Interdisciplinary Project

This assessment is worth 10% of your Internal assessment This is a Group assessment.

Word Count: 1500 +/- 10%

Due Date: 27 September 2021 at 11.59 pm.

Please support your problem-based answer with relevant materials as it applies.

CASE:

Tony is an accountant skilled in preparing budgets and cash flow statements for new businesses. On 20 March 2019, he is hired by two former university friends, Mark and Graham to prepare budgets and cash flows for a new company that is to be set up, to be called Silvana Pty Ltd.

Tony goes to the printer ABC Printing Ltd (ABC) on 21 March 2019 and orders stationery for the proposed new company and signs on behalf of the as-yet-to-be incorporated company. Tony then prepares the budgets and cash flow statements however is not paid for his work by Mark and Graham. The new company, Silvana Pty Ltd, is registered on 30 March 2019 with its own Constitution.

Silvana Pty Ltd immediately begins to operate as a commercial printing business with Mark and Graham as its directors. On registration, Mary, Mark's wife is appointed as company secretary. By 21 April 2019, the stationery which Tony originally ordered from ABC, has still not been paid for. Tony also is still waiting for payment for his work.

The company's constitution provides that contract documents may be executed without a common seal but they must be signed either by both of the directors, or by one of the directors and the company secretary. On 30 May 2019, Mary decides to order a new company car under a lease in the company name for her own use as she is tired of driving to clients using her own car. The lease reflects current market prices. No payments have yet been made on the car lease.

Mary also decides to purchase $10,000 worth of photocopying paper which PaperCo Pty Ltd is selling at a greatly reduced price for a short period of time, and also employs a new personal assistant for herself to "ease her workload". When Graham discovers what Mary has done he refuses to pay for the bills and tells her that she will be personally liable. She resigns immediately.

2

Required:

(a) Analyse and determine who is liable to pay for the stationery to ABC, and to Tony for his accounting work. (5 Marks )

(b) Discuss whether Silvana Pty Ltd may be liable for any of the contracts entered into by Mary. If not, how can Mary be held liable? (5 Marks )