Reference no: EM131036126 , Length: word count:2500

Question 1-

United Surveyors is the name of a road surveying firm which undertakes contracts for the Albury City Roads Department. Smith, Jones and Peters have been partners in the firm for some time. There is an agreement between them limiting the authority of the partners to contracts up to $ 5 000. Smith regularly deals with Mary Bradshaw, manager of Capital Engineering Supplies. On numerous occasions Smith has purchased surveying supplies from Mary, who is aware of the type of work United Surveyors does. Smith buys a surveying instrument costing $ 6 000 from Mary. He has always wanted the firm to branch into oil exploration, as he is also a qualified mining engineer, but his partners have continually rejected such a move. Hoping to persuade them of the rewarding nature of such work, Smith decides to drill some test wells on a property that the firm owns, and to that end places an order for a $ 3 000 mini oil-driller with Mary. Jones and Peters have told Mary that she will not be paid for either purchase. Advise Mary as to her legal position, citing relevant statute law.

Question 2-

Steve Jones is an entrepreneur with a variety of business interests. He learned of a gold deposit in Western Australia. Because he was anxious to exploit the opportunity, he decided to form a company, to be named WA Gold Exploration Ltd. He flew to Perth and on 6 July placed an order for a drilling machine from Thor Mining Machinery Ltd, to be used to drill a test shaft. The contract specified that the drill would be delivered, and payment of the $ 125 000 price would fall due, on 30 July. He signed the order for the drill as follows:

Steve Jones, on behalf of WA Gold Exploration Ltd.

WA Gold Exploration Ltd was registered as a company by ASIC on 10 July, with Steve as 90% shareholder. He and the other shareholders met on 11 July, to elect a board of five directors. Steve himself was not elected to the board, because although he had originally discovered the opportunity, he had no experience in mining operations, and so did not want to be involved in day to day running of the company.

On 14 July, the board signed a contract for a fleet of five ore trucks with Volvo Trucks (Australia) Ltd, costing a total of $ 500 000, to be delivered on 30 September. The board also established a sub-committee to determine the company's technical needs, and on 25 July the board accepted the committee's recommendation that the company not buy the $ 125 000 drill from Thor Mining machinery Ltd and should instead buy one from United Mining Machinery Ltd for $ 90 000. The board then contacted Thor Mining Machinery Ltd and told it that it would not be taking delivery of the drill or paying for it. Unfortunately, in mid-September it became clear that the gold deposit was not as large as hoped, and the board ceased trading on the basis that the company had only $ 400 000 in assets and had accumulated $ 2 million in liabilities. The company is therefore unable to pay for the trucks. Steve, who has personal assets of $ 1 million, has now been sued for breach of contract by both Thor Mining Machinery Ltd and Volvo Trucks (Australia) Ltd. Assume you are his legal advisor. Prepare advice for him citing full legal authority, as to what his legal position is.