Short answer questions

1. What are the sources of directors' duties and officers' duties to act with care and diligence? What is the significance of these different sources?

To answer this question students should discuss the general law and statutory duties. Refer to general law (common law & equitable duties), and statutory duties in chapter 15, Figure 15.1, 15.5.

2. Who can enforce the duty of care and diligence under s 180(1)?

The company is the proper person but if the company is not able to then ASIC can bring an action against the directors.

3. If a director's act is a breach of Section 181, can they rely on the business judgement rule for protection? Why/why not?

Refer to chapter 17 [17.22] and Figure 17.4 for the answer to this question.

4. Is the test to determine a breach of the duty of care the same as the common law?

Common law vs statutory negligence - common law duties care, skill and diligence, equitable fiduciary duties common law - refer to chapter 17.15 while statutory duty - under s 180 (1) - duty of care and diligence

5. Do the defences under s 180(2), 189 and 190(2) apply for the duty of care under common law and statute?

Refer to the Corporations Act and chapter 17 for the answer to this question.

6. Is a director required to be aware of all of the major decisions that a corporation makes? Why/why not?

Refer to the discussion on the duties imposed on directors in chapter 15 introduction to the chapter and case law and commentaries on directors' duties. Directors and the Board of Directors are responsible for managing the company and as such they have a duty imposed under general law and statutory law to ensure that they always act in the best interest of the company and exercise the duty of care, skill and diligence, best business judgement when making corporate decisions on behalf of the company.