Alex, Belinda, Cassandra, Davina and Edward are enthusiast stamp collectors and want to start an online business that buys and sells historical stamps from around the world. They decide to set up a company to do this. All five agree to put in $5,000 each to buy equal shares in the company. Alex and Belinda are assigned to put in an application to ASIC to register a company called Sydney Stamps Pty Ltd (Sydney Stamps). Cassandra is to look into the possibility of getting a web design company to design a website and get a quote. She visits Web Creations Pty Ltd in George Street, Sydney, and the salesman spends some time showing her various web design packages. Cassandra is very impressed with the Super Delux package but is a little concerned about the $8,000 cost. The salesman informs her, however, that they currently have a 25 per cent sale on that package, but that it finishes at 6 pm that day. Cassandra excitedly calls Alex from the store to get his thoughts, as Alex has been the driving force behind starting the business. He says Yes. Lets do it. Cassandra signs the contract on behalf of Sydney Stamps and the five directors, then and there.

The following week, Alex and Belindas application is successful and the company is registered with all five as directors. However, at their first board meeting, Belinda, Davina and Edward are unhappy about the cost of the website package and refuse to accept the contract, saying the basic package, at a quarter of the cost, would have been sufficient.

Advise the parties/entites of their respective legal rights and liabilities, referring to relevant legislation and cases.

Question 6

As part of establishing Sydney Stamps (as detailed in the previous question) and prior to the company being registered by ASIC, Edward is assigned to investigate buying some stamps that the new company can have as stock when it first launches. He visits a local stamp dealer, Manfred, of Manfreds Stamps Pty Ltd, who is very keen to get Edwards business. Manfred tells Edward that if the new business buys stamps from him worth over $10,000, he will give Edward a rare 1901 Australian Federation stamp worth around $800 as a personal gift to show his appreciation. Edward is excited about this. The next day, at a meeting of the five friends, he recommends that they buy two dozen rare stamps worth $11,000 in total. However, he doesnt mention the personal gift Manfred offered him. The others all agree with Edwards recommendation. So, after the meeting, Edward goes ahead and buys the stamps and receives the gift of the Federation stamp from Manfred.

Advise the various parties/entites of their respective rights and liabilities, referring to relevant legislation and cases. Answer question 6 only please.