Jeremiah and Linda are young entrepreneurs. They would like to form a small proprietary limited company to operate a dry cleaning business. The company was to be called CleanThis Pty Ltd. On 22 April, Jeremiah entered into a contract with Chemical Supplies Ltd to purchase 18 drums of cleaning solvent. He executed the contract in the name of CleanThis Pty Ltd (CleanThis).

On 24 April the proposed company was registered. The company did not adopt a constitution. Jeremiah and Linda each took 50 per cent of the issued capital, and both were appointed as directors. Due to a dispute between Jeremiah and Linda regarding the contract with Chemical Supplies Ltd, that contract was not ratified by CleanThis.

On 1 June, Jeremiah ordered dry cleaning business-quality clothes hangers from HangIt Pty Ltd. Jeremiah affixes the company seal and signs the contract.

It is now 1 July. The hangers supplied by HangIt Pty Ltd have been delivered to CleanThis but not paid for. Jeremiah is concerned and wishes to understand any possible liability.

REQUIRED

With reference to relevant legal principles use the IRAC legal problem-solving approach to advise Jeremiah on who may be liable under the two contracts and what assumptions HangIt Pty Ltd is entitled to make.