Candy Ltd is a large sweets company based in Perth. Candy Ltd is well known in the industry for their number one invention - the bomb bomb boom candy. The company was incorporated by Gustaf Gobb, who is one of two directors along with his brother Marcus. They each hold 50% of the shares in the company. Gustaf is the master confectioner and Marcus is the business brains behind the company. The company constitution states that neither director can make a contract over $100,000 without the signature of the other director.

In December of 2021, Marcus went on holiday with his family to Spain and was largely out of reach for the two week period. During this time Gustaf received an offer from CC supermarkets to stock his famous bomb com boom candy. The contract is worth over $1 million dollars in revenue to the company. However CC supermarkets has given Gustaf only three weeks to meet the production deadline or they will have to go with another company. Gustaf agrees to the contract.

Following this, Gustaf starts ordering supplies, including sugar, chocolate and corn syrup some of the major ingredients for his confectionary. He order these supplies from Standard Sweets Ltd. The contract is for $200,000 worth of supplies. As Marcus is in Spain, Gustaf proceeds with the contract with out Marcus's signature.

In February of 2022 CC Supermarkets become entangled in a huge food poisoning scandal and consequently by May are suffering significant losses and have been declared bankrupt. The contract for the supply of candy therefore falls through. Gustaf becomes extremely worried as he is unable to pay for the supplies he has ordered. He also has so much sugar, corn syrup and chocolate which he does not know what to do with. He creates a new candy and orders another $50,000 worth of chocolate however the bomb bomb boom 2.0 is not a success and receives terrible feedback from its test group. Gustaf has sunk Candy Ltd further in debt.

1. Standard Sweets Ltd wants to enforce the contract against Candy Ltd. candy Ltd states that they are no liable for the contract because Marcus had never signed them and that Standard Sweets Ltd should have check their corporate constitution. Advise Standard Sweets Ltd (20 marks)
2. When Marcus arrives back from Spain he is very worried. He says that Gustaf is guilty of insider trading and that he too is guilty by association. Marcus has come to you for advice and would like to know if this is true (10 marks)
3. Marcus also discovered that Gustaf has actually been selling his best inventions to Cream Ltd on the side, Candy Ltd and making a tidy profit from this. Also, Gustaf has been using all of Candy Ltd suppliers and contacts to do so. Marcus would like to know what actions can be brought against Gustaf (10 marks)
4. It turns our that Gustaf has a 55% shareholding in Cream Ltd. Last year, Gustaf as director of Candy Ltd proposed that they loan Cream Ltd some $150,000 and voted on this. Marcus would like to know if any action can be taken in this regard? (10 marks)