Assignment: Case Study

Question One


Can Helen argue that the contract of employment between her and Ray is enforceable?

Has Helen breached the contract between her and Ray?


Contract of employment between an employer and employee should be critically assessed by an employee before getting to agree to the contract because most of employment contract are sometimes unfair in some part of it and might right to disputes when the employee finally realise the limitations attached to the agreement he/she signed (K&L Gates 6; Tyson 44). However, business laws require an employer to use Fair Work Act when drafting their employment so to avoid exploitation of employees.

By Australian Contract Act 2001, an agreement of non-competition may restrict the employee’s right to conclude a new employment contract or engage in a trade concerned for maximum of six months. An agreement of non-competition does not bind the employee if the employment relationship has been terminated for a reason deriving from the employer. According to the Fair Work Act, there has to be at least one week advance notice on the termination of employment contract, and this only applies when the intended period of continuous service is not more than one year. The same scenario is also demonstrated in Bryson v Three Foot Six [2005] NZSC 34 case where period less than one week as a termination or resignation notice saw a film contractor’s employment terms concerning termination notice was disregarded as non-standard contract terms.


In this scenario, Helen claims that Ray’s employment agreement is enforceable yet she signed it at the beginning of contract. She also claims that Ray owes her a bonus of $500 he promised her yet there is no clause in their employment agreement stating any bonus to given to employees. However, giving a one week notice to Ray is, though against the agreement she signed, legal according to Australian employment law. If she deems the contract enforceable, she ought to have not signed it, or she can still make claims to Fair Work Association FWA. She is liable to continue her contract with Ray unless she claims against the contract agreement to FWA.


Helen can claim contract agreement between her and Ray is unenforceable only to FWA, and work with Haddock, otherwise she has to continue working with Ray according to his employment she signed to agree to. Ray is able to sue Helen for breaching contract since she signed the contract agreement.

Question 2


What is the best option for Jill and Christine’s company?

What rights does Westpac have to recover the principal and the outstanding interest?

What is the effect of the personal guarantee on Jill?

What is the impact of transaction 4 and 5 on liquidation of the company?


Corporations Act 2001 describes situations that affect a corporate company. If a company is not able to pay its employees, an implication that it t is an able to run its daily activities, the likelihood of incurring more liabilities such as debts is relatively high. Unable to run its activities, the corporate company has to dissolve to avoid incurring liabilities. Upon dissolution, mutually agreed amongst member of the corporation, registered debenture, a loan unit, in a corporate company is to be paid first before the share capital of the corporates. It is required by Australian corporation laws that if a company decides to dissolve, all outstanding loans owed to registered bodies are to be settled first before dissolution. If the company is unable to meet its outstanding loans, fixed and current assets of the company can be auctioned and/or the guarantors come in, and settle the debts of the company (Thomson 145). According to Sheehan; South Australian Service Stations Ltd vs. Varco & Hodge (2001), a corporate company unable to meet its financial requirement may dissolve and registered debentures paid first when its being liquidated within that same year of loan.


In this scenario, VP is unable to meet its operation finical requirement, and any further operations will likely to incur more debts to the company. The possible way to avoid that is to dissolve the company, liquidate the assets and pay its debentures. Jill, however, is deemed responsible to a situation where the company will not be able to full refund Westpac Bank the full amount of the principal they borrowed and the interest it gained within that duration. The car Jill took as her own, by the corporation laws still belongs to the company and will have to be considered when recovering the debts the company has. However, upon liquidation of the company, Westpac Bank and the supplier will be considered first before the salaries owed to employee.


The only option to avoid more liabilities for the company is to dissolve, liquidate its assets and recover its depts. With Jill as the guarantor, she will have to be liable to pay for the principal and the interests in a case where the assets used as security to the loan are unable to meet the total amounts required. The car Jill has is for the company and will have to be considered to repay company’s debts. However, if liquidation date is 31st May 2015, the supplier will be compensated as stated by corporations laws, that if debenture is within six months to the time of liquidation, is should be paid.

Question 3


Have any of the directors breached their duties, and is there any defence to this?


Under chapter 2D, Part 2D.1, Corporation laws describes the duties and powers of officers and employees of a corporate company. According to this law, each director of a corporate company is responsible for his/her exercises where power is delegated amongst the directors. The director delegated a particular responsibility will be responsible for any activities within the powers of his/her delegation; however, the director will not be responsible if the actions are believed to out of good faith, reasonable grounds, after making the circumstances inquiries and deeming the action necessary, if the actions are in accordance with the corporation constitution along with the corporation act.

According to Harris, Hargovan & Adams (46), it is important that all directors attend directors’ general meetings on issues concerning the directions of their company. However, a director can notify his/her colleagues for being absent in the meeting prior to the meeting’s agreed day. The director can accept information given to him/her by one of the directors, an employee, concerning issues discussed in the meeting as well as issues concerned with areas of particular director’s delegation. For this, corporation laws require director to give all the information, in his/her delegations, to the other directors; otherwise it is a breach of duty as claimed by Christine v Harcourt [1973] 2 NZLR 139 case.


Nathaniel did not attend directors’ meeting without prior notice; that is a breach of duty. Charles and Blair did not got through the report to comprehend the content; considered a breach of duty since Corporation Act require a director to fully comprehend information given by a member of directorate of any other employee. However, thy can argue to have trusted that Serena acted in good faith in matters she found necessary to the company. Serena, however, did not inform the other director of the issue connecting her with the property in question; this is a breach of duty since she acted to her advantage rather that to the interest of their company. She can still argue to have considered it necessary for the company to buy the property after assessment, since she is the company’s property lawyer. Breaching duties can result into disapproval of the contract made by the director; the director can lose his/her position as directors if the owners decide to relieve duties; the company can act against the director demanding remedies to damages caused by the breach.


All the directors have breached their duties in matters of the company. However, Nathaniel cannot claim that the property contract has been inappropriately conducted has been since the other colleagues signed in agreement whilst he neglected to attend the meeting.

Works Cited

Harris, J, Hargovan, A and Adams, M,.Australian Corporate Law, 5th ed (2015) , Sydney: Lexis-Nexis. Print.

K&L Gates. Doing Business in Australia: Employment Law. (2013). Print.

Tyson, A.F. Synopsis of “Hobbit Dispute”. Newzealand Journal of Employment Relations. (2010). 36(3): 5-13. Print.

Thomsom, R. Corporations Legistations 2006-2014 CD Archives. (2015). Print.


Corporation Act 2001

Fair Work Act 2001

Bryson v Three Foot Six [2005] NZSC 34

Christine v Harcourt [1973] 2 NZLR 139

Sheehan; South Australian Service Stations Ltd vs. Varco & Hodge (2001),

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