QUESTION FOUR- chapter 6

Simon has decided he will register a company Cosec Pty Ltd and offer company secretarial services. Before he is ready to register the company he searches for a suitable office and finds a perfect location.Simon signs on behalf of the proposed company, a 2 year lease on the office and a 2 year rental agreement with a telephone company.

Before Cosec Pty Ltd is registered, Simon gets offered an attractive sum of money to assign the office lease over to another party.Simon takes the money and transfers the lease.

Cosec Pty Ltd is finally registered and at the first directors' meeting the ratification of Simon's telephone agreement is considered.The directors opt for another telephone system that they consider better suited to the company's needs.

REQUIRED:

(a)Discuss whether Simon breached any obligations by transferring the office lease.

(2 marks)

(b)Will the telephone company have any right of action against Simon?

(2 marks)