Q 1.John, Ringo, George and Paul incorporate Big Hopes Ltd for their property development business. Its constitution provides that its directors may borrow such sums as they should be authorised by an ordinary resolution of the company in general meeting. The directors borrowed $100,000 without an authorised ordinary resolution of the company.

(a)Explain the significance of the 'indoor management rule' in the above.

(b)Would it be different if the constitution provided that the company could not borrow more than $10,000?

(c)What would be the position if the company had no constitution?

(d)What would be the position if the company had a constitution but it did not state anything about borrowing powers of the directors?