Part B

On 3^rd May 2017, Fresh Pty Ltd was incorporated and its constitution is a combination of all the replaceable rules and the following provisions:

"Clause 1

The sole object of the company is to carry on organic farming.

Clause 2

Al Gorey shall be director and Chairperson for life.

Clause 3

Tipper Gorey shall be employed as a Farm Consultant until 2025 at a salary of $50,000 per annum."

(i)On 2^nd April 2017, prior to the incorporation of the company, Al purchased several computers for that proposed company.He negotiated a contract with Officeworks.He signed the contract "for and on behalf of Fresh Pty Ltd". After the company was incorporated, it made no payment to Officeworks despite the computers being used by the staff.Al is worried that Officeworks will sue him.(3 marks)

(ii)On 23^rd August 2017, Al received a notice of an extra-ordinary meeting to delete Clause 2 and to remove him as director. Al only had 1000 shares while the company has an issued share capital of 10000 shares. At the meeting Clause 2 was deleted and the Company dismissed him as director. Al wishes to sue for compensation. (3 marks)

(iii)Tipper was also dismissed from her post. She was informed by the directors that her dismissal was effective immediately. Tipper wants to sue for compensation. (2 marks)

(iv)Fresh Pty Ltd has not been making any profit carrying on organic farming. The directors decide to have some cabins built on the farm to attract people who might want to have a holiday in a farm. Discuss whether the company needs to change the objects clause.(2 marks)