Question
Martin and Trevor are the directors of Creative Account Ltd. The board of the company decides to approve a contract for the provision of advertising
Martin and Trevor are the directors of Creative Account Ltd. The board of the company decides to approve a contract for the provision of advertising by Right Stuff Ltd. Right Stuff Ltd. requires a substantial deposit and this is paid by Creative Accounting Ltd. Martin, a marketing graduate and experienced market researcher, undertook to research the merits of the proposed contract. He prepared a report recommending that it be approved. Based on Martin's report, the contract appeared to be very competitive at the time it was approved. However, one month later it became clear that Right Stuff Ltd. could have offered its services at a much lower price than it did, and that Martin had been rather careless in his assessment of Creative Accounting Ltd.'s ability to pay. The company is now unable to meet the full cost of the advertising. Trevor believed that the contract was in Creative Accounting Ltd.'s best interest, although he wondered if the company would be able to afford to pay for the advertising. Pamela, another director, on the other hand, was fairly sure that the company would not be able to pay Right Stuff Ltd, and that the payment of the deposit would also mean that the company would not be able to repay an outstanding loan of $100,000 to Capital Finance Ltd. REQUIRED: (a) Whether Martin and Trevor have breached any of the statutory duties? (b) To whom are these duties owed? (c) Whether Pamela has breached any of the statutory duties? (d) To whom are these duties owed?
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