Danny negotiates the terms of a lease for a larger factory with Property Holdings Ltd, and also negotiates a contract with Timber Supply Solutions Pty Ltd for the supply of timber. Contracts are prepared to give effect to the terms that have been negotiated with these companies, and Danny and Benita sign these contracts on behalf of TFS.

Given its increased profitability, TFS attracts interest from buyers. VBH receives an offer to sell TFS for a price of $10 million. The directors agree, and upon settlement the ordinary shares held by VBH in TFS are transferred to the buyer, Consolidated Holdings Pty Ltd. The preference shares held by Danny are not included in the sale. Erica, the sole director of Consolidated Holdings Pty Ltd, is appointed as sole director of TFS. In the contract for the sale of shares (Sale Contract), Abdul, Benita, Charlie and VBH warrant that there have been no breaches of the Corporations Act in relation to the establishment operation of TFS prior to settlement. Erica considers that the terms of the contracts entered into with Property Holdings Ltd and Timber Supply Solutions Pty Ltd are not on favourable terms, and believes she couldnegotiate better deals on behalf of TFS.

are the contracts valid and binding or are there legal grounds on which they can be challenged