Maxwell is the sole director and shareholder of Smart Enterprises Pty Ltd, a marketing company. Maxwell is an 'ideas' person and not very good at the practicalities of operating a business, such as keeping adequate financial records. Recently, the company has received letters from various creditors demanding payment and has also had a few cheques dishonoured by its bank. He approaches Siegfried, a newly qualified accountant for advice. Maxwell is advised by Siegfried that the company's cash flow position is in peril and that it needs to make a lot of money quickly to get out of its current difficulties. Maxwell tenders for a big advertising contract. In anticipation of getting it, he enters into a contract to take advertising space on television for a substantial amount of money. When he is not awarded the tender, he is unable to pay the fee to the television station. Smart Enterprises Pty Ltd is placed into liquidation by the television station.

Advise the liquidator as to Maxwell's personal liability, if any, for the debt to the television station.

Note:

- identification of issues

- identification of the source of the law on each issue: case law, statute

- accurate explanation of the relevant law each issue