LAW20019 Law of Commerce Management

Students are expected to reference cases and legislation only and will NOT be required to complywith in-text referencing (such as Harvard System or AGLC). For referencing, it is sufficient to reference in the same style and manner as you would in a written exam. For example, it issufficient to cite the case in brackets without full citation details (eg, Salomon v Salomon) or cite the legislation, for example, the Corporations Act 2001.

Blackout Period prior to Exams

It is a general school policy to have a blackout period prior to an exam scheduled and during the formal exam period. This blackout period starts on midday of the previous business day of yourexam. This means that you should not expect a response to any exam related question from this point onwards. For exams scheduled on a Monday, you should only expect a response to questions asked before midday on the previous Friday.

The blackout period covers email contact, queries in person, via office phone and Canvas. Discussion boards on Canvas will also be locked for this period, in order to protect you fromthecreation of last-minute panics and confusion on Canvas.All Swinburne Law School staff members are required to adhere to the blackout policy unless there are exceptional circumstances to deviate from it; for example, if you want to seek advice  about special consideration or you cannot sit your exam/assessment.

Technology and Health Issues

Remember, do not leave your submission until the final few minutes. If, in the unlikely event there is an issue with the electronic submission via Canvas, students should submit their work to the convenor by email to capture the submission time. Students will still be required to submit their work through Canvas (Turnitin) at a later time.

Students who are unable to complete the timed assessment due to technical difficulties are advised to take photos or screenshots of their computer issue and then either: (a) Request an extension or alternative arrangement by contacting the Unit Convenor (b) Apply for Special Consideration through the standard processes. Evidence will be requested. The Assessment and Progression Team will contact the Unit Convenor to arrange the assessment to be rescheduled.

If you become unwell during the completion of your final assessment task, the normal Special Consideration processes are available for you, you would need to have a Registered Practitioner Statement as part of your application.

Question 1

Maxwell is the sole director and shareholder of Smart Enterprises Pty Ltd, a marketing company. Maxwell is an ‘ideas’ person and not very good at the practicalities of operating a business, such as keeping adequate financial records. Recently, the company has received letters from various creditors demanding payment and has also had a few cheques dishonoured by its bank. He approaches Siegfried, a newly qualified accountant for advice. Maxwell is advised by Siegfried that the company’s cash flow position is in peril and that it needs to make a lot of money quickly to get out of its current difficulties.

Maxwell tenders for a big advertising contract. In anticipation of getting it, he enters into a contract to take advertising space on television for a substantial amount of money. When he is not awarded the tender, he is unable to pay the fee to the television station. Smart Enterprises Pty Ltd is placed into liquidation by the television station.

Advise the liquidator as to Maxwell’s personal liability, if any, for the debt to the television station.

Question 2

Steptoe Pty Ltd (‘Steptoe’) operates a small chain of retail shoe stores. James was appointed as managing director for a period of three years from 1 February 2018 to 1 February 2021. The company does not have its own constitution. An employment contract had been signed between Steptoe and  James. One of the terms of the employment contract restricted James from borrowing more than $10,000 on behalf of the company.

James was not formally reappointed at the end of the three years, but he continued to carry out the duties of managing director. No new document of appointment was lodged with ASIC. On 1 May 2021, James went to the Willis Bank and asked to borrow $3,000,000 on behalf of Steptoe. Willis Bank had been the main banker for Steptoe for the last 15 years. James told the bank that the money was needed to purchase an interest in a pine plantation which would give the companysubstantial tax benefits.

James signed the loan contract as managing director of Steptoe. The bank advanced the money by a cheque payment payable to Steptoe. James misappropriated this money by diverting it into a similarly named account at another bank. He is now believed to be living in Vanuatu or one of the island states in the south Pacific.

Steptoe now seeks your advice as to whether they are bound by the loan contract with Willis Bank.

Question 3

Wellworn Pty Ltd (‘Wellworn’) is engaged in the business of the acquisition and retail sale of floor coverings. The directors and shareholders of the company are Peter, Norman and Norman’s son,George; and their respective shareholdings’ percentage are 10% (Peter), 70% (Norman) and 20% (George). Norman has been appointed the company’s managing director. The company makes good profits, all of which are distributed as directors’ remuneration.

Under Wellworn’s constitution, the company has express power in a general meeting to remove a director by ordinary resolution. Peter works mainly on the sales side of the business in Melbourne, whilst Norman spends much of his time acquiring carpets in India. Disputes arise between Peter and Norman. Peter alleges that Norman is engaging in improper practices in buying and selling carpets from which he is deriving personal profits. Norman denies these allegations. Subsequently, Norman and George exercise their majority voting power at a general meeting of the company to remove Peterfrom the board of directors. Advise Peter about any rights that he may have.