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Whether the contract that Amy entered into with FCD would bind SCL?
Member rating: No Rating | Words: | Submitted: Mon Jun 19 2006
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INTRODUCTION: We have a case where there is a company BCL and it has its Subsidary Company as SCL. BCL has 100% shareholding in SCL and three of the directors of BCL sit on the board of SCL (Amy, Ben and Carrie). One of the directors of SCL(Amy) engaged in a contract with Eddie who was the manager of FCD for trading in fake cds considering the fact that it was more profitable to trade in fake cds then to trade in genuine. This was against the constitution of SCL and General Law. When FCD invoiced SCL for the 1000 Cds SCL refused to pay the account. On further inquiry it as learnt that SCL was insolvent. Question 1: Whether the contract that Amy entered into with FCD would bind SCL? Answer 1: Under s126(1) of Corporations Law, an individual acting with the company's express or implied authority can make, vary, ratify or...
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