THERE ARE TWO QUESTIONS
EACH STUDENT MUST ANSWER PART A AND CHOOSE A QUESTION FROM PART B:
PART A: (MAXIMUM 1,000 WORDS) (10 MARKS)
Olga migrated to Australia from Russia a year ago and is living with her cousin, Ivan, and his
parents, an elderly couple who do not understand English. Olga has been unemployed for
most of the time since she arrived in Australia, but she has recently been offered to work as a
courier for Beverly, a florist. The work requires Olga to deliver flowers and floral
arrangements to customers according to order. However, under the terms of the work
contract, Olga must have and use her own car to do the flower deliveries. The contract also
provides that Olga is to be paid by the number and distance of the deliveries.
Olga is very keen to take on this job. She goes to a car dealer who has a car that would be
suitable for doing flower deliveries. The car costs $22,000, money which Olga does not
have. Olga therefore goes to the Eastpac Bank and applies for a $22,000 loan. Eastpac Bank
informs Olga that it will not lend her any money unless a third party guarantees the loan.
Olga requests Ivan to guarantee the loan but he turns her down, stating that he thinks she will
default on the loan and he does not want to be liable for Olga’s loan under a guarantee.
Olga then goes to Ivan’s parents, Tanya and Boris, and tells them that she would like them to
help her borrow money to buy the car. Both Tanya and Boris are very close to Olga. They
are old and frail and have become dependent on Olga for physical and emotional support.
Tanya and Boris are eager to help Olga and therefore readily agree to guarantee her loan from
Eastpac Bank. They sign the guarantee document at the Eastpac Bank. However, the bank
does not explain to Tanya and Boris that Olga’s income as a flower courier is uncertain and
that they may have to pay the bank any sums outstanding on Olga’s loan if Olga defaults on
Olga buys the car using the loan money and commences work as the flower courier.
Unfortunately, Olga is only receiving three or four delivery jobs per day and the income she
makes is not enough to cover her car expenses and the repayment of the principal and interest
on her bank loan. Eastpac Bank now seeks to enforce the guarantee against Tanya and Boris.
Using case law and statutory law, advise Tanya and Boris as to their legal rights.
Part B: (15 MARKS)
Students are to select any ONE of the following topics (MAXIMUM 2,000 WORDS)
1 You are a financial analyst for a large financial institution. Your employer is in the
business of lending or investing in a range of companies particularly start-up
companies looking for funds.
You have been asked to prepare a paper on the benefits of investing in start-up
companies either by way of debt or equity.
Discuss the different types of equity and debt instruments that are available in the
market place that can be used as a form of investment in a start up company.
2 The concept of a company being a separate legal entity is a myth and has no relevance
in today’s commercial world. Certain people take advantage of this concept to deprive
creditors of access to funds. A common practice is the establishment of phoenix
companies. Discuss whether you agree with this concept and what you would
recommend to make the system fairer to creditors.
3 The legal obligations imposed on directors are not onerous enough. Directors should
be under a higher duty of care. Recent cases involving breaches by duties demonstrate
that the Corporations Act is not strong enough to punish directors. Discuss whether
you agree with this statement or whether you think directors in Australia should face a
heavier duty than currently exists.
4 How does Australian Corporations law protect stakeholders other than shareholders
(for example, employees and unsecured creditors)? Are these protections adequate?
Discuss this in the light of the recent corporate collapses. Compare this to the rules in
your own country, if not Australia.
In-text referencing (either Harvard Style or footnotes) must be included. A bibliography
must also be included.
The research should be a thorough coverage of the critical legal points in the chosen topic and
some conclusions should be drawn concerning the issues. Students should form their own
opinions after informing themselves of the different views and relevant issues. Students
should assume they are writing for an audience who already has general knowledge of the
law. Students should aim to examine an area of interest at a deeper level than the level of the
course lecture materials or a textbook.
Your research should contain at least five articles relating to corporate finance law extracted
from the following current sources:
a) daily newspapers
b) journals (targeted at professional practitioners) – for example, Law Institute Journal
c) journals (targeted at academics) – for example, Melbourne University Law Review
d) global business data bases
e) internet resources
f) law reports / statutes
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