Question 1

Milton Friedman, a famous economist, once said the only purpose of a company was for it to make profits for its shareholders. Many disagree with this statement and believe that a company is a privileged body which must conduct itself for the benefit of society, not just in the interests of shareholders. With reference to the theory of corporations, make a comment on the various roles that could be perceived for a company in Australia.

Question 2

Jacob, a company secretary, wishes to take a holiday. Jacob realises he needs to leave someone in charge of company administration who will also report appropriately to the directors. Jacob asks the head of accounting within the company to carry out his role as company secretary, which includes attending certain company meetings with the directors, particularly when negotiating serious contracts. When Jacob goes on holiday, the accountant assumes Jacob's role. He attends certain meetings where he is introduced as the company secretary, even though he has not been officially appointed. The accountant is requested to close a few deals by the directors, which he does, though he forgets certain instructions as to how the company's customers should pay and. in particular, approves a loan by the company's bank to a colleague, which he guarantees on behalf of the company. The directors find the various mistakes made by the accountant on certain contracts and want to cancel those contracts. The loan taken by the accountant's colleague has not been paid, and is unlikely to be paid in the future. The company directors are refusing to honour any of the commitments made by the accountant. What are the rights of these particular outsiders when dealing with the company and the directors? Can they enforce these different contracts?