Mr & Mrs Jaquerie operate a popular transport business in Darwin through a company called Go Go Transports Pty Ltd. Mrs Jaquerie is a director of the company and Mr Jaquerie is also a director and secretary of the company. The shareholders in the company are:

• Mr&Mrs Jaquerie 50%; and
• Mr daniels 50%.

Mrs Jaquerie goes to Westside Bank where Go Go Transports Pty Ltd has its accounts and asked to borrow $500,000. Westside Bank has been the companys banker for many years and the bank manager knows Mr & Mrs Jaquerie reasonably well.

Mrs Jaquerie tells the bank manager that she wants the money to invest in a pine plantation which would give the company substantial tax benefits. The bank manager thinks this is rather odd but makes no further enquiries and agrees to lend the money as long as it can take security over the companys major asset which is the building from which Go Go Transports operates from.

Mrs Jaquerie obtains the loan and mortgage documents from the bank. She affixes the common seal of Go Go transport Pty Ltd and forges her husbands signature as secretary. The bank advances the money to Mrs Jaqueries personal account.

Mrs Jaquerie invests the money, however the pine plantation was a scam and never existed. Mrs Jaquerie did not undertake any research into the pine plantation and relied solely on her friend for advice (her friend had no experience in business). Nor did Mrs Jaquerie advice or husband of the loan or the investment.

Westside bank becomes aware that the pine plantation was a scam and has requested Go Go Transport Pty Ltd pay back the outstanding loan.

REQUIRED:

• Explain how a company can execute a contract under the Corporations

Act (Cth). (5 marks)

• Explain whether Westside Bank can enforce its mortgage over the building and

whether it can rely on the assumptions in s129 of the Corporations Act. (15 marks)

• Could there be an exception to the assumptions by way of s128(4)

Of the Corporations Act? (5 marks)

• Explain whether Mrs Jaquerie has breached her duty of care as a director under section 180 of the Corporations Act. Will Mrs Jaquerie be able to rely on the Business Judgement Rule contained in section 180(2) of the Corporations Act?

(10 marks)

Important: Your answer must use the IRAC structure and refer to the relevant case law.