QUESTION THREE-chapter 5

Jack is the managing director of Beanstalk Ltd. The company has a constitution, which states that the company may only sell agricultural products grown in Queensland. The board of directors have implemented a company policy that all transactions over $100,000 require board approval and this is also in the constitution.

Jack attends a trade fair in Victoria and is so impressed with the quality of the beans grown on a Victorian farm by Giant Ltd that he signs a $150,000 purchase agreement.

The board of directors of Beanstalk Ltd decide that this purchase will undermine the company's marketing campaign promoting Queensland products. They advise Giant Ltd that the company will not make payment under the purchase agreement as:

a)Beanstalk Ltd hadno legal capacityunder its constitution to buy any produce from outside Queensland so the agreement cannot be enforced against it;

b)The constitution of Beanstalk Ltd wasavailable in the public recordand Giant Ltdhad a responsibility to know its contentsand comply with it.

REQUIRED:

Advise Giant Ltd on the issues above. To support your answers, you must not only reference your textbook but you must also refer to the Corporations Act and cases where appropriate.

Hint: The best practice question to use are Rainbow and Tipsy as well asSpears