Karl started a small business called "Karl's Birds Farm", which isa business breeding kestrels, eagles,falcons and other large birds of prey. The business became successful and breeding large birds of prey became increasingly popular, especially since Karl 's Birds Farm featured in the newest breeding machine in South Australia.

The business was so successful that Karl decided to incorporate the business with a view to future growth. Karl registered "Karl's Birds Farm" (KBF) and transferred all business assets including his breeding machine to the new company. Karl owns 19,000 shares with a nominal value of $10 each and is the only director of KBF. His wife Hanna owns 1,000 KBF shares. To begin with, Karl did all of the work for the company himself.

A few months later, business was booming and KBF expanded by buying a second breeding machine from Breedingmac Pty Ltd for $120,000 ($60,000 up front and 6 monthly instalments of $10,000). KBF also hired breeding machine operator and a receptionist that dealt with all the administrative work.

4 months after the purchase of the breeding machine, business dropped significantly as a result of an unexpected decrease in need of the large birds to the area. KBF was not able to make the final 2 repayments. Breedingmac Pty Ltd demands that Karl and Hanna pay the remaining $20,000 because KBF does not have any money left. They refuse.

Please Discuss whether Breedingmac Pty Ltd can demand payment from Karl and Hanna.