Duty Of Care And Diligence

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|Duty of Care and diligence |
Concepts and standards of duty of care and diligence have changed significantly in contemporary society and these are regulated in the general law and corporate legislation with slightly difference (Ramsay, 1997). Legislation focuses on the appropriateness of the practice of directors, while general law concentrates on the foreseeability of the consequent damage. As per s 180 (1) of Corporations Act 2001 (Cth) defines, directors or other officers must exercise their rights and undertake their responsibilities with a duty of care and diligence, otherwise, they are negligent of duty. It is hardly feasible to create a uniform standard of care because directors in different companies are various. Daniels v Anderson (1995) 37 NSWLR 438 is an important case in understanding the care standards.
|Duty not to trade while insolvent|
In s 588G of Corporations Act 2001 (Cth), directors have the responsibility to cease any trading that could incur debts when the company is in bankruptcy protection or is likely to be insolvent. This rule is set to protect the benefits of creditors (Jiang, 2015). Besides, liquidator or individual creditors can also sue the directors for the breach of this duty. S 588G is only applicable at the time of the insolvency of company and a debt has been incurred. Officers or employees are not affected by this section.

2. Evolution of director’s duties and responsibilities
2.1 A short history of director’s duties
Company law in
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