Read the following scenario and answer all of the following questions. Refer to relevant cases and statutory law in your answers where appropriate.

Refresh Ltd('Refresh')is an unlisted company specialising in property development. The directors areAaron (the CEO), Tina (Financial Director) and Chrissy (Director of Operations). In a directors meeting in March, 2019 the directors discuss the slightly depressed real estate market and note that prices remain low. As such, they discuss acquiring land now and holding it for future property development.

Robert, a cousin of Aaron, owns a block of land in the eastern suburbs of Melbourne, currently advertised for auction with no list price. Robert is under financial pressure from the bank to repay the loan on the land and is therefore keen to sell it. Aaron brings the ad to the attention of the Board, who express interest in acquiring the parcel of land. Aaron does not disclose his relationship to Robert. The board unanimously vote in favour of the company acquiring the land for $450,000 which represents a much higher market value, and is higher than thedebtthat Robertowes the Bank.The othertwodirectors knowthat land prices are depressed and do not obtain an independent valuation of the property. To acknowledge his gratitude, Robert gives Aaron $5,000 so he can take his family on holiday. Three months after acquiring the property, the directors learn that the land is full of termites and contains contaminated soil. Its commercial value is actually about $250,000.

In a separate matter, Refresh Ltd are looking to engage a landscaping and architectural firm to design plans for their new buildings.As it happens, Tina's brotherSpiros owns an architectural firm. The board delegates to Chrissy the role of obtaining quotes from at least three architectural firms. Over lunch, Tina asks Chrissy how everything is going and Chrissy explains that she has obtained two quotes so far-one for $80,000 and the other for $69,000. Tina recommends her brothers firm, but does not advise it is her brother. That afternoon, Tina tells Spiros what the other architectural firms have quoted. This allows Spiros to offer a lower price of $65,000, but only valid for 24 hours. Because this is the cheapest quote and Chrissy does not want to miss out, she immediately signs on behalf of the company. Later that week she explains this transaction at the April board meeting. Tina does not attend the board meeting, or vote, as she is away on holiday. This is her fourth missed meeting in less than a year. She has not told the Board that her brother was planning to submit a tender.

QUESTION THREE

Respond to the scenario based problem and answer all the following questions. Refer to relevant cases and statutory law in your answers where appropriate.

a. Explain whether the contract entered into by Chrissy on behalf of Refresh is valid and legally enforceable?

b. Explain whether any directors have breached their duties, and whether any valid defences apply. Include reference to any applicable penalties. Support your answer with reference to statutory and case law.

c. Explain what the likely consequences for the directors may be, if the company enters into administration?

d. Explain what the likely consequences for the directors may be, if the company enters into liquidation. Would a liquidator identify any transactions which can be clawed back?