need 2 case study done
ACC220 Assignment 1 ACC220 Law of Business Associations Semester 2, 2018 Assessment Task 2 – Written Hypothetical Assignment DUE DATE: 5pm, Monday Week 10 TOTAL MARKS: 40 marks (40% of overall assessment) [Each Question is worth 20 marks] WORD LIMIT: 2000 words SUBMISSION: Electronically in Black Board under the Assessment tab. Ensure that you include a cover page with your name, the name of your tutor and day and time of your tutorial. There are two (2) questions. You must submit answers to BOTH questions (including sub-questions). Submissions should be in a single document. In preparing your responses you should focus only on the Week 3 to 7 Lecture Topics (and Week 4 to 8 Tutorial Questions). QUESTION 1: Raj and Alana have owned a vineyard and winery in South Australia for many years. In 2010 they decided that they wanted to make provision for including their children in the business in the future. As such, they incorporated the company Organic Wines Pty Ltd (“OW”) and transferred the vineyard and winery to the company. They then asked a solicitor friend of theirs, Ted, to draft the company’s constitution. Because of their desire for the company to continue their practice of organic farming and wine production, Raj and Alana asked Ted to include an ‘objects clause’ in the constitution which restricted the activities of the corporation to the organic framing of grapes, the production of organic wines and any related and incidental activities. When drafting the constitution Ted included this clause, along with a clause appointing himself as the company’s solicitor and stating that he could only be dismissed for misconduct. Ted received an allotment of 5% of the shares in the corporation as consideration for drafting the constitution. Up until 2016, the board of OW was made up of Raj, Alana and their son Jack (who is also the company’s Chief Financial Officer). In January 2016, Raj and Alana’s daughter Priya moved back from Melbourne after finishing her university studies. Raj and Alana were wanting to step back from the business and allow their children to have a more active role. On the 1st of February 2016, Priya was appointed to the position of Managing Director of OW for a period of two years. The board did not formally reappoint Priya as Managing Director after 1 February 2018, but she has continued to act in that position. In February 2018, Priya arranged for the 2 appointment of Carl, a recently admitted solicitor and her current boyfriend, as company secretary of OW. One of the terms of Priya’s appointment, which were set out in a contract between her and OW, included a restriction to the effect that she was not to commit the company to any transactions in excess of $100,000 without approval by the Board of Directors. Priya had been looking at ways of expanding the business, and has been discussing potential supply agreements with Bob Murphy’s, a large national liquor supplier. However, in order to increase production sufficiently OW would need to purchase additional grapes from other vineyards. In June 2018, Priya negotiated an agreement for the supply of grapes from Seedy Vineyards Pty Ltd, for the value of $500,000. Seedy Vineyards use a range of pesticides on their grapes and have not subscribed to any principles of organic farming. On the 1st of July, Priya signed the contract as managing director along with Carl as company secretary. On the 5th of July, Priya notified Ted that his services are no longer required by OW, as they now have sufficient legal expertise with the appointment of Carl. When Jack receives the first invoice from Seedy Vineyards requesting payment, he raises the contract with Raj and Alana who are not pleased. They both call Ted for advice, but he says that he has been dismissed from his role and is about to bring an action against the company for breach of contract. Advise Raj and Alana: A. Whether OW is bound by the supply contract with Seedy Vineyards given they believe that: a. Priya has exceeded her authority to enter into such agreements; and b. The agreement is in breach of the objects clause in OW’s constitution; B. Whether Ted can enforce the clause in the constitution appointing him as company solicitor and what type of remedy would be applicable. QUESTION 2: The directors of Seedy Vineyards Pty Ltd are Karim and Miles, who each also own 45% of the company’s shares. The remaining 10% of the shares are owned by Olive. Whilst Seedy Vineyards has had a number of customers, their profits have not been significant and therefore they have not regularly paid dividends. As such, Olive has been trying to sell her shares. Karim and Miles want to retain control of the shareholding, but have generally refused to purchase Olive’s shares because of a lack of funds. However, on the 20th of June 2018, Miles agrees to buy 5% of Olive’s shares and they execute the agreement and transfer the shares. 3 At the same time, Olive also managed to secure a sale of her remaining 5% of the shares to Priya. However, after completing the sale contract, Karim and Miles refuse to register the transfer of shares. Karim then offers to buy the shares at 10% less than the price Priya was paying. After the transaction with Organic Wines is finalised on the 1st of July 2018, Seedy Vineyards declares a dividend five-time higher than any of the dividends declared in the past three years. Advise Olive: A. Whether Karim and Miles have breached s181 of the Corporations Act 2001 (Cth) or their equivalent equitable duties by refusing to register the transfer of shares and what penalties or remedies might be applicable; and B. Whether she has an action against Miles for a breach of directors’ duties for his purchasing the shares without telling her of the improved prospects of the company. 4 ASSIGNMENT GUIDELINES & INSTRUCTIONS The following guidelines are based on a review of common errors made in assignments. Students are asked to read these guidelines carefully as they will be taken into account in marking your papers. ASSESSMENT CRITERIA As noted in the course outline, the assessment criteria for this assessment task are: 1. Demonstration of knowledge of the law, as evidenced by accurate statement of relevant legal principles; 2. Demonstration of understanding of the law, as evidenced by cogent and coherent application of legal principles to the fact situation as stated; 3. Demonstration of requisite academic communication skills, as evidenced by logical structure of arguments, appropriateness of conclusions, accuracy of citations (legal referencing) and academic referencing and use of accurate and appropriate expression. CONTENT AND ANALYSIS The focus of the assignment is on clear, accurate and concise application of the law to the fact scenario. You should make direct reference to the relevant sections of the legislation (the Corporations Act 2001 (Cth)), as well as the relevant case law (such as that discussed in the lectures and textbook). Make sure you clearly and directly answer the question that is asked. Whilst there may be a range of issues that arise on the facts, focus on the key issues required to respond to the question. In terms of addressing the assessment criteria: • In order to demonstrate knowledge of the law for this assignment, you need to state the relevant legal principles accurately and reference them appropriately by citing case law and legislation; • In order to demonstrate understanding of the law, you need to apply the relevant legal principles to the facts of the case study in order to reach a conclusion; • You need to adopt a logical structure (it is recommended you use headings), avoid spelling and grammatical errors (see further under ‘Structure and Style’ below) and present your arguments in a coherent and convincing manner. Note that the use of footnotes is the required method of referencing for legal writing (you can use the ‘Insert > Footnote’ function in Word). The following guidelines stem from the criteria stated above: • It is not enough to discuss the facts in a general way without reference to legal principle/s. • It is not enough to state relevant legal principles without explicitly applying those principles to the facts. • Statements of legal requirements/ principles must be accurate. Use of your own words is encouraged but must convey the substance (meaning of) the legal principle/s. • Merely reproducing the facts given in the problem will not attract marks. This problem commonly occurs in written introductions, where it would appear that the writer is not sure where to start. • Answers to each question should include an introduction, analysis which outlines and applies the relevant law to the facts and a conclusion which responds directly to the 5 question (but DO NOT simply use ‘introduction’, ‘analysis’ and ‘conclusion’ as your headings). • The introduction to each question should contain brief statements of: • The legal terms given to the relevant parties on the facts • The nature of the action to be taken by the party advised • The party who must prove the action (burden of proof) • The relevant standard of proof • The elements of the action requiring proof. • The analysis should include • Statements of the relevant law including the elements requiring proof (from the legislation) and interpretation of those elements (from legislation and case authorities as appropriate) • An application of the legal requirements (elements) and their interpretation to the facts in question – after correctly identifying the relevant legal issues, this is the most important aspect of your answer • A consideration of legal remedies available to the injured party should the action be proven. • The conclusion should contain: • A summary