Assume that the directors of small family company excluded one of their number from board meetings, that other director would have grounds for bringing
Answers
d. an action for oppressive conduct as in the Fexuto case
Explanation
A court can make an order on behalf of the member under oppressive conduct as applied in Fexuto case. If one shareholder is sidelined by the other shareholders without causes, he/she can sue for oppressive conduct. In the case between Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001], the court found that Bosjnak with directors who were from the same family (brothers and sister in-law), had acted oppressively towards one of the brothers. They did this by excluding him from board discussions which was considered inappropriate. The directors of the small family in our case have replicated the same case and would be found oppressive to the excluded member.
Reference
Company Law: An Interactive Approach
By Ellie Chapple, Alex Wong, Richard Baumfield, Richard Copp, Robert Cunningham, Akshaya Kamalnath, Katherine Watson, Paul Harpur Page 314
A participating cumulative share which is preference as to dividend gives the holder
Answer
b. a right to a guaranteed dividend and any arrears dividends
Explanation
Where a preference share is cumulative, it implies that the right to the dividend is carried over to subsequent year if the right is not declared in a particular year. This means that instead of losing the right to arrears dividends as in the case of non-cumulative shares, the dividends are said to be arrears and carried over to a subsequent year. On the hand, participating shares offers the right to share extra dividends. Therefore, if there is an increase in rate of dividend, the preference share holder is entitled to the new rate.
Reference
Financial Reporting
By Janice Loftus, Ken Leo, Sorin Daniliuc, Noel Boys, Belinda Luke, Hong Nee Ang, Karyn Byrnes Page 480
If a director wishes to take a corporate opportunity the director requires the consent of
Answer
d. only a majority of votes cast at a shareholder meeting
Explanation
In public companies, directors are elected by shareholders at a general meeting and can as well be removed by resolution that needs to be passed by majority of the shareholders. Directors are elected by the shareholders meeting on a one-share-one-vote basis. A director wishing to take corporate responsibility can be elected through ordinary resolution or by decision of the directors. Each of the participating directors has only one vote, and the person presiding may decide to use the raising hands or by a poll and if there is an equality, the individual presiding is required to second or cast their own vote to break the tie.
If a corporation offers securities to the public before a disclosure document is lodged
Answer
a. there will be a breach of s 727(1)
Explanation
As stated in Australian Corporations & Securities legislation 2011 corporations Act 2001, (p. 901), the offer of securities must have lodged disclosure document otherwise it will constitute a breach of section 727(1). Unless when the disclosure document for the offer has been lodged with ASIC, a person must not make an offer of securities that needs disclosure to investors.
If A makes an offer to B and B then makes a counter offer to A which A rejects in those circumstances
Answer
c. B cannot change his mind and accept A's original offer, as his counter-off was also a rejection of A's original offer
Explanation
In contracts, a counter-offer functions both as an offer to enter into a contract, as well as a rejection of the original offer. Whenever the counter-offer is made, the original offer becomes invalid, which means accepting the original offer later cannot constitute a valid contract. Whenever the offeror makes an offer, the offeree has a choice of either to accept it and be bound by the terms, or reject the offer and make a counter-offer if he/she wishes to.
The doctrine of separation of powers as developed by montesquieu is that
Answer
a. each branch of government is independent of the others
Explanation
Montesquieu was born in 1689 at Chateau de la Bordeaux. He expounded the theory of separation of powers. According to Montesquieu, separation of powers is the best safeguard against the rise of tyrannies. Power needed to be exercised by a separate system or organ to ensure harmony of the state, The three branches of government that are mainly focused in the theory of separation of powers are the executive, the legislature, and the judiciary. If executive and legislature were to be united by a single individual, there could rise apprehensions.
To be effective an exclusion clause must
Answer
c. be included in the contract when it was entered into
Explanation
Exclusion clause must be reasonable to be effective. For example, a clause that purports to exclude a party's liability for breach of contract will be subjected to reasonability test if the other party is a consumer of business. It must be agreed upon by both parties not only a single party, and must form part of the contractual terms.
Reference
Why use an exclusion clause? Retrieved from: https://rm-legal.co.uk/mark-wright/why-use-an-exclusion-clause/
Minors have contractual capacity in regard to
Answer
b. contracts for necessaries and beneficial services
Explanation
Some contracts can be formed and enforced by minors but not against minors. Minors (under the age of 18), lack the capacity to make a contract which means a minor who signs a contract may decide to either honor the deal or void it. Minors can only be bound by contracts involving necessaries and beneficial contracts of service.
Reference
Business Law
By Nickolas James, Timothy Thomas page 250
A term can be implied into a contract where
Answer
e. any of the above situations exists
Explanation
Implied terms are terms implied into the contract by the courts and are taken to be as effective as if they were included from the beginning of the contract. A court implies terms into a contract when contracts in the same market or trade are presumed to have that term. According to the law of contract by Sullivan & Hilliard (P.162), some terms are implied by courts while others are implied by the statute, some terms are also implied to reflect the trade custom and give effect to parties presumed intentions.
Reference
Australian Commercial Law
By Dilan Thampapillai, Claudio Bozzi, Mark Giancaspro, George Yijun Tian Page 16
A voidable transaction includes
Answer
a. an unfair preference
Explanation
According to 'British Virgin Islands Insolvency laws and regulations handbook by IBP (p.114), voidable transaction is used to refer to: an unfair preference, an undervalue transaction, a floating charge that is voidable as described under section 247, and lastly, as an extortionate credit transaction. Unfair preference implies that the liquidator of an insolvent company has the power to recover any unfair debt payments made from unsecured creditors.
An ordinary resolution requires the assent of
Answer
c. a simple majority of all shareholders
Explanation
Shareholder resolutions are either passed as ordinary or special resolutions. For ordinary resolutions, these are routine company business which requires a simple majority of shareholders. On the other hand, special resolutions require 75% majority.
In the context of alternative dispute resolution
Answer
b. an arbitrator settles the dispute whereas a mediator helps the parties agree on a solution
Explanation
Alternative dispute resolution involves settling disputes using means other than litigation or the use of courts. These includes means such as negotiation, conciliation, mediation, and arbitration. By using mediation, a third party brings the conflicting parties together to solve the problem for common objective and the mediator does not make any decision on their behalf. On the other hand, arbitrator makes decision on behalf of both parties basing on evidence presented.
If C agrees to paint D’s house and D agrees to give C the amount of $ 500
Answer
a. there is a contract because each party would receive consideration.
Explanation
When two parties make an agreement and are expected to perform their obligations, this type of contract is called bilateral contract. For a contract to be considered valid, there must be a consideration which is described as the benefit each party gets from the contractual deal. Party D would gain the service which is having the house painted while party C would gain monetary value for the painting.
The three branches of government as provided in the commonwealth constitution are
Answer
b. The executive, the legislature and the judiciary.
Explanation
The three branches of government are the legislature, executive and judiciary. Each of the three branches are independent to prevent any arm or person from becoming too powerful. The legislature has the power to make laws and in Australia, the legislature arm is the parliament. The executive enforce laws and in Australia, it is the executive council. The judiciary interprets and applies laws and in Australia, the judicial arm is the hierarchy of courts headed by the supreme court.
