Deck 1: Legal Issues in Events Promotion and Company Winding up

Question 1

Esther is an events promoter. She advertises that 'John Legend' will be performing at a concert. Tickets are sold out in a matter of hours. On the night of the concert, the famous singer John Legend does not perform. Instead, another man named John Legend sings for the crowd. Has Esther breached the ACL?

A) No, because Esther has told the truth.
B) Yes, because Esther has engaged in unconscionable conduct.
C) Yes, Esther has engaged in misleading or deceptive conduct.
D) Yes, Esther has engaged in pyramid selling.

Answer 1

Yes, Esther has engaged in misleading or deceptive conduct.

Question 2

Which of the following is not a requirement for establishing that an agent has apparent authority?

A) The agent did not have actual authority.
B) The third party knew that the agent did not have actual authority.
C) The principal 'held out' the agent as having authority to act on their behalf.
D) The third party relied upon that holding out and assumed that the agent had actual authority.

Answer 2

The third party knew that the agent did not have actual authority.

Question 3

Christian agrees to sell five hundred footballs to Anderson. However, Anderson subsequently refuses to accept the footballs. Which of the following is not one of the statutory remedies available to Christian?

A) An order for specific performance compelling Anderson to accept delivery.
B) Compensation for any expenses incurred as a result of Anderson's refusal to accept delivery.
C) The right to resell the footballs to another buyer.
D) The right to retain possession of the footballs until Christian is paid.

Answer 3

An order for specific performance compelling Anderson to accept delivery.

Question 4

Jack negotiates with Jill to buy her red Ferrari. Which of the following will most likely be unenforceable as a non-contractual representation?

A) During negotiations, Jill states that red Ferraris go faster.
B) Jill states that the price of the Ferrari will be $1 million.
C) Jack tells Jill that he has to take delivery by the end of the week.
D) Jill tells Jack that she purchased the car brand new.

Question 5

Only secured creditors can initiate a compulsory winding up of a company.

Question 6

A compulsory winding up rquires a court order.

Question 7

A liquidator must be registered with ASIC.

Question 8

An uncommercial transaction made while a company is insolvent is voidable.

Question 9

Once a company is deregistered, the company ceases to exist, but the directors and officers can still be liable for the things done when the company was in existence.

Question 10

A compulsory winding up arises from a court order issued when:

A) A secured creditor has made an application to the court to wind the company up because it is solvent;
B) There has been oppressive conduct by the company and / or its member;
C) The directors pass a resolution declaring the company solvent and the shareholders pass a special resolution to wind up the company;
D) When ASIC obtains a declaration of contravention pursuant to section 1317E;
E) The company's assets exceed its liabilities.

Question 11

Which of the following parties can bring an application under section 459A of the Corporations Act to liquidate a company:

A) a creditor
B) a director
C) ASIC
D) another government agency such as the Australian Taxation office
E) all the above.

Question 12

Which of the following is not a function of a liquidator?

A) conduct an impartial investigation of the company's affairs
B) realise the company's assets
C) make calls on contributories
D) prosecute directors for breaches under section 184 of the Corporations Act
E) determine the debts payable by the company.

Question 13

Which of the following are grounds for the compulsory winding up a company other than for insolvency?

A) The company has been unprofitable;
B) The company has ceased business operations for one year;
C) The company has fewer than the required number of members;
D) The court believes it is just and equitable to wind up the company;
E) All of the above.

Question 14

Buzz and Neil are the directors of Moon Pty Ltd. Moon Pty Ltd has been experiencing financial difficulty for some time. Indeed, the company received a report from its accountant stating that it was insolvent. Buzz and Neil decide to place the company into voluntary administration. Immediately prior to appointing the voluntary administrator, Buzz transferred a motor vehicle owned by the company into his own name. The company was subsequently place into liquidation. The liquidator is desirous of recovering the car or its value from Buzz. Which of the following is most accurate?

A) It is unlikely the liquidator would be able to recover the motor vehicle because directors have broad powers under section 198A of the Corporation Act and this would certainly include the power to transfer property owned by the company;
B) The liquidator may be able to recover the motor vehicle on the basis that the transfer constituted an avoidable unfair preference;
C) The liquidator may be able to recover the motor vehicle on the basis that the transfer constituted an avoidable uncommercial transaction;
D) The liquidator may be able to recover the motor vehicle on the basis that the transfer constituted an avoidable unreasonable director-related transaction;
E) All of the above;
F) (c) and (d) could both be correct.

Question 15

Which are the following are voidable transactions under s 588FE of the Corporations Act?

A) A transaction to defeat creditors
B) An unfair loan
C) A related-party transaction
D) An invalid circulating security interest charge
E) All of the above
F) A, B and D only

Question 16

The Corporations Act provides a creditor with a defence if they receive a demand from a liquidator for the return of property or money transferred or paid to them by an insolvent company. Which of the following is NOT one of the conditions of the defence?

A) They acted in good faith.
B) The creditor had no reasonable grounds to suspect the company was insolvent.
C) The transaction was entered into after the relation-back day.
D) They had given valuable consideration under the transaction.

Question 17

What are the steps involved in (a) a voluntary winding up by members? (b) compulsory winding up on grounds of insolvency?

Question 18

What is the main distinction between a members' voluntary winding up and a creditors' voluntary winding up?

Question 19

Who can apply for a compulsory winding up? On what grounds? How do they prove it?

Question 20

What are a liquidator's duties?

Question 21

What does "voidable transaction" mean? Provide examples.

Question 22

Why is the relation back day important?

Question 23

What is the effect of deregistration?