(a) Is “TV Treats” bound to pay for the cocktail party and sponsorship of the soccer team?

1. Whether Jennifer has the authority to sign the contract?
By approaching common law, an agent enters into a contract as a behalf of a company binds the company to the contract if it is within the scope of the agent’s authority, actual or apparent .

Actual authority makes the contract to the company by the expressly or implied agreement of a company, as an agent . In this case, TV Treats Limited (“TV Treats”) has its own replaceable rules and its constitution by stating that any over $50,000 expense must ask the requirement of approval of board. Obviously, Jennifer, as a company’s secretary, she does not have the express actual authority to enter the contract with EventsRUs at $70,000, which exceed a monetary limit on TV Treats’ behalf as set out expressly in his employment contract. To the case of sponsorship at amount of $10,000, Jennifer has actual authority to bind the principal to the contract. However, as a secretary, Jennifer has implied actual authority to make the contract with EventsRUs in such a position, as occurred in Hely-Hutchinson v Brayhead Ltd . Jennifer was taken to have implied actual authority as in this case to represent the company in the circumstances because Bernard, the managing director, has asked her to assist him to arrange the contract of company. This is also applied to S126 (1) . Thus, due to the situation, she can finalize the contract with her superiors indicating that she has the authority to make the contract.

In addition, we can use the doctrine of apparent authority where an agent is given the impression by the company to act on behalf of the principal. Apparent authority arises when an agent is given the impression, which has authority to be the principal’s behalf, by the company. According to Freeman and Lockyer v Buckhurst Park Properties Ltd , Jennifer has the representation by Bernard, who has the authority to make the decision to outsider. Furthermore, there’s need more evidence of reliance by events such representation to show Jennifer has apparent authority. In this case, contract which Jennifer signed is made by Bernard, who has the authority to make the decision to outsider, relied on Crabtree-vickeers v Australian direct mail .

2. Whether the contract, which Jenifer signed, valid or not?
By approaching Corporation Act 2001 (Cth), s127 (1) has represent that a company only executes a document by itself when the document is signed by appropriate officers of company and without using a common seal. In this case, the contract is only signed by Jennifer, who is only a secretary of company. At this situation, “TV Treats” did not execute the document by itself. In contrast, according to s128, people are entitled to make any assumptions when dealing with the company. Apply the case based on s129 (3), EventRUs and local soccer team recognized that Jennifer is behalf of “TV Treats”, who having the authority to exercise and perform appointed customary duties. Moreover, due to 129 (4), outsider can trust that the officer is perform their appointed duties to the company. Therefore, EventRus and local soccer team are entitled to assume that Jennifer has performed her duties and the contract has been properly signed by his superior .

By approaching common law, outsiders can use the indoor management rule as can be seen in Royal British Bank v Turquand . In the case, EventRUs and local soccer team may assume that the contract is signed by the person who has actual authority to dealing with. However, the internal management irregularities do not influence on any outsider unless actual or constructive knowledge . There’s no evidence to shows Jennifer has any actual knowledge or constructive knowledge. Thus, the internal management rule under common law is likely to apply and the contract, which Jennifer made, is valid rely on ss129 (3) & (4).

In conclusion, due to Jennifer has implied actual authority to sign to contract and the contract is valid under common law and statute assumption. With high certainty, “TV Treats” bound to pay for the cocktail party and sponsorship of the soccer team.

(b) Is “TV Treats” bound by the banking contract form signed by Kevin and his wife?

1. Whether Kevin and his wife, Philippa, have the authority to sign the contract?
By approaching common law, an agent enters into a contract as a behalf of a company binds the company to the contract if it is within the scope of the agent’s authority, actual or apparent .

As discussed above, actual authority is an agent, who has expressly or implied agreement of a company, makes the contract to a company . In this case, Kevin and his wife signed the contract, which is made to Seven Network Limited (“Seven”). In order to gain the dividend from Seven, Kevin filled his own bank details rather than the company. Due to the contract should be made by appropriating people, who have authority to control the business. Kevin, as a non-executive director of “TV Treats”, clearly does not have the expressly actual authority.

However, Hely-Hutchinson v Brayhead Ltd indicated that people have implied actual authority to make the contract with outsider in such a customarily position. Apply on the case, Kevin was only an executive director, the position do not taken to have any authority of running the company. Thus, he has no implied actual authority. What is more, for the perspective of Philippa, she is the person outside of company. The only relationship with company is that her husband represent as a non-executive in it. Thus, Philippa does not have any authority in this case.

2. Whether the contract valid or not?
According to Corporations Act 2001, ss128 and 129 implies that outsiders are allowed to many assumptions when they are dealing with a company. As mentions, s127(1) and s129(5) has represent that a company only executes a document by itself when the document is signed by appropriate officers of company and without using a common seal. In the case, the deal was not valid since the fraud ‘signature’ and the document was failed in common seal which means “TV Treats” would not executed the document.

By approaching common law, outsiders can use the indoor management rule as can be seen in Royal British Bank v Turquand . In the case, Kevin and his wife pretended to have authority to sign the contract. Thus, company “Seven” recognized that there was the appropriate person, who was under the authority, has signed contract. However, Ruben v Great Fingall Consolidated stated that “forgery is nullity and cannot bind a company ”. Therefore, the contract is void when Kevin and his wife act fraudulently.

However, s128 (4) of Corporations Act 2001, indicated that any of the assumptions set out in s129 apply if the agent of the company fraudulent a document and “covers the situation where a company seal or signatures attesting its application are not genuine but are fraudulent ”: Story v Advance Bank Australia Ltd . Therefore, “Seven” can assume Kevin and Philippa have the authority to make to contract.
To conclude, although “TV Treats” cannot be bound thought indoor management rule, “Seven” could claim that the contract is valid due to apply on statutory assumptions in ss128 & 129. It is likely that “TV Treats” will be bound by the contract signed by Kevin and his wife.

(c) Is “TV Treats” bound by the guarantee of the loan to Fresh Fruits?

1. Was Alexandra validly appointed?
For prospect of Corporations Act 2001, In view of Corporations Act 2001, s201H(1) permits the company’s directors to fill up a casual vacancy by appointing a director . However, to be a director in “TV Treats”, which is a public company, the appointment need to confirmed by the members in the next annual general meeting: s201H (3). As described in the case, Alexandra is not formally approved by the other members in the company.

In addition, “a company must notify ASIC within 28 days if a person is appointed as a director”, rely on S201L. In the case, the notice, which Alexandra been a director, has been seen to ASIC, however, board of the company never formally appointed Alexandra to be a director in “TV Treats”. The held is that Alexandra is invalid to be the director of “TV Treats”

2. Whether the contract as a guarantee valid or not?
By approaching common law, outsiders can use the indoor management rule as can be seen in Royal British Bank v Turquand . According to the case, the Careful Bank is considering being an outsider, who can assume that people has authority to sign the contract and be a guarantee of “Fresh Fruits”. However, Alexandra is only being a fraudulent director in the company who do not have authority to be a behalf of “TV Treats”. S128 (3), as mentions, indicated that any of the assumptions set out in s129 even for forgery: Story v Advance Bank Australia Ltd . Therefore, although Alexandra acts fraudulently, “Careful Bank” still can assume she is the behalf of company to make the contract and as a guarantee in bank loan of “Fresh Fruits”.

However, s129 (5) states that a company only executes a document by itself when the document is signed by two directors of the company and without using a common seal . In the case, the document is only signed by Alexandra, who is not being appointed, and none of the director of company has been notice. Thus “TV Treats” would not execute the document.

3. The use of “put on inquiry” by Careful Bank for verification
According to indoor management rule, “Careful Bank” can assume the contract, which “TV Treats” acts as a guarantee of bank loan of “Fresh Fruits”, is made by appropriate person. In contrast, Northside Development v Registrar-General states that when a possible irregularity by circumstances of the case and the outsider fails to make inquiry . In this case, “Careful Bank” should recognize that there simply do not have any relationship between “TV Treats” and “Fresh Fruits”. What is more, “Careful Bank” has responsibility to examine and do some research on “Fresh Fruits”. Therefore, the "Put on inquiry" exception may prevent “Careful Bank” from relying on indoor management rule.

By approaching the Corporation Act 2001, s128 (4) states that if a person knew or suspected that assumption was incorrect, the person cannot made any assumption rely on s129. In the case, the bank should put Alexandra’s signature on inquiry, which would results that it is not entitled to make the assumption based on s129. Thus, “Careful Bank” cannot assume the contract is made by appropriate person any more.

In conclusion, due to Alexandra is not formally appointed by the board of company and acts fraudulently, indoor management rule is unlikely to be applied. “Careful Bank” failed to rely on ss128&129 to prove the contract should be valid, as an outsider. Furthermore, the bank should use “put on inquiry” to confirm the guarantee is genuine. Thus, “TV Treats” is not bounded by the guarantee of the loan to “Fresh Fruits”. Reference:
Case Law:
 Crabtree-vickeers v Australian direct mail [1975]33 CLR 72
 Freeman and Lockyer v Buckhurst Park properties (Mangal) Ltd [1964] 2 OB 480
 Hely-Hutchinson v Brayhead Ltd[1968] 1 QB549
 Northside Developments Pty Ltd v Registrar-General [1990] 170 CLR 146
 Royal British Bank v Turquand [1856] 6 E&B 327; 119 ER 886
 Ruben v Great Fingall Consolidated [1906] AC 439
 Story v Advance Bank Australia Ltd [1993] 31 NSWLR 722

Legislation:
 Corporation Act 2001(Cth)

Books and Journal:
 Lipton, Herzberg A and Welsh, Understanding Company Law, 15th Ed, 2010, Thomson Lawbook Co.