Assignment task: Peter Blake and Donald Thomson are directors of a company called Party-on-the-Ftun Pty Ltd. Shares in the company are held by Peter [4D ordinary shares], Donald {3t} ordinary shares}, Peter's son, Malcolm [2D shares] and Donald's wife, Alicia [1D shares}. The business of the company is managed on the basis of a combination of a constitution and the replaceable rules in the Corporations Act 2001 {cm}. The constitution contains only three clauses, namely: I The business of the company is only to provide hiring equipment for parties and all types of corporate and social events. II Any director can make contracts on behalf of the company. 0 Any shareholder who wishes to sell his/her shares must first offer the shares for sale to other existing shareholders of the company. Only if none of these shareholders are interested in purchasing the shares, may the shares be offered for sale to non- shareholders. Unfortunately, the business relationship between Peter and Donald has taken a turn for the worse, with Peter wishing to expand their business to include a catering arm and Donald resisting the idea. Peter's wife, Lorna, is a wonderful cook and he is convinced that haying her in charge of a proposed new catering division of the business will result in even better profits for the company. Donald is satisfied with the business as it is and does not want the company to take on any more than what it is currently doing. Donald draws Peter's attention to the clause in the constitution describing the business of the company and is convinced that this clause would be sufficient to prevent Peter from proceeding with his plans to expand the business of the W decides to approach you for advice to double-check.
Advise Donald. Explain the legal effect of the clause describing the company's business in detail. Distinguish between a scenario where -
Q1. Peter is considering making a contract on behalf of the company that is not related to its business as described in the constitution, but has not done so yet.
Q2. Peter has already made a contract on behalf of the company that is not related to the business of the company as described in the constitution.
Questions should be answered using the IRAC method (Issue; Rule; Application; Conclusion)