The main object of Flower Limited is to engage in agriculture in all its aspects. The Articles provide that the approval of the general meeting is required if the directors enter into a transaction in terms of which the company is liable for an amount that exceeds R200 000. It is further provided that a member who wishes to dispose of his or her shares to a third party must first offer them to company members on the same terms as those available to the third party. The Articles also contain a provision that Flower Limited is obliged to buy its fertiliser from Compo Limited. It was decided by the directors to diversify the business of the company and to start a tourist agency. With this in mind they purchased 10 tourist buses for R400 000 from Brian. The necessary approval was not obtained from the general meeting. The tourist agency was a financial fiasco and in order to prevent further losses the buses were sold for R100 000. The directors then started negotiating with Clint to purchase an ice-cream factory from him in an attempt to cover the financial losses of the tourist agency. (a) Is Flower Limited bound to pay Brian the purchase price of R400 000? Can the company rely for its defence against Brian on the fact that the purchase of the buses was beyond the objects of the Memorandum or that the directors did not have the authority to conclude the contract on behalf of the company? (2) (b) Would it make a difference if Brian were a member of Flower Limited or if he knew (or had constructive notice) that the transaction fell outside the ambit of the objects of the company? (1) (c) May the directors be held liable by Flower Limited for any damage caused to the company by the ultra vires transaction? (d) The fact that the tourist agency incurred financial losses and that the directors intend to buy a ice-cream factory concerns a member of Flower Limited. Discuss the legal remedies available to this member. (3) (e) Andy, a shareholder, sells his shares to a third party, Brian, for R2 per share. Can a fellow member, Carl, prevent Andy and Brian from carrying into effect this transaction? Discuss the legal principles applicable. (3) (f) Flower Limited buys its fertiliser from Tammy Limited. Can Compo Limited rely on the stipulation in the Articles that the fertiliser must be purchased from Compo Limited and compel Flower Limited to comply with this provision? (3) Discuss. 1131 The main object of Flower Limited is to engage in agriculture in all its aspects. The Articles provide that the approval of the general meeting is required if the directors enter into a transaction in terms of which the company is liable for an amount that exceeds R200 000. It is further provided that a member who wishes to dispose of his or her shares to a third party must first offer them to company members on the same terms as those available to the third party. The Articles also contain a provision that Flower Limited is obliged to buy its fertiliser from Compo Limited. It was decided by the directors to diversify the business of the company and to start a tourist agency. With this in mind they purchased 10 tourist buses for R400 000 from Brian. The necessary approval was not obtained from the general meeting. The tourist agency was a financial fiasco and in order to prevent further losses the buses were sold for R100 000. The directors then started negotiating with Clint to purchase an ice-cream factory from him in an attempt to cover the financial losses of the tourist agency. (a) Is Flower Limited bound to pay Brian the purchase price of R400 000? Can the company rely for its defence against Brian on the fact that the purchase of the buses was beyond the objects of the Memorandum or that the directors did not have the authority to conclude the contract on behalf of the company? (2) (b) Would it make a difference if Brian were a member of Flower Limited or if he knew (or had constructive notice) that the transaction fell outside the ambit of the objects of the company? (1) (c) May the directors be held liable by Flower Limited for any damage caused to the company by the ultra vires transaction? (d) The fact that the tourist agency incurred financial losses and that the directors intend to buy a ice-cream factory concerns a member of Flower Limited. Discuss the legal remedies available to this member. (3) (e) Andy, a shareholder, sells his shares to a third party, Brian, for R2 per share. Can a fellow member, Carl, prevent Andy and Brian from carrying into effect this transaction? Discuss the legal principles applicable. (3) (f) Flower Limited buys its fertiliser from Tammy Limited. Can Compo Limited rely on the stipulation in the Articles that the fertiliser must be purchased from Compo Limited and compel Flower Limited to comply with this provision? (3) Discuss. 1131