Question
specializes in buying and selling anti-aging cosmetics and shampoos for women. Dilpreet chats to her friend, Amander, who is not connected to the company. Amander
specializes in buying and selling anti-aging cosmetics and shampoos for women. Dilpreet chats to her friend, Amander, who is not connected to the company. Amander asks Dilpreet whether Mohan's would be interested in helping to market a new product that that she says prevents male hair loss.
Dilpreet tells Amander that her company would not be interested in this product because it sells women's products only. However, she offers to help Amander and the two of them set up a separate company (AMANDER Pty Ltd). They become its only two directors and shareholders. (Dilpreet holds the majority of shares). This new company is virtually an overnight success.
At a board meeting of Mohan's six months later, Dilpreet proposes that Mohan's enters into a long-term contract with AMANDER - to buy supplies of its product for re-sale. The board agrees and, as part of the contract, Dilpreet negotiates that she be paid a small commission on each sale because she drew the board's attention to this new product opportunity. Mohan's makes good profit from selling this new product line.Mohan's directors' now learns that Dilpreet is the majority member in AMANDER and they are annoyed they Dilpreet never told them about her connection to AMANDER.
Has Dilpreet breached any director's duties to Mohan's? What defence arguments could she use? Use relevant cases and legislation to support your answer.
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