Corporate law Essay Example | Topics and Well Written Essays - 3000 words

Corporate law - Essay Example The accuser has the hard work to prove the accused is guilty. If the Australian Securities and Investment Commission will sustain this theory and it can be proven by evidence, this would constitute vitiation ( impairing the quality or effectiveness of an act such as to contaminate, spoil, make invalid) of consent which would make the contract voidable ( contract is valid unless it is questioned or objected, then, it is made illegal or void).(www.allwords.com). Under the corporation law of Australia, the contract is invalid if voidable. A voidable contract may be held valid if there is failure to question the same within You could reference see point in time legislation and updates to determine if you are following the law. If Bevin could prove fraud there will be cancellation of contract and a possible award of damages to Bevin. Since Bevin signed and approved the sale of his shares, then his negligence for not reading the fine print is not ground for cancellation of contract. To answer the SUB ISSUE no 1, the possible defenses and remedies of Wonders to uphold the validity of the contract is as follows. DISCUSSION:Wondersteel could invoke the defense of good faith by proving that it did not compel Bevin to sell his share because other stockholders were also offered to sell their share aside from Bevin. Under a free market economy, the seller offers a stock or product at a proposed selling price. The buyer or bidder then gives a bid price, usually lower than the offer price. If they both do not agree to the offer and bid, then the seller may lower his offer price and the buyer may increase his bid price. This is the normal practice in the Australian Stock Exchange. No force or intimidation was seen in the situation here. In answering ISSUE NO. 2, Regarding possible loan contract violation between Wondersteel and XYZ bank my opinion is as follows. The case states that Mr Malcolm _______ http://www.asx.com.au/index.htm (2005) http://portsea.austlii.edu.au/pit/ (2005) www.newadvent.org (2005) used some of the loan funds to pay Malcolm's mortgage repayments of his luxurious Sydney home and private school fees for his children. He also transferred a very large amount out of the loan funds to an overseas corporation, which owns 51% of Wondersteel' shares. In fact Wondersteel even defaulted on its repayment to XYZ and a receiver was appointed under the terms of the charge document. DISCUSSION: It appears that Wondersteel ,by prima facie, violated its contract with XYZ Bank. Although XYZ Bank is not without recourse, when a receiver was appointed under the terms of the charge, the use of the loan funds is still unjustified. Mr. Malcolm as director owes loyalty to Wondersteel. Under the law ,directors are agents or trustees of the corporation. As agents or trustees they hold a fiduciary relationship with their corporation which is their principal. The directors, according to the Australian Corporation law, required to safeguard the assets and