Note: The word limit is 2000 words. Please see the Essential Guide for the penalties for exceeding the word count, or submitting late. There is other relevant information there, such as on avoiding plagiarism.

Marking Guidelines

Marking Guidelines

Identifying and analysing the main issues .

6 marks

Identifying and applying the relevant law to the issues relating to the question in part (a) by discussing the possible legal arguments for and against the parties concerned and drawing the conclusions based the relevant law.

14 marks

Discussing the question in part (b) with regard to the remedy, if any, under the general law and the Corporations Act 2001 (Cth).

10 marks

Criteria for Assessing LAW251 Assignment

The assignment will be assessed on the following criteria:

[1] Does the answer adequately address the issues raised by the questions? This means you should thoroughly analyse the facts of the assignment by pointing out the main issues that need to be dealt with so as to answer the question posed. For example, if the question seeks a critical assessment of a particular issue, then a merely descriptive answer will not be awarded high marks.

[2] Does it identify and state the relevant law, both case law and statutory provisions, applicable to the issues you have already analysed in [1] above. In stating the relevant law, try not to rely on quotations from secondary sources such as textbooks or journal articles, but instead make reference to the primary materials such as law reports and statutes.

[3] Does it demonstrate analytical and critical skills? This is assessed by the way you analyse the issues in [1] and you identify the law in [2]. Obviously, this will not be demonstrated merely by a repetition of what appears in the textbooks or journal articles. In other words, your answer must demonstrate your ability to analyse, assess and state the issues and the law in your own words.

 

Catalogues R Us Pty Ltd (CAT) is an advertising and print company which has been in existence since the 1980s producing retail catalogues and point of sale advertising material for over 3000 clients around Australia. The board consisted of six people, four of whom were the original founders, but were now retired from the day to day running of the company. Two others members, one of whom was the Chief Executive Officer and the other the Advertising Manager, were a young and dynamic couple (Bruce and Phyllis). They had worked in the business for the last 10 years and after an office romance had married two years ago.

Bruce and Phyllis had been working on a digitisation of the advertising business, and were developing a platform where all published catalogues could also be accessed online. The plan was that customers of CAT clients would be able to sign up through a web portal, and as catalogues were released, customers would receive an email with links to the latest catalogue, also highlighting specials and other promotions to be offered by CAT clients that week or month, for instance.

In the last 12 months, the budget for the project had been $500,000, and a company called Online Magic Creations Pty Ltd (OMC) had been engaged to build the website and associated software processes required to deliver the project. Several of the larger customers of CAT had been approached to run a trial of the system when it was nearing completion. ‘Ozzie Camping Equipment’ (OCE) and ‘Auto Spares and Farm Equipment’ (AS) had been particularly keen to be part of the trial.

The project was now at the stage where it was going to run a live trial, but the project was over budget by $100,000. Bruce and Phyllis could see that they would require at least another $500,000 to $1 million over the next 12 months to have the online platform fully active, but projected income in the first year as they began to ramp-up might only be $250,000. When they took it to the board to get the additional funds approved, the older board members were not impressed. They said that they did not understand how so much money could be spent on a digital advertising system and could not see that it would ever be profitable. They passed a resolution to allow a further $250,000 at a maximum to be invested in the online platform, and stated that they would need to see positive cash flows before any consideration of further funds for the project would be allowed. Bruce and Phyllis, deeply unhappy with the decision, decided to resign from CAT.

3

They travelled to the USA and visited several technology companies to see what was available ‘off the shelf’ to deliver catalogues electronically. They talked to an online advertising company called Online Promotions Inc (OP). OP were very keen to setup a local office in Australia and, after negotiations, Bruce and Phyllis were appointed to open an Australian office, located in Liverpool NSW. They approached both OCE and AS to run a trial with the OP platform. Both businesses accepted the trial offer and cancelled their production contracts with CAT.

Bruce and Phyllis commenced their first run of online and printed catalogues through the trial with OCE and AS. Using a small graphics team, they prepared the new catalogues, which they published online and emailed to verified lists of customers supplied by both companies. They also outsourced the printing for the standard paper catalogues as previously prepared. The trial was a success, and both OCE and AS were extremely pleased with the results of the online delivery of catalogues and signed 12 month contracts to use the platform. Bruce and Phyllis then set about advertising their new platform and also contacting other customers from CAT in the hope that they would sign up with OP.

When the board of CAT heard that two of their clients had jumped ship to OP, and that others were being approached to use the new platform, they were furious and passed a resolution to take legal action against Bruce and Phyllis.

Advise the CAT board of directors as to the following questions:

a. Have Bruce and Phyllis breached their duties as a former directors at Catalogues R Us Pty Ltd (CAT) under the general law and the Corporations Act 2001 (Cth)? 20 marks

b. If so, what remedy may CAT seek against Bruce and Phyllis?

10 marks

Note that you should focus your advice on the legal issues relevant to the areas of law covered by the contents of Law251 Study Guide.

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