Answering Company Law Questions


A company is developing a new drug which it expects will significantly reduce the disease known as rheumatism. The company has conducted many tests on the drug. One of the scientists is concerned that there are some side effects which have not been fully investigated. The company requests a confidential report from a number of other scientists about these side effects. The scientists are paid $500,000 each to investigate the drug and compile the report. These scientists are also required to sign a document promising that they will not disclose the content of their report to anyone except the Board of Directors of the company. The new confidential report indicates that side effects do occur but they are statistically small. All the Directors agree to keep the information about the side effects of the new drug confidential. The Board of Directors are confident the new drug will significantly increase the profits of the company and keep the shareholders happy. The company continues to develop the new drug and subsequently markets it.

Discuss the ethical issues in this scenario. Use relevant cases and principles. (7 marks)


Bill owns a restaurant. He said to his 19-year-old son, Quentin, “If you work in the restaurant every Sunday for the first year of your university course, I will pay your university fees for the year.” Quentin was a talented tennis player and had been offered a scholarship to undertake tennis coaching with a famous tennis coach. The tennis coaching was to be held every second Sunday. Quentin desperately wanted to attend the tennis coaching but he also wanted to have his father pay for his university fees. Quentin made the decision, in reliance on Bill’s promise, to work every Sunday in his father’s restaurant. He did this for the entire first year of his university course.  Quentin has just successfully completed the first year of his university course. He now wants to take a year off study and travel overseas. Quentin’s father, Bill, is upset that his son is going to take a year off study and now refuses to pay Quentin’s university fees.


  • Advise Quentin using relevant cases and principles. Do not use legislation (5 marks)


  • What is your answer if Quentin is 17 years of age? Do not use legislation (2 marks)



Samantha advertises her Holden Monaro car for sale for $15,000. Terrence comes to look at it. He takes it for a test drive.  He says, “One of my friends had trouble with a Holden Monaro. It had a rusted suspension that wasn’t visible to the eye. Is the suspension OK in this car?” Samantha replied, “Yes, this car has excellent suspension.” “Great,” says Terrence. “We have a deal.” Terrence immediately signed the contract of sale, paid the $15,000 dollars, and drove away in the car. The contract of sale was silent about the car’s suspension.

A week later Terrence discovered the car had a very badly rusted suspension.

Advise Terrence using relevant cases and principles. Do not use legislation (6 marks)



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