LAW513 – Assignment 2
Heritage Ltd is a manufacturer of custom-made jewellery. It also makes badges and pins for sports clubs and corporations. Its business is small, and is run from rented premises in Melbourne. The company has clients in Sydney and Brisbane, and makes deliveries using a van hired from Melbourne Van Rentals & Sales Ltd. Its directors are Peter, Paul and Mary. Mary is named as Managing Director in the company’s constitution. This appointment is stated in the constitution to be subject to annual confirmation by the Board. The last time this occurred was in February 2014. Despite this, Mary has carried on performing her duties as Managing Director. The constitution also states that any contract of over $150,000 in value requires the prior approval of the board.
Mary is of the view that the company should expand its business, and so approaches Mike Smith, Managing Director of Melbourne Van Rentals & Sales. Mike Smith has previously visited Heritage’s premises and knows Mary well, having advised her over the past five years on the most economical way to spend Heritage’s transport budget which he knows is $65,000 per annum. Mary says that Heritage Ltd wants to purchase three (3) armoured vans at a cost of $100,000 each, and signs a contract to this effect on behalf of Heritage. Mike has not seen Heritage’s constitution.
Peter and Paul are shocked when they hear about the contract for the armoured vehicles, which they certainly do not approve of, and have now received a letter from Melbourne Van Rentals & Sales stating that the armoured vans are ready for delivery and asking Heritage to perform under the contract.
REQUIRED:
Advise Heritage and Melbourne Van Rentals & Sales, citing authority for your answer.