to exercise due care and diligence required the
directors to personally scrutinise each line in the accounts
• Directors had failed to take all reasonable steps to ensure compliance with the guarantees
ASIC v Hellicar (480)
• Failed to exercise due care and diligence in the release of information to the market
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Since the company was registered as a company, it exists as a separate legal entity capable of entering into contracts and it can be sued or sues on those contracts. This concept of separate legal entity was established in salomon v. Salomon & co ltd an recognised in s124(1) of the corporation act. This means that the company has legal capacity to . S128(3) - these assumptions can be made even if the director, officer has acted fraudulently or had forged a document in connection with the dealing. S128(4) a person loses the right to rely on s129 if they or suspect that the particular assumptions are not correct. Thus, third party acting in good faith can presume that the person with whom they are dealing has authority to bind the company and all procedures and documents are in order. Asic v healey (478: mistake account approx.
