Reference no: EM13316028

Part-1

Arthur, Bill, Christine and David are directors of Chance Ltd, a company whose business is wine bottling. Given the downturn in the economy and entry of new countries into the "New World" wine market, competition especially in Asia is becoming increasingly stiff. The directors of Chance feel that it would be prudent to diversify and invest in other business opportunities.

During the Easter vacation, Arthur caught up with his old friend from university days, Walter, who works for a green energy company in Norway that predominantly specialise in Tidal energy. Tidal energy is a very new form of energy that is picking up momentum in Europe and the Atlantic coast of the USA. The power created through tidal generators is generally more environmentally friendly and causes less impact on established ecosystems. Although not yet widely used, tidal power has a potential for future electricity generation. None of the energy companies in Australia currently use this form of energy.

At the next board meeting Arthur mentions tidal energy as a possible business venture for Chance Ltd. Arthur invites Walter who has just formed a company, Waves Pty Ltd that makes tidal stream generators, to come and speak to Arthur, Bill, Christine and David at their next meeting about tidal energy for 30 minutes. Walter is a very convincing speaker who showed them great 3D underwater pictures of the tidal stream generators his company makes. After Walter leaves, Arthur, Bill, Christine and David are all very excited at the prospect of being pioneers in the field of tidal energy in Australia and believe that this will be a profitable business. Without much further discussion they decided to invest $20 million into this venture and to give the sole contract to supply tidal steam generators to Waves Pty Ltd.

3 months later Chance Ltd.'s tidal energy business is a disaster. They discovered that the Australian waters is not suitable for tidal energy. While it may be suitable in Europe and the USA, Australia is not a suitable site for tidal energy, mainly because of our Great Barrier Reef.

The Directors later discovered that although Walter had been very convincing in his speech to them he really was not an expert in tidal energy and actually held an insignificant position in his company in Norway. And much to the directors' surprise, they discovered that Arthur is a major shareholder of Waves Pty Ltd.

Advise the directors of Chance ltd whether they have breached their directors duties under both the Corporations Act 2001 and general law.

Part-2

Nathan was born in Sri Lanka and recently arrived in Australia on a boat. He holds a refugee visa and is currently living in Adelaide. He speaks very little English. One sunny afternoon while he was walking down Rundle Mall he was approached by John, a sales representative from a telephone company, Dubious Connections Pty Ltd, who was selling telephone contracts. John was struggling to meet his sales quota and needed to sign up 10 more contracts by the end of the week. He told Nathan about the contracts he was selling. Nathan had been recently thinking about getting a mobile phone as it would be useful for him, especially to be connected with his family back home. As he had neither owned a phone nor had he ever entered into a telephone contract before, he knew virtually nothing about such contracts, and John was aware of this. John told Nathan that there was a special promotion just for that day and if Nathan signed up today he was entitled to a free i0S7.1 telephone. John explained the main features of the contracts but knew that Nathan did not understand most of what John told him, neither did he offer to get an interpreter to explain the terms and conditions of the contract to Nathan. Nathan was under the impression that he could terminate the contract any time he wanted and simply return the phone. In fact the contract was for a three year term and if the contracted was terminated anytime during this period Nathan would have to pay the full contract price of $3120 plus the price of the iOS7.1 which was an additional $800. After two months into the contract Nathan found the additional expense of this monthly phone bill difficult to manage with the meagre allowance he received from Red Cross. He wants to terminate the contract and return the phone.

Advise Nathan if there is a valid contract with Dubious Connections Pty Ltd, and any remedies that may be available to him. (Make reference to relevant case law and support your answer).