Subject Code : LAW251
Assignment Task:

LAW251: Law Assignment Help

 

QUESTION
Great Fit Design Specialist (GFDS) and Sofas Designs for Life Specialist Ltd (SDFL) are two companies that specialise in designing sofa covers. GFDS is in NSW and SDFL is based in Melbourne, Australia. They are fiercely competitive. They have hopes of taking the designs to international markets with the advent of businesses based on the Internet. GFDS is the larger of the two companies and the board of GFDS are looking to expand its business to other countries so that GFDS can meet its overseas demand.

GFDS appointed Thomas Grant in December 2015 as its managing director and Thomas is responsible for developing the Marketing and Communications of the company. Thomas has also been charged with responsibility for the web designs to facilitate a launch into other countries. The multi-language site will enable the selection of a preferred language, colour, designs and the placement of orders. Possible Joint venture partners such as ‘Bright Comfort and Style’ (BCS), ‘Sitting Made Easy’ (SME), and ‘Best Buddy in Home Furniture’ (BBHF) are keen to launch their websites with new designs and were waiting to see the final product from GFDS. However, the development had taken a longer time than expected, resulting in some joint venture partners to use their in-house designs. GFDS had hoped to launch the new platform before Christmas 2017 and after months of development, there was still no clear launch date. Tensions began to mount with some of the board members in GFDS.

In January 2019 a board meeting was called to discuss where the project was heading. Thomas was severely criticised for the length of time the project was taking and the amount of money the company had invested with no result forthcoming. Concerns were also expressed that the possible joint venture partners were losing interest. Among discussions that day, a suggestion was made that perhaps their in house development team was not up to the job and work should be outsourced to a specialist web development company.

This allegation made Thomas furious as he had put in a lot of work into the design. His argument was that GFDS had refused to provide Thomas with sufficient funding to engage a team to work with him. His assertion was also that GFDS was not fully aware of how difficult it is to develop a multi-language platform to roll out to other countries and sign up joint venture partners without a supportive team.

The board’s allegations had caused Thomas tremendous stress and he decided to take his mounting annual leave for three (3) months to self-reflect and rejuvenate. During this period, he approached SDFL and promised to set up the multi-language platform as well as to sign up joint venture partners with companies he was in contact with whilst he was employed by GFDS. This proposal would be in return for a position as the International Marketing Director with SDFL. SDFL offered him the position at SDFL on 1 September 2019. Thomas accepted it after resigning from GFDS on 1 August 2019. GFDS soon found out that SDFL had signed joint venture contracts with ‘Bright Comfort and Style’ (BCS), and had two more in negotiation. When the board of GFDS discovered that Thomas had joined SDFL following his resignation from GFDS, they held an urgent meeting at which time they passed a resolution to take legal action against Thomas. Thomas’s employment contract with GFDS clearly stated that ‘should he resign from GFDS, he must not engage in any activities or employment which directly competes with GFDS’s products and services for a period of two (2) years from the date of his resignation from GFDS’.

Advise the GFDS board of directors as to the following questions: a. Has Thomas breached his duties as a former director at GFDS under the general law and
the Corporations Act 2001 (Cth)

b. If so, what remedy may GFDS seek against Thomas?

Note that you should focus your advice on the legal issues relevant to the areas of law covered by the contents of Law251 Unit Guide.

 

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  • Posted on : November 22nd, 2018

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