Two years ago Tom began to create apps for small businesses in his suburb. He quickly attracted new clients as his ideas were creative and successful. Tom wanted to expand his app business and in early December 2020 he discussed business opportunities with 3 of his friends who had technical and creative skills: Renu, Paula and Chloe. Renu was interested but was concerned about the liability she may take on if she began advising clients. Tom suggested they think about forming a company and he took on the task of developing a plan with Linda, a solicitor he knew.

The following week the group met again, and Tom told them that Linda agreed that incorporation was the only way to protect them from liability and that she could help them incorporate a company. They all agreed to proceed and decided to call their company Sunrise Pty Ltd (Sunrise). They would each be directors and shareholders. On 20^thDecember Tom emailed Linda and told her to proceed.

On 11^thJanuary Sunrise held its first board meeting.

oLinda attended and advised that the company had been incorporated on 6th January.

oThe meeting resolved that Tom be the Managing Director, Renu be Marketing Director, Chloe be the Finance Director and Paula take responsibility for staying on top of relevant technology changes.

oPaula advised that she had already entered into a service contract in the name of Sunrise Pty Limited with AppAdvice Pty Ltd, a technology support company. She had entered into the contract on 30^thDecember at what she said was an exceptionally good, discounted price: $18,000 for 12 months which could be paid in monthly instalments. The other directors accepted Paula's view that this was a good deal and resolved to pay the amount in monthly instalments.

oIt was resolved that, for the time being, Sunrise run its business from Tom's home office.

In early March Renu asked Chloe if she could spend some time finding out about office space, what was available and what rent might be charged. Very quickly Chloe found offices which she thought were ideal at rent she was told was 40% lower than that charged in 2020. She met with Sasha, the General Manager for leasing at City Leasing Ltd (the owner of the offices) and agreed to enter into the lease on behalf of Sunrise. Chloe signed the lease as director of Sunrise. The lease was for 12 months and commenced 15^thMarch 2021. Sasha signed on behalf of City Leasing.

On 12^thMarch Sunrise held a board meeting at which Chloe excitedly told the directors about the lease she had just signed. The other directors were not happy. The office space was in the city which didn't suit the other 3 directors. Tom said the nature of the business didn't require a city location. Renu said all she had wanted was information, not a concluded deal. Paula said that she didn't think more space was needed. The directors told Chloe she didn't have authority to enter into leases.

Immediately after the meeting Tom called Sasha. Tom said Sunrise did not want to proceed with the lease and would not pay the rent. Sasha said that as far as City Leasing was concerned, they had a binding contract entered into by a director of Sunrise. If Sunrise did not pay the rent City Leasing would enforce the lease in court, if necessary.

Q1: Sunrise failed to set up an order with its bank to make payments to AppAdvice. AppAdvice is threatening to sue for non-payment. Who is liable to pay AppAdvice and why?

Q2: Can City Leasing enforce the lease against Sunrise? Why? Consider only arguments relevant to authority.