Fate Pty Ltd (Fate) has five shareholders: Jack, William, Michelle, Janet, and Marie. Jack, William and Marie own 90% of the shares and are also the directors of the company. Janet and Michelle owned 5% of the shares each. Marie is also the company secretary. William is the managing director of company.

Over the years, the company flourished and the directors decided to expand the business and discovered that they needed some extra capital. Accordingly, the board of directors passed a resolution to raise capital by issuing debentures to the general public. On the urging of the directors, Jack put an advertisement in Investors Weekly for interested investors detailing the rights and obligations that came with the debenture.

Unknown to the rest of the directors, Jack is also a shareholder in several wholesale companies that had a policy to pay bonuses to shareholders who employed their services. Jack always made sure that Fate contracted with these companies. When Janet discovered this, she raised her concern with other directors but no one took her concerns seriously and nothing was done about it. As a result, Janet became very upset and wanted to take action against Jack but she was not sure what her rights in relation to this matter are.

William has commenced negotiations with a domestic airline, Octopus, which is in financial trouble (William had heard rumours that Octopus had not completed a number of projects it has signed on to. However, he dismisses such rumours without making further queries). William has signed a contract to pay $10 million with Octopus to purchase one of its aircraft. The board of directors of Fate does not want to be bound by the contract because it is very unlikely that Fate could afford this contract.

Is a Fate Ltd liable under contract to Octopus?