Corporate law-law2001

ASSESSMENT 3 - ASSIGNMENT
Course Title and Code Corporate Law LAW2001
Assessment Description Assignment
Topics 3.1, 3.2, 3.3 and 4.1
Individual/Group Individual
Modules 3 and 4
Learning Outcomes
5. Identify the risks of liability arising from diverse
sources for both the company and its officers and, in
particular, define directors’ duties and the
consequences of breaching those duties;
10. Use skills, including analytical and deductive
reasoning, in applying the above knowledge, rulesand
principles of corporations’ law to factual situations
which could arise in practice, in order to solve a
problem perceptively and creatively or to have
sufficient understanding of the legal issues to know
what questions to ask when referring the matter for
legal advice.
Weighting 30%
Total Marks 60 marks
Task Description
Students will be presented with three case studies on directors' and officers' duties incorporating
legal issues taken from Modules 3 and 4 up to and including Topic 4.1.
Students are to answer either a single question or a series of questions about each of these case
studies in approximately 2 500 - 3 000 words in total and submit their written responses via Turnitin
on Blackboard.
https://www.essaycorp.com.au/law-assignment-help

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Instructions
 The assignment is to contain a header which includes the following:
o Student’s name
o Course title and code
o Assessment description
o Trimester and year
 Pages are to be numbered.
 The assignment guidance and/or referencing guide attached to the assignment should not
be included in your assignment submission.
 Each individual assignment submitted is to be a student’s own work. Any other sources used
(including by consultation with any other person) are to be acknowledged and appropriately
referenced.
 The assignment is to be referenced using footnotes in accordance with the Australian Guide
to Legal Citation (‘AGLC’).
 A bibliography is to be provided in accordance with the AGLC.
 Guidance for the assignment, a referencing guide and a marking guide for the assignment
are attached to the assignment.
 When submitting the assignment on Turnitin, the following are NOT to be included:
o Assignment questions
o Assignment guidance
o Referencing guide
o Marking guide
Assessment of answers
The factors listed below will be taken into account in the assessment of answers to the assignment
questions. Please refer to the Assessment Rubric in the Assessment Brief on Blackboard for more
detail.
1. Knowledge, content and application
 demonstration of knowledge of the relevant course material
 correct application of course concepts and the law
 conclusions to be based on legal reasoning
 relevance to the questions
 evidence of critical thinking and analysis
 appropriate use of authority (case law and legislation) to support analysis and
conclusions
 completeness / comprehensiveness of the answer
2. Expression and convention
 logic and clarity of expression
 use of academic and professional conventions (e.g., correct use of language, legal
terminology and appropriate referencing)

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NOTE: In your answers, please focus on the main directors’ duty breached and
only briefly refer to any other duties which may have also been breached.
CASE STUDY 1
NOTE: In your answer to Case Study 1, you need not deal with the restrictions
on a company in providing financial assistance for the purchase of its own
shares.
Uninest Limited (‘Uninest’) is a student accommodation provider. A
competitor, Urbanlodge Limited (‘Urbanlodge’), is planning a takeover of
Uninest as the current management of Uninest is underperforming, its share
price is declining and it is experiencing cash-flow problems. Uninest’s shares
are valued at $10.00 per share. Urbanlodge makes an offer of $12.00 per share.
The board of directors of Uninest is aware that Urbanlodge intends to replace
the entire management team (board of directors) at Uninest with a new
management team, if Urbanlodge is successful in its takeover bid.
Christine Neales (‘Neales’) acts as a consultant for Uninest and has negotiated
on behalf of Uninest in a number of important transactions in the past,
including the acquisition and development of new properties and the
negotiation of long leases. Due to her experience in the field, Neales is given
great autonomy in decision making in Uninest and the board of directors
always follows her directions. Neales devises a strategy to ensure that
Urbanlodge’s takeover bid will not succeed. Neales instructs the directors to
pass a resolution for Uninest to lend $30 million interest-free to one of its
directors, Gilligan, to enable him to purchase shares in Uninest, as this would
inflate the share price of Uninest. This would mean that Urbanlodge would
have to offer a significantly higher share price in order to succeed in its
takeover offer. The directors of Uninest know that Urbanlodge would not be in
a position financially to make a higher offer and therefore its takeover bid
would not succeed and the directors’ positions on the board of Uninest would
not be at risk. All of the directors of Uninest vote in favour of the resolution
proposed by Neales, Uninest makes the loan and the directors issue the shares
in Uninest to Gilligan.
Advise whether the directors of Uninest have breached any of their general
law directors’ duties and also their directors’ duties under the Corporations

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Act 2001 (Cth). In your answer, discuss whether Neales would have any liability.
Give reasons for your answer and provide relevant statutory law and/or case
law as authority for your answer.
15 marks
CASE STUDY 2
Primo Construction Limited (‘Primo’) is an industrial construction company.
Shane is a director and shareholder of Primo.
Primo performs construction work for Landstock Limited (‘Landstock’) on an
ongoing basis. Shane knows that Landstock is going to call for tenders (offers
to perform work) from various construction companies, for a new construction
contract to build an industrial warehouse near a major port. The warehouse is
to be used for the unpacking and storage of goods from shipping containers.
Before the tender process begins, Shane forms a new company called
Iconstruct Limited (‘Iconstruct’). Shane is the managing director and a
shareholder of Iconstruct. The other directors and shareholders of Primo are
unaware of the existence of Iconstruct. Stanley knows that Primo will submit a
tender for the contract with Landstock and he also knows what Primo’s tender
price will be, based on its construction costs. Iconstruct submits a tender for
the contract with Landstock for a lower tender price than Primo’s tender price.
The construction contract is awarded by Landstock to Iconstruct due to its
lower tender price. If it were not for Iconstruct’s lower tender price, the
contract would have been awarded to Primo.
Please answer the following questions and in each case give reasons for your
answer and support your answer with authority in the form of relevant
statutory law and/or case law.
a. Discuss whether Shane has breached any of his general law and/or
statutory duties as a director. 15 marks
b. Outline the remedies and/or penalties which would apply if both the
general law and statutory director’s duties referred to in Question (a)
above were breached.
5 marks

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CASE STUDY 3
Dronebotics Limited (‘Dronebotics’) is a start-up company which designs,
manufactures and supplies autonomous drone systems, using automatic flying
robots. The robots are programmed by software to complete tasks such as
monitoring oil pipelines, inspecting equipment or surveying land and then to
return to the base station. The use of the flying robots instead of humans to
perform these tasks increases cost efficiencies and productivity.
Dronebotics is approached by an agribusiness, CorpGrain Limited (‘CorpGrain’).
CorpGrain wants to use the autonomous drone system to inspect towering
grain silos, a task which is very dangerous for employees to perform and which
requires compliance with onerous safety regulations.
Frank and Diane are executive directors of Dronebotics and Ron and Kelly are
non-executive directors. Frank and Diane are entrepreneurial risk-takers and
are keen to expand Dronebotics into as many different industries as possible.
Frank and Diane want to enter into a contract to supply the autonomous drone
system to CorpGrain.
Ron and Kelly are concerned that the current technological capabilities of the
autonomous drone system would not cope with the complexity of the
proposed task of inspecting the grain silos at enormous heights and that it
would require considerable and costly further research to develop the
appropriate software. Ron and Kelly are more cautious and use their voting
power on the board of directors to commission an expert report on the
feasibility of the proposed task being successfully executed by the autonomous
drone system with its existing software.
Scenario A
The expert report concludes that it would not be feasible for the proposed task
to be successfully executed by the autonomous drone system with its existing
software. Frank and Diane refuse to attend the board meeting at which the
decision is taken to commission the expert report and also refuse to attend the
board meeting at which the outcome of the report is discussed. Frank and
Diane are subsequently given the written report to read, but neither of them

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read the report nor do they make any enquiries about the report of Ron and
Kelly (who have read, assessed and accepted the contents of the report).
Frank and Diane are both very optimistic and are convinced that the
autonomous drone system has the required capabilities to carry out the
proposed task with the existing software. They are very domineering and
stubborn personalities and, in the end, Ron and Kelly are persuaded to vote in
favour of the proposal to enter into the contract with CorpGrain.
Have Frank, Diane, Ron and/or Kelly breached any of their general law and/or
statutory directors’ duties? Give reasons for your answer and provide relevant
statutory law and/or case law as authority for your answer.
Scenario B
15 marks
Assume that, in the same circumstances as described in Scenario A, the results
of the expert report instead indicate that the autonomous drone system in fact
has the capability to complete the task required by CorpGrain and that it would
be feasible to successfully execute the task. Dronebotics is therefore in a
position to enter into a very profitable contract with CorpGrain.
All four directors vote in favour of the proposal to enter into the contract with
CorpGrain for the supply of the autonomous drone system.
After purchasing the autonomous drone system, CorpGrain experiences
ongoing technical difficulties with the system and is unable to use it for the
inspection of its grain silos. CorpGrain states that its own expert can produce
evidence that the existing software is not adequate and it intends to claim
substantial damages from Dronebotics.
Discuss whether any statutory defences could be raised by the directors in the
circumstances. Give reasons for your answer and provide relevant statutory
law and/or case law as authority for your answer. 10 marks
TOTAL 60 MARKS
Please see following pages for assignment guidance, referencing guide and
marking guide.

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CORPORATE LAW - LAW2001
Module 3 to Module 4
DIRECTORS’ & OFFICERS’ DUTIES
GUIDANCE FOR ASSIGNMENT
A. GENERAL
 The general law consists of common law and equity. Statutory duties are those found in
legislation. In this instance the relevant legislation is the Corporations Act 2001 (Cth)
(‘the Act’).
 Do not mix the general law and statutory duties in your answer – deal with one at a time.
 In your answer, deal with the general law duty first and then the statutory duty (unless
only one is asked for).
 If the general law duty and statutory duties are the same and you are asked for both
duties, you need not repeat the principles and analysis of the law, but need merely state
that they are the same.
 If more than one general law or statutory duty is applicable to a case study then identify,
analyse and apply the dominant duty in your answer and refer to the other duties in
passing only.
 You need not include remedies in your answer, unless this is required by the question.
 Where possible, cite at least one case as authority for each key principle, key statement,
rule, test, etc. in your answer.

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 Study the key cases and case examples in the textbook to gain a better understanding of
how the legal principles are applied in practice and also to familiarise yourself with
different factual scenarios, which might be of assistance when answering case study
questions.
 Use the Flowchart of Directors’ and Officers’ Duties and Remedies on page 417 of the
textbook, Australian Corporate Law, 5th
edition, as a starting point. The general law
duties are in the top half of the flowchart and the statutory duties (Corporations Act
provisions) are in the bottom half.
 See too the flowcharts:
o Overview of Fiduciary Duties, page 429
o Comparison between Fiduciary Duties and Statutory Duties, page 436
 Read the following portions of the textbook as an introduction:
o ‘Overview of duties’ on page 416 to 419, paragraph 15.1
o ‘Fiduciary Duties – Overview’ on pages 427 to 429, paragraph 15.9
B. CASE STUDIES
1. Identify the directors’ duty which is relevant to the facts in the case study, based on
the conduct of the director/s. State the name of the duty. Identify both the general law
duty and statutory duty (unless only one is required in the question).
eg. Duty to act with care, skill and diligence at general law
Duty to act with care and diligence in Section 180(1) of the Corporations Act
2001 (Cth)
a. Classify the directors’ duty as general law (common law or equitable; fiduciary or
non--fiduciary) or statutory.
eg. The duty to act in good faith and in the best interests of the company and
the duty to act for proper purpose are fiduciary duties under the law of equity.
b. Define the duty: state the general law definition or the statutory definition from
the relevant section of the Act and explain the meaning of the duty, eg.

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- At general law, directors have a fiduciary duty to act in good faith in the
best interests of a corporation. The meaning of ‘good faith’ ishonesty.
- The statutory duty of care and diligence as defined in Section 180(1) of
the Act is:
“A director or other officer of a corporation must exercise their powers
and discharge their duties with the degree of care and diligence that a
reasonable person would exercise if they:
(a) were a director or officer of a corporation in thecorporation’s
circumstances; and
(b) occupied the office held by, and had the sameresponsibilities
within the corporation as, the director or officer.”
2. Analyse the duty:
a. State the principles which apply to the duty,
eg. At general law, in equity, directors have a fiduciary duty not to misuse
confidential company information.
The principle which is applies to this duty is that a director cannot use
confidential company information for his/her own benefit without disclosure
and approval of the members and, in some instances, the directors.
This principle includes the misuse of trade secrets and lists of customers and
suppliers.
b. State any rules which may apply,
eg. At general law, in equity, the fiduciary duty to avoid conflicts of interests
requires directors to make full disclosure of their potential conflict of interest to
the company’s members at a general meeting and obtain the members’
informed consent.
The equivalent statutory duty under Section 191 requires directors who have a
material personal interest in a matter that relates to the affairs of a company to
disclose that to the other directors.
c. Examine the tests used to determine compliance with or breach of the duty,for
example:
eg. In order to establish whether a power was exercised for proper purpose, the
following tests are applied:
(i) The ‘two step’ test:

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 the reason for the existence of a directors’power
compared to
 the actual purpose of a director when he/sheexercises
the power
Howard Smith Ltd v Ampol Petroleum Ltd (cite in full)
(ii) The ‘but for’ test:
The test used when there are multiple (more than one)
possible purposes, in order to determine the actual purpose
for which the power was exercised by a director - Mills v
Mills (cite in full)
d. State what standard is used in certain circumstances, for example, for assessing
a director’s conduct or state of mind,
eg. Both the general law duty of care, skill and diligence and the statutory duty
of care and diligence impose an objective ‘reasonable person’ standard.
e. Provide authority as support for the law you have analysed, in the form of
relevant case law and/or statutory law. Cite at least one case for every key
principle, key statement, rule, test, etc.
3. Apply the law to the facts
a. Apply only the relevant law to the facts of the case study,
eg. There are three common situations involving the ruleagainst
conflict of interests:
1. diversion of business opportunities
2. misappropriation of company property; and
3. secret profits (undisclosed commissions).
Choose only the situation/s relevant to the facts of the case study.
b. Ensure that you have applied the law to all the relevant facts in the case study,
without omitting any relevant facts, eg.
The ‘corporation’s circumstances’ in Section 180(1)(a) include: the type of
company, the size and nature of its business, the provisions in its constitution,
the composition of its board and the distribution of work between the board
and other officers.

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Therefore, any facts in the case study which provide information about these
different factors are relevant when applying the law to the facts.
c. In developing an argument for both parties, what follows below should be taken
into account. The extent of detail required in dealing with defences and relief
from liability will depend on the scope of the assignment, as determined by the
wording of the assignment question. If you are not specifically required by the
assignment question to deal with defences and/or relief in your answer, you
need only include them, or either of them, briefly and not in detail. It appears
that defences relate to the issue of breach, whereas relief appliesto the issue of
liability.
i. Breach:
Identify and analyse the duty, then apply the law to the facts to
determine whether or not a duty has been breached.
ii. Defence:
1. If there is a defence, there is no breach and the director will not
be liable.
2. If there is no defence, there will be a breach and thedirector
will be liable.
iii. Relief:
An application may be made to Court for relief from a breach or
contravention, in certain circumstances:
1. If relief is granted, the director will not be liable.
2. If relief from liability is not granted, the director will be liable.
d. Remedies and penalties will apply if the director is liable. Remedies and
penalties need only be included in your answer if specifically required bythe
assignment question. These may be:
1. Statutory and/or general law (common law or equitable)
2. civil and/or criminal
4. Conclusion
This is the short answer to the question posed in the case study and should follow
logically from the reasoning in part 3 ofyour answer.

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CORPORATE LAW – LAW2001
REFERENCING GUIDE - AGLC
In your assessments, in order to avoid plagiarism, you are to use your own words and not merely
copy from other sources, eg. the textbook. You will be penalised for plagiarism and in serious cases
you may fail the assessment.
The usual copyright provision is that you may directly quote up to 10% of your assessment from
other sources, however, as you need to provide authority in the form of case law and legislation in
law assessments, a further allowance will be made when you are quoting directly from case law and
statutory law.
A reference in accordance with the Australian Guide to Legal Citation (AGLC) is to be provided for
every quotation. All quotations must be in quotation marks:
--for short quotations of three lines or less, use single quotation marks;
-for long quotations of more than three full lines, do not use quotation marks but indent the
quotation and type it in a smaller font size.
You are also to provide a reference for every idea which is not your own and which is taken from
another source, even if the idea is expressed in your own words.
All quotations and sources referred to in the body of your assessment are to be referenced in
footnotes at the bottom of the page. In addition, a bibliography is to be provided at the end of the
assessment, which is a list of all resources read or consulted, whether or not you actually used or
referred to them in the body of your assessment.
(Click on ‘Subject Guides’ then ‘LAW2001Corporate Law’ then ‘Legal Citation and Referencing’).
The portions of the AGLC which you are most likely to need for referencing are:
 Footnotes – page 1
 Subsequent references – page 7
 Quotations – page 12
 Cases – page 37
 Legislation – page 64
 Journal articles – page 81
 Books - page 89
 Newspaper articles – page 107
 Internet materials – page 116

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CORPORATE LAW - LAW2001
MARKING GUIDE FOR CASESTUDIES
1.Identify legal issue/s -Identify the legal issue/s correctly
-Interpret the given facts holistically,
where applicable, to identify multiple
legal issues arising from different areas
of law
TOTAL
5%
2. Analyse legal issue A. Analysis
-identify relevant law
-break down into essential
parts/components including rules,
principles, tests and/or standards
(must be comprehensive)
-define and explain legal rules,
principles, tests and/or standards
- show knowledge, understanding and
correct interpretation of legal concepts
-explain different interpretations of
the law, where applicable
B. Authority
-support principles, rules, tests and
standards with relevant statutory law
and/or case law
-use case law for interpretation of
statutory law, where applicable
-show evidence of reading beyond key
readings (for higher grades) 30%
3. Apply law to facts Synthesis of law and facts:
Facts
-select relevant facts (show
understanding of legal significance of
relevant facts)
Assumptions
-make assumptions (‘if … then’) in
order to clarify the facts, if and when
necessary, in order to apply a
particular rule or principle of law
Law
-apply relevant law to the relevant
facts
- show understanding and correct
interpretation in applying law to facts
-show relevance of key case/s to facts

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of case study
-use logic and reasoning in applying
law to the facts
Argument
-provide legal argument, position or
point of view of each party
-take into account defences and/or
exceptions
-take into account different
interpretations of the law, where
applicable
Distinguish between personal opinion
and information supported by
evidence/authority 50%
4. Conclusion Arrive at correct conclusion using
analytical reasoning; use critical
reasoning where appropriate. 5%
5. Language, structure,
Referencing
Ability to explain legal
concepts
(communication skills)
See Assessment Rubric on Blackboard
See Assessment Rubric on Blackboard
10%
TOTAL 100%

Corporate law-law2001

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