Steve has decided he will register a company called Starky Computer Hire Pty Ltd which will offer for-lease computers to businesses around Perth. Before he is ready to register the company, he looks for computer manufacturers so that he may create a supply-chain of products to lease to his clients.

Steve signs a 2-year service agreement with Eternal Computers Pty Ltd, which states that Eternal Computers Pty Ltd will supply Starky Computer Hire Pty Ltd with as many computers as they need at a 40% discounted rate for the service period. Eternal Computers Pty Ltd is very proactive and sends Steve 10 computers in advance so that Starky Computer Hire Pty Ltd may begin leasing them immediately after registration. Eternal Computers Pty Ltd advises that another 10 computers are currently being manufactured and will be supplied in four weeks.

Before Steve has registered Starky Computer Hire Pty Ltd, Steve’s brother offers him an attractive cash-in-hand offer for the 10 computers he already has. Knowing that another 10 computers are on the way, Steve takes the money and gives his brother the computers.

Starky Computer Hire Pty Ltd is finally registered and at the first directors’ meeting Steve is unanimously appointed as the managing director of the company. Ratification of the service agreement with Eternal Computers Pty Ltd is also considered but other directors opt for another computer manufacturer which they consider better suits the company’s needs and decide not to ratify the service agreement with Eternal Computers Pty Ltd.

Steve would like to know whether he will be considered a promoter by the courts in relation to his activity in establishing Starky Computer Hire Pty Ltd. (2.5 marks)

Steve would also like to know the likelihood of being held personally liable by Eternal Computers Pty Ltd in relation to the service agreement with them. (2.5 marks)