University : Swinburne University of Technology UniLearnO is not sponsored or endorsed by this college or university.
Subject Code : LAW20019
Assignment Task :

ANSWER ALL QUESTIONS 

Question 1 

Homer is an accountant and a non-executive director of Simpson Homes Pty Ltd, a home renovation  company. The executive director is Bart, a qualified builder. Marge is the other non-executive director.  Homer has a busy accounting business and is therefore unable to attend all the directors’ meetings.  When Homer does attend meetings, he asks very few questions and generally agrees with whatever Bart  proposes. The company was awarded a large contract to renovate several government-owned houses.  Soon after the work started, it become obvious that the company would lose considerable money on the  contract. The extent of the required work had been grossly under-estimated. Marge had queried the  contract price before the contract was entered into but was assured by Bart that the contract would be  profitable. It was also learnt that one of the main sub-contractors engaged by Simpson Homes to work  on the government contract was a plumbing and electrical company owned by Bart’s son, Millhouse. 

Discuss whether any of the directors have breached any of their duties, including any actions that  may be taken by ASIC. 

Your answer must include case law (where relevant) and the provisions of the Corporations Act  2001. 

 

Question 2 

Advise Banksia and Mario of their legal rights in each of the following situations (treat each situation  in part (a) and part (b) separately). 

 

Part (a) 

Banksia Pty Ltd wished to build a new office building on land it owned in Hawthorn. It entered into a  building contract with Mario Bros Pty Ltd (Mario) for $1.5 million, with a 6 months completion time.  Work commenced on 1 June 2019. On 1 October 2019, an unusually strong cyclone caused a lot of  building damage in northern Australia. As a result of the unexpected increase in demand for building  workers needed to fix the many damaged buildings there, Mario had difficulty finding enough  tradespeople to complete the contract by the due date on 1 December 2019. This resulted in completion  being delayed till the 30 June 2020 and the cost of the project also increased by $250,000. 

Mario wishes to claim the additional costs of completing the project. Advise Banksia and Mario of their  legal rights. 

 

Part (b) 

Assume that Mario had stopped work when they had completed three-quarters (¾) of the work because  they realised that they would lose money on the project.

Banksia invites tenders for builders to complete the project. The tendering process takes one month.  The successful builder, A1 Contractors, is unable to start work on Banksia’s project for a further three  months because of other building works that they are involved with. 

Banksia nevertheless engaged A1. As a result of the building not being completed by the original date,  Banksia lost a major tenant who was going to lease an entire floor of the building at a rate of $20 per  square metre above the market rate. 

Advise Banksia and Mario of their legal rights. 

 

Question 3 

The board of directors of Big Hopes Pty Ltd (‘Big Hopes’), a property development company, has  appointed Rodney as its managing director. The constitution of Big Hopes requires any contract over  $100,000 to be approved by the board of directors before being entered. Rodney enters into a contract  for the purchase of a block of land for $500,000 from Larry without getting the prior approval of the  board of directors. The board refused to ratify the contract when it learns of it. Advise Larry. 

Your answer must include case law (where relevant) and the provisions of the Corporations Act  2001. 

 

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  • Posted on : November 30th, 2018

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