Reference no: EM132489050

Tory, James and Alex decide to createcompany called Little Creations Pty Ltd (Little Creations).  Little Creations will operate a business selling haute couture baby clothing.  They decide that they will each hold one ordinary share and Tory and James will be directors. Due to her impeccable tastes in infant fashion, Alex is going to be the "Head Designer".

Tory proceeded to register the company with a constitution.  Among other things, the constitution says that Alex will be Head Designer for 5 years and she can never be removed from that position during the 5 year period. The constitution also provides that Alex has to get board approval if she is going to enter into any contract in excess of $20,000 in her capacity as Head Designer.

After Little Creations is formed, Alex entered into a contract on behalf of the company to purchase a roll of fabric from Sophia for $25,000.

A. Tory and James want to terminate Alex from her position as Head Designer but Alex says they can't because of the constitution.  Can Alex enforce the constitution in this respect?

B. When James and Tory discover the contract with Sophia, they call her and say Little Creations will not be proceeding with the contract as Alex had no authority to enter into the contract.  Can Sophia enforce the contract against Little Creations?