Eddie is a well-known property developer. He owns 100% of the shares in Stadium Enterprises Ltd (Stadium) which builds and manages sporting venues. He is its CEO, and there are two other non-executive directors of Stadium, Marge and Bart. Eddie is also a non-executive director of Major Events Pty Ltd (Major Events). Its business is bringing international musical acts to Australia.
While he is overseas on holidays, Eddie meets with the management of Lesha Minogue, a hugely successful American singer. Eddie tells Lesha's management that he runs Major Eventsand can organise a concert tour for her across Australia, using venues that Stadium owns. He is confident that the rest of the Major Events board will agree when he tells them. Eddie uses some Major Events letterhead to draft a contract and he signs the contract on behalf of MajorEvents, writing 'director' next to his name. Lesha's management also sign, and pay him a 'negotiator's fee' of $50,000. Eddie believes this fee is only fair, as he has done all the work toget the contract, so he doesn't tell the rest of the Major Events board about it.
Eddie is very glad to receive this fee. He has been having personal financial problems. Recently, he secretly sold back half of his shares in Stadium to the company, without telling Marge andBart. While Stadium is still solvent, buying back Eddie's shares has significantly reduced theamount of its cash reserves.
Major Events are very unhappy when they hear about the deal Eddie has done with Lesha'smanagement.
(a) Advise Major Events whether it is bound by the contract with Lesha's management.