Case Study: Smart Engineering Pty Ltd.

1613 Words 7 Pages
Smart Engineering Pty Ltd. Case involves Alex who is its managing director that accepted a $100,000 order for the supply of steel cables to Shifty Sellers Pty Ltd. This order was placed by the director of Shifty Sellers Pty Ltd, Max. The order was then delivered on credit to Shifty Sellers Pty Ltd. that failed to pay for the steel cables. Prior to the supply of the steel cables, Max had been known to be a bad credit risk by Alex and in the engineering industry. In the liquidation process of Shifty Sellers Pty Ltd never paid Smart Engineering Pty Ltd for the steel cables. At the same time, Alex took a loan of $500,000 from Eastpac Bank Ltd. on behalf of Smart Engineering Pty Ltd. for the purpose of expanding the business of the company into …show more content…
Case above has highlighted the business environment that Alex who is its managing director has to work within to achieve its business goals and objectives of making huge profits. Let us examine the facts of this case. First, Alex accepted a $100,000 order for the supply of steel cables to Shifty Sellers Pty Ltd. which was placed by Max, its director. Second, Shifty Sellers Pty Ltd. failed to pay for the steel cables. Third, Alex knew Max as a bad credit risk who the engineering industry finds to be the same. Fourth, Shifty Sellers Pty Ltd. did not pay Smart Engineering Pty Ltd. for the steel cables after going into …show more content…
steel cables because before supplying the steel cables, Alex knew Max was a bad credit risk. This puts the responsibility on Alex who should have refused to deal with Max who puts his own interest above his company’s interests. In looking at Salomon v A Salomon and Co. Ltd [1879] AC 22 case, Max cannot be found liable for the loss Smart Engineering Pty Ltd. incurred because of the unpaid steel cable. This is because Shifty Seller Pty Ltd. is the business entity that takes the liability and not Max. As per chapter 5c, section 601FC, her intentions were honest because she knew Alex to be the best person with knowledge of the Chinese market and experience that would ensure expansion of the business into China. Alex and Betty did not breach any duties owned to Smart Engineering Pty Ltd. as per the Corporations Act 2001 (Cth) because as per chapter 5c, section 601FC they were both acting in the best interest of expanding the business into

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