Question
Lulu, Victoria and Uda are the directors of Blue Sky Ltd (BS). BS owns a newspaper publishing business. Lulu is an expert in the publishing
Lulu, Victoria and Uda are the directors of Blue Sky Ltd ("BS"). BS owns a newspaper publishing business. Lulu is an expert in the publishing business whereas Victoria and Uda are investment bankers and have no experience whatsoever in the publishing industry.BS needs to purchase new printing presses as the ones it owned were old and were constantly breaking down. Without doing any due diligence whatsoever, the board pass a resolution to buy new printing presses from Nasty Presses Ltd. Unfortunately, the new presses can only use a very expensive type of ink that needs to be imported from Argentina.The cost of purchasing the ink has caused BS to suffer tremendous financial losses. Which of the following is most likely true:
a. Victoria and Uda cannot be liable for this loss because they have no understanding of the printing industry and, therefore, can't have breach their duty of care and diligence.
b. All of the directors have probably breached their duty of good faith under section 181 of the Corporations Act because their poor decision means they are not acting in the best interests of the company.
c. None of the directors could be liable for breaching their duty of care and diligence because they didn't know that the presses required the expensive ink.
d. All the directors would probably be liable for breaching their duty under section 180(1) of the Corporations Act,because they should have undertaken certain minimum due diligence before entering into the transaction, which would have highlighted the problem with the ink.
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