Nirosha,Ross,George and Paulin corporate BigHopes Ltd for their propertydevelopment business. Its Rules provide that its directors may borrow such sums asthey should be authorised by an ordinary resolution of the company in generalmeeting.

The directors borrowed $100,000 without the sanction of an ordinaryresolution of the company.

1)Explain the significance at common law of the 'internal management rule'inthe above.

2)What would be the position if there was no such company rule?

Please refer to CorporationAct 2001 specific sections and case law.