LML4806
Assignment 1
Semester 2 2024
QUESTION 1
In order to counter any potential claim by Touring Africa by Bicycle (Pty) Ltd that it is
not obligated by the contract between Nancy and James, Cycle for Life (Pty) Ltd must
prove that James had apparent power to enter into the contract. This requires proving
that the directors of Touring Africa by Bicycle (Pty) Ltd said that James had the power
to make agreements on behalf of the firm, and that Nancy, representing Cycle for Life
(Pty) Ltd, reasonably trusted this statement.
As per Section 20(5) of the Companies Act, the directors are empowered to prevent
the company or other directors from engaging in actions that go against the company's
restrictions. Section 20(6) confers upon shareholders the entitlement to seek
compensation in the event that an individual, by fraudulent or negligent means,
induces the corporation to exceed its authorized actions. James initiated contact with
the directors using a Zoom conversation, during which the directors clearly and directly
told him to buy the bicycles. Nancy, the representative of Cycle for Life, received this
order and justifiably relied on the explicit authorization of the directors.
In order to demonstrate ostensible authority, Cycle for Life must provide evidence for
the following:
1. The directors, having actual authority, represented James as having the
necessary authority to purchase the bicycles.
2. The directors made this representation immediately during the Zoom call.
Assignment 1
Semester 2 2024
QUESTION 1
In order to counter any potential claim by Touring Africa by Bicycle (Pty) Ltd that it is
not obligated by the contract between Nancy and James, Cycle for Life (Pty) Ltd must
prove that James had apparent power to enter into the contract. This requires proving
that the directors of Touring Africa by Bicycle (Pty) Ltd said that James had the power
to make agreements on behalf of the firm, and that Nancy, representing Cycle for Life
(Pty) Ltd, reasonably trusted this statement.
As per Section 20(5) of the Companies Act, the directors are empowered to prevent
the company or other directors from engaging in actions that go against the company's
restrictions. Section 20(6) confers upon shareholders the entitlement to seek
compensation in the event that an individual, by fraudulent or negligent means,
induces the corporation to exceed its authorized actions. James initiated contact with
the directors using a Zoom conversation, during which the directors clearly and directly
told him to buy the bicycles. Nancy, the representative of Cycle for Life, received this
order and justifiably relied on the explicit authorization of the directors.
In order to demonstrate ostensible authority, Cycle for Life must provide evidence for
the following:
1. The directors, having actual authority, represented James as having the
necessary authority to purchase the bicycles.
2. The directors made this representation immediately during the Zoom call.
