(Please include case studies in answers)

Part A

Phillip, Mark, Mary, Judith and Florence are the directors of the Do Pty Ltd. They own a block of vacant land in the city. The block of land has been on the market for some time and it is finally decided that the land should be auctioned off. A reserve price of $280 000 was set by the directors but the price was not reached at the auction and the land was not sold.

Mark tells Phillip that he would like to buy the land for $200

000 and Marks offer was directly accepted by Phillip, who is the managing director.

The land did not go to the board for approval.

Mary discovers what is happening and is not happy with the

situation. She knows that Phillip and Mark are friends and she discovers that

Phillip is getting 10% commission on the land.

1.Did the director breach their duties?

2.What should have been done to avoid the breach?

3.What are the penalties available to the ASIC in the case of the breach?

Part B

Phillip enters into another contract to supply certain material to the New Wave Pty Ltd. The contract is lucrative, but the company is not able to fulfil its legal obligations because it is having financial difficulties. Phillip believes that the company will soon be solvent again. Mark on the other hand is not involved in the management of the company and leaves everything to Phillip. Mary has been ill and in and out of the hospital for the last year. On a regular basis, Judith and Florence ask Philip if everything is going well with the company, and Phillip nods. Judith and Florence are satisfied with this response and leaves him with the job. Phillip is never maintained any financial record of the company. The company is unable to meet its legal obligations and goes into liquidation.

Advise the directors on their liabilities.