Amy, Brian and Charlie are the directors of Top Bicycle Pty Ltd$,$ a company that imports bicycles from Europe for resale in Australia. Brian and Charlie authorise Amy to enter into contracts, on behalf of Top Bicycle Pty Ltd$,$ with European bicycle suppliers. Amy signs a supply agreement with European bicycle supplier, Eurocycle Ltd$.$ Top Bicycle Pty Ltd places an order with Eurocycle Ltd for the supply of $500$ bicycles to meet anticipated demand in Australia during the upcoming summer months. Eurocycle Ltd terminates the agreement and refuses to ship the bicycles. The directors of Top Bicycle Pty Ltd are all shocked and disappointed because the company has already spent over $$10,000$ in advertising to market the bicycles in Australia. They threaten to sue Eurocycle Ltd for breach of contract but are directed to a clause in the agreement that states:

$$This written agreement is not intended to be a formal or legal agreement, but an

honourable pledge between Eurocycle Ltd and Top Bicycle Pty Ltd$.$

Brian and Charlie cannot believe Amy could be so careless as to sign an agreement

containing a clause like this. They are also concerned that their reliance on Amy may also amount to carelessness on their part.

QUESTION $1$

Use the IRAC method to advise Amy, Brian and Charlie if they have breached their

directors duty to exercise their powers with care, skill, and diligence and if so$,$ what

defences may be available.

QUESTION $2$

Use the IRAC method to advise Top Bicycle Pty Ltd if their agreement with Eurocycle Ltd is a legally enforceable contract.