Under the articles of association of Dundas Ltd, a farming company, the directors of the company require the consent of the general meeting by an ordinary resolution to borrow sums of money in excess of R100,000. The other articles are in the form of Table A.John has been appointed managing director of the company and he holds 1% of the issued shares of the company. Without seeking the approval of the members as required by the articles, John entered into a contract worth R200,000 with Farm Machinery Ltd to buy some agricultural machinery for use by Dundas Ltd in its farming operations. However, John holds shares in Farm Machinery Ltd, which subsequently paid him a personal commission of R20,000.Smart is the company secretary of Dundas Ltd. He hired a car from Superb Cars Ltd telling them that the car was being rented for company business. Smart asked Superb Cars Ltd to deliver the car to his home address, which they did. Smart then used the car for private purposes and has now disappeared without paying the hire charge.Required:Advise the directors of Dundas Ltd whether:(a) they are bound by the agreement with Farm Machinery Ltd and Superb Cars Ltd; and (5 marks)(b) Dundas Ltd has any claim on the commission paid to John. (5 marks)
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