Vivien and Elektra are shareholders in Danish Housing Circle Pty Ltd ("DHC"). They are elected as directors in August 2016. DHC was registered at ASIC in 2002 and has retained the replaceable rules. It is a busy and creative furniture and design company. However it is going through a difficult financial period. Shareholders voted for Vivien and Elektra because they promised to create stability in the company to avoid it suffering financial loss in the future as an economic downturn in the industry was expected. Vivien was a director in a different company but that company went into liquidation. There are 4 other directors (making 6 directors in total) and a total of 20 shareholders. Vivien and Elektra are the only directors with tertiary qualifications. Minty, one of the other directors, has very little education and left school at 15.

During October 2016 Vivien is in Surry Hills and sees a "For Lease" sign on A-Bar, a bar she used to always go to. She has great memories of the bar and immediately decides that this should be where DHC's office should be. She believes that converting the bar into a design studio and office space will be easy. The company's present premises are in an industrial area near Macquarie University, 15 km from the centre of the city, and the current lease has 6 months to run (6 months left). The bar in Surry Hills is located near fashionable interior design and clothing shops but is too big for the company's present needs and the rental is higher than at the company's current location.

Although she likes Surry Hills, Vivien is a little unsure about moving the company's offices. She telephones Minty and asks her to convene a directors meeting for later in the week to discuss the lease. Minty explains that it may be difficult to get the other directors together at such short notice and tells Vivien to have confidence in herself. Vivien is in fact doubtful about Minty's understanding of the lease arrangement but appreciates her support.

On the same afternoon that she sees the bar and after she has called Minty, Vivien contacts the owners of the premises and expresses her interest in leasing it for DHC. The owner says that there is another interested party who is also in the furniture business and that if she wants the premises she must act immediately. The owner informs Vivien that the lease must be for an initial period of 2 years. She feels she is being rushed but agrees and accordingly signs the lease on behalf of DHC before she has been able to raise the matter at the directors meeting.

Elektra hears of the lease arrangement early the next morning. She believes that Vivien has led the company into a bad deal and that she is "too creative." Minty does not agree with Elektra but the other directors do. Accordingly DHC refuses to enter into possession of the premises and rejects the lease. The owner of the premises wants the lease enforced and threatens to sue. DHC already has several outstanding creditors and these debts, together with the claim by the owner, could easily result in the company's liquidation.

Consider the above fact situation and explain whether Vivien has breached her duty of care and diligence. If she has, what are the relevant consequences? Answers should refer to relevant cases and law sections.