Mary Meow is concerned about the propriety of the sale of the pet store business by Gary Growl to Lassie Ltd at an inflated price. Mary Meow wants the directors to take action against Gary Growl.
With reference to the Corporations Act 2001 (Cth) and case law, you are required to answer the following questions:
(i) Is the cat contract with Feline Fertility Pty Ltd enforceable? Your answer should include an analysis of the reason put forward by Lassie Ltd for terminating the contract.
(ii) Will Lassie Ltd’s constitution prevent Willy Woof from entering into a lease with Hot Ltd?
(iii) Do you consider a court would order the reappointment of Gary as General Manager on the grounds he has put forward?
(iv) Gary has a clause in his employment contract with Lassie Ltd that he must not compete with the company’s business during his appointment or after termination of his appointment. After leaving Lassie Ltd, Gary sets up a company called ‘Poodle Pty Ltd’ to sell different types of dogs. Lassie Ltd brings an action seeking to restrain Gary and Poodle Pty Ltd from engaging in a competing business. Gary argues that Poodle Pty Ltd is a separate legal entity and it can do what it likes. Discuss whether Lassie Ltd is likely to be successful in its action.
(v) Advise Gary of his responsibilities and any liability arising from the incorporation of Lassie Ltd and his sale of the pet store business to that company.
(vi) Two years after Lassie Ltd started trading, there was a real decline in the demand for dogs and Lassie Ltd went into liquidation. Lassie Ltd still owes $50,000 to a company called Doggy Pty Ltd. Advise Doggy Pty Ltd as to whether it might be able to recover any amount from Lassie Ltd, its directors or its shareholders?
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