Curtin University Curtin Law School Semester 1, 2017 Take Home Test 2 Unit Name: Fundamentals of Business and Corporations Law Unit Number & Version: BLAW5016 Duration: You are required to attempt a...

Curtin University

Curtin Law School

Semester 1, 2017

Take Home Test 2

Unit Name: Fundamentals of Business and Corporations Law

Unit Number & Version: BLAW5016

Duration: You are required to attempt a take home test from 5pm on Friday 19 May to 9am on Monday 22 May. The take home test requires you to write an answer to a problem question dealing with materials from Lectures 7, 8, and 9 of the semester program. The test must be submitted through Turnitin in Blackboard before 9am on Monday 22 May WST. Marks will be deducted for late submission.

You will not be awarded marks for copying directly from any textbook or legislation.

The take home test has a word limit of 2000words and it must be typed/word processed unless prior agreement has been obtained from your tutor. The take home test will not be assessed if it exceeds 2000words. Please ensure that you have checked the document for spelling and grammar before submission.

The take home test MUST be submitted ELECTRONICALLY.

Please observe the following requirements:

Font: - Times or similar font - no smaller than 12 point in size

Spacing: - 1.5 line spacing, and appropriate paragraph spacing

Margin: - at least 2.5cm on the top, left, right & bottom

Pages: - Numbered in top or bottom margin

Paper: - A4 size paper

The take home test must be accompanied with the cover sheet provided with the test and must be received by 9am WST on Monday 22 May.

Once you are satisfied that your take home test is ready for submission, you should save it with a filename as below:

Student ID_FirstnameLastname.doc

For example: 12345678_JohnSmith.doc or 12345678TakehometestJohnSmith.doc

It is important that you don’t include characters other than your student number, underscores and your student name. This means do not include characters such as * or / or ANY SPACES IN THE FILE NAME.

Please ensure that you click on the submit buttonto upload your take home test.

Failure to submit the take home test by the due date may result in a zero mark for that part of the assessment.

Total Marks: 25 Marks comprising 25% of the final subject grade.

QUESTION

Josh, a qualified motor vehicle mechanic, operated a sole trading business in West Perth. His business mainly involved repairing and servicing prestigious motor vehicles from Luke’s car yard located next to his mechanic shop. Five years ago, Josh and Luke decided to go into business together and registered a company Josh Luke Pty Ltd, with the intention that Josh would look after the repair and mechanics of motor vehicles and Luke would look after the sale of used prestigious motor vehicles. The company issued 300,000 $1 shares to Luke and 200,000 $1 shares to Josh. Both Josh and Luke transferred their businesses to the company in exchange for the shares. Josh and Luke were appointed as the directors of Josh Luke Pty Ltd.

The company’s business became very successful and required more capital, so two years ago they decided to convert their company into a public company, Josh Luke Ltd with the following constitution:

“The provisions of the Corporations Act 2001 (Cth) shall apply to this company except for the following:

1. The company shall only operate a used car dealership business of prestigious cars.”

2. Henry Hall shall be appointed as the managing director of the company for a term of five years.

3. The company’s business can only be changed with the approval of all the directors.

Josh Luke Ltd now has a large number of shareholders through the issue of 1million $2 shares to the public. The directors of the company are Josh, Luke and Henry.

Six months ago, Henry placed an order to import ten new electric cars from Korea as he felt confident of the demand for electric cars. Josh and Luke are most displeased with Henry as they feel that without charging stations, electric cars will not be as successful as used prestigious cars. Josh and Luke would like to cancel the Korean electric car order on the following basis:

1. It is beyond Josh Luke Ltd’s capacity to enter into such a contract and the Korean company should have known this; and

2. Henry Hall did not have the authority to enter into such a contract without the approval of all the directors of Josh Luke Ltd.

REQUIRED:

1. Advise Josh and Luke of the advantages and disadvantages of operating their business:

(i) separately;

(ii) as Josh Luke Pty Ltd; and

(iii) as Josh Luke Ltd.

[4 Marks]

2. Discuss the procedure and the legal requirements that need to be satisfied to convert the company from Josh Luke Pty Ltd to Josh Luke Ltd. Also include in your answer whether a new company is created after the conversion.

[3 Marks]

3. Discuss whether Josh and Luke are likely to be successful in cancelling the Korean electric car order on the basis that it is beyond Josh Luke Ltd’s capacity to enter into such a contract and the Korean company should have known this.

[5 Marks]

4. Discuss whether Josh and Luke are likely to be successful in cancelling the Korean electric car order on the basis that Henry Hall did not have the authority to enter into such a contract without the approval of all the directors of Josh Luke Ltd.

[6 Marks]

5. Can Henry Hall enforce the clause in the company’s constitution and remain a managing director for five years.

[4 Marks]

4 step process, writing style and referencing [3 Marks]

TOTAL 25 MARKS

Note:

1. Reference your answers to cases and the Corporations Act 2001 (Cth) where possible.

2. In answering some parts of the questions, a formal 4 step process may not be required. However, if application is required, please write the law before applying to solve the problem.

3. You do not need to consider whether the directors have breached their duties when answering this question.

4. You do not have to discuss or apply Contract Law.

See Guidelines for Test 2 on the next page.

GUIDELINES FOR TEST 2

Where the question requires you to use the 4 step process, the 4 steps are:

- Step 1: Introduce the area of the law

- Step 2: Discuss the applicable law to solve and quote relevant cases and the sections of the Corporations Act 2001 (Cth) where applicable.

- Step3: Apply the law to the facts to resolve the problem.

- Step 4: Come to a conclusion

When writing your answers for Test 2, you cannot copy word for word from another source. You can paraphrase or summarise ideas or data obtained from another source, so long as you reference the source of your information using the AGLC footnote referencing style. More information can be found on this style from blackboard or the Curtin library web site:www.library.curtin.edu.au. A Bibliography is NOT required under the AGLC footnote referencing system.

Please note that plagiarism occurs when work of another person is presented as one’s own, without appropriate acknowledgement or referencing. Plagiarism is a serious offence. This unit is ascribed to Turnitin, an electronic plagiarism detection service. Students should be aware that their work will be required to be submitted to this service to check for unacknowledged use of others’ work. Please read Test 2 submission process carefully to determine how to submit your test through Turnitin.

The research for legal principles and cases can be restricted to that referred in the prescribed text book, lectures and case studies. You will not be awarded marks for referring to cases or legislation outside these sources.

You should not exceed the word limit stated in the questions. The marks for each part should give an indication of the words that should be allocated for that part. You should check the rubric to ascertain how marks are allocated and the criteria that will be used to assess your level of achievement. Marks will be deducted for exceeding the word limit.