Question
EZY Pty Ltd is situated in Australia. It has three directors: Aric, Smile and Chetan. Aric signed a mortgage and guarantee in favour of EASYloan
EZY Pty Ltd is situated in Australia. It has three directors: Aric, Smile and Chetan. Aric signed a mortgage and guarantee in favour of EASYloan Bank Ltd on behalf of EZY Pty Ltd. The guarantee secured a personal loan by EASYloan Bank Ltd to Aric. The loan is guaranteed by a mortgage over EZY Pty Ltd's land in Ballarat. The documents were signed by Aric and appeared to have been signed by the other directors. However, Aric had forged the signatures on the documents and the other directors were unaware of the transactions. EZY Pty Ltd's constitution provides that loan agreements could only be executed if authorized by directors' resolution. In this instance, no such resolution had occurred. EASYloan Bank Ltd had not undertaken searches to establish whether Aric, Smile nor Chetan were directors of EZY Pty Ltd prior to accepting the guarantee and mortgage. Aric has failed to repay the loan and has now left Australia. EASYloan Bank Ltd is attempting to enforce the guarantee and mortgage against EZY Pty Ltd. Required: Discuss whether EASYloan Bank Ltd can enforce the guarantee and mortgage (contracts) against EZY Pty Ltd with reference to relevant sections of the Corporations Act 2001 (Cth) and to relevant cases.
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