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Terms test

Question 2

On her 21stbirthday, Katipo is given a Siberian Ballerina fish, called Anastasia, by her mother Dimples D.There are only nine surviving Siberian Ballerina fish, and Anastasia is the only female.She is valued at $200,000.Dimples D was very attached to Anastasia, and makes Katipo pledge that she will always protect her welfare.

Bazzine runs a business specialising in selling exotic fish to couples without children.When she finds out that Katipo has acquired Anastasia, she suggests that they form a company together.Katipo runs a tanning studio and at first is not interested.Bazzine however suggests that they combine the two businesses into one.Katipo agrees and a new company is incorporated called "Fish 'n' Tan Ltd".Bazzine transfers her business to the company, while Katipo transfers her tanning business, plus Anastasia.The total value of the assets of the company is approximately $500,000.Katipo and Bazzine each receive 50% of the shares, and each is a director.At Katipo's insistence, the constitution contains the following clauses:

"1. The company has no capacity whatsoever to sell Anastasia, and any contract to do so shall be completely void.

2. The company can only ever get capacity to sell Anastasia if Katipo delivers a writtennotice to the company allowing it to do so."

By agreement, Bazzine runs the fish business and Katipo runs the tanning business.They are run from the same shop premises, but there is a partition wall between the two.At the entrance to the shop premises there is a large sign:"See the Bazz for your exotic fish needs.See the Kat for a tan".Anastasia is located in a large tank at the entrance to the fish division of the premises.

Donald, a wealthy tax consultant, owns "Boris", a male Siberian Ballerina fish.He had previously bought a number of expensive fish from Bazzine when she was a sole proprietor.On entering the shop he notices the change.Bazzine tells him that she now co-owns Fish 'n' Tan with Katipo, but she has complete control over the fish division.On seeing Anastasia, Donald immediately offers to buy her for $300,000, and writes out a cheque for that amount.Bazzine tells him that she has to check with Katipo "whether a cheque is o.k."

Bazzine walks through a gap in the partition and tries to convince Katipo to allow her to sell Anastasia.Katipo refuses and a loud argument ensues.She feels that Anastasia is not yet ready for commitment to another fish.Katipo eventually throws a bowl of tanning die over Bazzine, puts Anastasia into a plastic bag, and storms into her office.Donald hears shouting but is too polite to ask what is going on.On returning Bazzine tells Donald: "Actually, a cheque's no good.But come back later with cash."

A week later Donald returns with $300,000 in cash.Katipo is not there.On seeing him Bazzine says: "Everything's fine now.She's agreed to let me sell the fish.Do you still have the cheque?"Donald hands Bazzine a cheque and arranges to pick up Anastasia the next day.On learning this, Katipo is horrified and claims that the agreement is not binding upon Fish 'n' Tan.

is this agreement binding upon 'Fish n Tan LTD'?