Your client You are employed as a graduate at a boutique business advisory practice in Melbourne. One of the clients of the firm is a Hardware Enterprises Pty Ltd (HEPL). HEPL runs a business that imports computer hardware and associated electronics equipment. There are two prongs to the company's operations. First, the company operates a storage warehouse located near the Port of Melbourne along with a eet of trucks that it uses to transport the equipment direct to customers. Second, the company has team of technicians that install and maintain computer equipment. Management and Capital Structure The board of HEPL consists of two directors Bronwyn and Kevin. Both directors work full-time in the company and are paid an executive salary. They met 10 years ago while completing their Bachelor of Business degrees at RMIT University. Bronwyn is the Managing Director and is responsible for the day to day operation of the business and the company's nances. Kevin is the Chief Information Officer and is in charge of the more technical aspects of the business including sourcing suppliers and overseeing the technicians. HEPL currently has 500,000 shares on issue originally purchased at $1.00 per share. An extract of the share register is as follows: Shareholder Ordinary Shares Bronwyn 1 50.000 Kevin 150,000 Lynette 1 00 .000 Edwin 100.000 Clause 12 of the Company's Constitution provides that: (1) Before issuing shares, the directors of the company must first offer them to the existing shareholders of the company. The number of shares offered to each shareholder must be in proportion to the number of shares of that class that they already hold. If a shareholder declines to take up shares, the directors may then issue to any other third party. (2) The company may by resolution passed at a general meeting authorise the directors to make a particular issue of shares without complying with subsection (1). The directors discuss the funding requirements for the next ve years and are considering a range of different options. They are also considering appointing Bronwyn's brother Bruce as another director of the company he has a software engineering background. The current directors have come to you to seek professional advice. Kevin decided to upgrade and refurbish the technicians workrooms at a cost of $200,000 including installing new bathrooms and shower facilities for many of the staff that ride their bikes into work. Kevin signs a contract with Ofce Upgrades Pty Ltd \"for and on behalf of Hardware Enterprises Pty Ltd." The work has not yet been completed but HEPL have paid a non-refundable deposit of $20,000. Bronwyn claims that she expressly told Kevin in a directors' meeting not to go ahead after he obtained a quote because they could not afford it. Kevin conrms the discussion but says he had since changed his mind and went ahead with it anyway because the company needed to provide a welcome workplace and encourage environmentally friendly transport options. Ofce Upgrades Pty Ltd had previously dealt with Kevin but only for purchases of office furniture such as desk chairs of no more than $500 purchases at a time. REQUIRED Advise the directors whether HEPL are bound by the contract with Ofce Upgrades Pty Ltd. (1 0 marks) NOTE: You must refer to relevant legal cases and legislation in your answers. (TOTAL 10 marks)