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Company Directors Opposing the Decision of One Director

Question

Harry is one of three directors in Engineering Products Pty Ltd. Harry is out for lunch one afternoon with a supplier of engineering parts, and after a long session of talking and drinking with the supplier, he agrees to place a very large order with that supplier.

The other directors discover the order that Harry has made and attempt to cancel the order. It appears the parts are inappropriate for their business, overpriced and the supplier has a poor record in the industry for delivering on time. According to the company constitution Harry is not permitted to sign off orders without the signatures of the other directors.

Can the Engineering Products Pty Ltd cancel the order? Explain the viewpoint of the supplier and Engineering Products Pty Ltd and its directors.

Would your answer be different if Harry was not a director of a company but instead a partner in a partnership called Engineering Products?

Summary

The question belongs to Law and it discusses about one of the directors of a company placing an order with a supplier with bad reputation. The other directors of the company disagree and want to cancel the order. Whether the directors can cancel the order or not has been explained.

Total Word Count 88




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