Law of Business Association Assignment

Question 1 15 Marks
William is bankrupt and therefore cannot act as a director of a company. Nevertheless, hedoes so. Harry is the managing director of the same company. Harry gives William a letter
addressed to the other party to the contract saying that that William has authority to enter intoa contract. Harry, however, privately tells William that he is only to negotiate the contract, butis not to enter into it. Nevertheless, William signs the contract as agent of the company.

a. Is the company bound by the Contract? Provide reasons for your answer.
b. Would it make any difference to your answer if Harry were only acting as managing
director, never having been appointed to the position?

Question 2 10 Marks
Maria is one of two directors and shareholders of a company. David is the other director andshareholder. Maria wants to borrow $100,000 for both the company and for private purposesfrom a bank. She borrows the money in her own name, but the bank wants a guarantee fromthe company. She knows David will refuse to do so, so she signs the guarantee Maria,director and writes David, director in writing that is dissimilar to her own. If Maria fails tomeet payments under the loan agreement, can the bank enforce the guarantee against thecompany?