Marlin Fishing Pty Ltd carries on the business of commercial fishing.

Marlin Fishing Pty Ltd carries on the business of commercial fishing. The company is run

by 4 directors; Michael and his three (3) sons Dan, Terence and Pat. They are also the only shareholders and hold equal interests.

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The company has a constitution that requires that all contracts to be entered into on behalf of the company must in the first instance be approved by a meeting of the directors and that the company seal should be affixed. The constitution expressed that when the company seal was affixed it needed to be accompanied by the signatures of two (2) directors.

Michael discovers a new boat for sale which would considerably improve the ability of the

fishermen to stay at sea longer and better keep the catch of fish. He decides to purchase the

boat on behalf of the company believing that his sons would agree with the decision. He dealt with a friend of his who ran Commercial Vessels Pty Ltd. His friend knew what Michael did and assumed he ran the family commercial fishing business, so he was very happy to deal with him. Michael simply signed the contract: ‘Michael, for and on behalf of, Marlin Fishing Pty Ltd’.

When Dan, Terence and Pat learned of the purchase of the new boat they refuse to ratify the

contract and do not wish to spend the company funds on such a vessel at this time. Advise

the sons whether the company will be bound by the contract and also identify any possible consequences for Michael.

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