BUSINESS AND CORPORATIONS LAW
Question 1
Is Swimming pool Co liable for Martin’s actions? On what basis in law would this bethe case?
Swimming pool Co is not liable for Martin’s actions. This is because Martin is in a fiduciary relationship with the company he is serving. He is obligated to execute fiduciary obligations in good faith and fair dealing upon the part of the fiduciary. As a matter of fact, a fiduciary relationship means that an individual who is subject to the fiduciary duty should not misuse his knowledge, his position or the benefits of his position to advance the interest of a third party or the fiduciary (Tomasic, Bottomleyn & McQueen, 2002). In this case, Martin is obligated to sign new contracts and receiving cash on behalf of the company. However, Martin failed to fulfil his duty of good faith and proper purpose (Hanrahan, Ramsay & Stapledon, 2013).Therefore, this case can be based on the law of duty to act bona fide for the company’s benefit thus declaring that Martin acted dishonestly.
He may be charged under criminal offence as stated in s 184 of Corp Act. It states that a person commits a criminal offence when he or she acts dishonestly and commit the offence recklessly or intentionally (Tomasic et al., 2002; Fitzpatrick, Symes & Veljanovski, 2014). In this case, it is clear that Martin used the power vested on him to embezzle the company’s money for his personal interest. This is evident where he seems to have kept part of the money collected away from the company’s bank. From this perspective, Martin has breached his fiduciary duty to use his authority for the reason the power was given to him. In Marchesi v, Barnes the ruling held that the duty to act honestly is equal to acting bona fides or in good faith. His honour O’Bryan J stated ‘[R]efers to acting bona fide in the interests of the company in the execution of the roles associated to the office of director. A breach of the obligation to act bona fide in the interests of a corporation include a consciousness that what is happening is not in the benefit of the company, and intentional behavior in disregard to that knowledge. This makes up the element of mens rea in the criminal offence created by the statute’ (Tomasic et al., 2002).
Question 2
Can the company claim they are not liable for Martin because he has not followedinstructions? Explain.
The company is not liable for Martin because he has breached his duty to the company. The company has the right to bring forth proceedings against Martin for not honoring the contracts he made to the clients leading to huge losses in the repair of the new swimming pools. The company is entitled to remedies for breach of professional obligation by Martin resulting to damages. In both the contract and tort, the breach of duty by a professional is restricted to the concepts of migration, causation and remoteness (Christensen, Duncan & …
