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The issue of law will be to determine if individual director have the authority to enter into contract on behalf of a company. If the company have any legal capacity to enter into a contract with the mayor of Sydney, the effect of ultra vires and constructive notice.

Under section 126, the company’s agent may enter into contract on its behalf and the company will be bound by the action of its agent. As support by Hely-Hutchinson v Brayhead Ltd [1968] 1 QB549, an agent may have implied actual authority to enter into contracts on behalf of the company, Furthermore, under section 128, 129 and 130, a person is entitled to make assumption when dealing with a company, support by Royal British Bank v Turquand [1856] 6 E& B 327; 119 ER 886. However, individual directors does not have customary authority to make contracts just because it is holding to a director position, as mention in case Northside Developments Pty Ltd V RegistrarGeneral (1990) 170 CLR 146, the position of director does not give it power to act on behalf of the company, directors can act only together as a board and the function of an individual director is to participate and make decision as a board should there be no representation made by the company. Under section 124, a company have the legal capacity like an individual and have the means to engage to enter in contracts, based on section 125 (2), an act of the company will be not invalid because it may conflict with the object clauses in its constitution.

With the above information, for the contract enter by Michael for the purchase of program from Ultimate Computer Programs, although an individual director does not have the customary power to enter into contract on behalf of the company as mention in case Northside Developments Pty Ltd V Registrar-General (1990). However, being the Information Technology director, there may be apparent authority that arise where Ultimate Computer Programs may rely on Section 128 to assume under Section 129 that Michael have the actual authority to make contract on behalf of the company and Michael will have perform their duties to its company. Although Events R Us Ltd have an objects clause that required the board to approve any transaction that cost over $40,000, however under Section 130, although the clause may be available to the public from ASIC, Events R Us Ltd may not rely on this to say that the contract made by Michael is invalid and further suppose by Section 125 where the act of the company will not be invalid due to conflict with the object clauses in its constitution. These are support by case Hely-Hutchinson V Brayhead Ltd [1968] and Royal British Bank V Turquand [1856].

As for the contract enter by Jenny with the mayor of Sydney, the company do have legal capacity to enter into the contract with the mayor as support by Section 124, although Events R Us Ltd have a constitution that states that the company can only organizes events in Western Australia, however with the abolish of ultra vires and constructive notice as support by Section 124, 125 and 130. Events R Us Ltd may not rely on this to say that the company has no legal capacity. Even with that said, given the position of jenny as a Finance Director, as mention in case Northside Developments Pty Ltd V Registrar-General (1990), she do not have any authority to enter into contract on behalf of the company as an individual director, further to that, as a finance director role is to manage the company finance, the mayor in City of Sydney may not rely on section 128 and assume under Section 129 that jenny have the customary authority to enter into contract.

Therefore, with the above information, we can conclude that Ultimate Computer programs is able to enforce the contract against Events R Us Ltd. As for the contract with the City of Sydney, Events R Us Ltd is unable to argue that the company have no legal capacity to enter into the contract, however, it may inform the city of mayor on Sarah having no authority to enter into an agreement with the City of Sydney.

References 1. Lipton, P., Herzberg, A., & Welsh, M. (2018). Understanding company law. Pyrmont, N.S.W.: Thomson Reuters. 2. Australian corporations & securities legislation. (2019). North Ryde: CCH Australia....