Assignment

Gordon Small, Managing Director of Dawson Industries Ltd, which owns a number of vineyards, approaches you for advice on the following facts:



(i) The constitution of Dawson Industries Ltd states that all its barrels must be bought from Adelaide Barrels Pty Ltd. As yet the company has not bought any barrels, but proposes to enter into a contract to buy some from United Wood Products Ltd. Adelaide Barrels Pty Ltd is now threatening legal action. Are they likely to succeed?



(ii) The constitution also lists ten named persons as directors, and states that they will hold office for 10 years at a salary of $ 50 000 per annum. Each director also has a contract of service with the company in the same terms. Five years has elapsed since the company was founded. One of the directors, Tom Skase, has been underperforming. A special resolution has been passed by shareholders removing Tom Skase’s name from the list in the constitution and dismissing him as director. What is the legal position of the company vis-a-vis Skase?