Hawkins V Bank Of China: Legal Implications & Case Analysis

Basically, section 588G of the Corporation Act accentuates that when an enterprise has a liquidity crisis, its officers and directors are required to take distinctive care in their respective transactions with those outside the business. It enforces an obligation upon which company managers should stop a corporation from doing in any insolvent transaction. In this aspect, one of the cases that discuss section 588G of the Corporation Act is the case between Hawkins & Ors v Bank of China (1992) 10 ACLC 588 which was alleged that the liability included a contingent obligation for the company. In this case, it was held that the provision of guarantee instituted the suffering of a debt. The debt that was suffered under the guarantee was to reimburse an already accumulated sum of funds which was basically regarded as a liquidated sum.

Essentially, debt is adept of incorporating a contingent obligation because this particular expression Hawkins & Ors v Bank of China (1992) incorporated a contradiction in its terms. The term incurs, in this case, means an undertaking of a particular engagement in order to pay a specific sum of cash in future even if the transaction is uncertain and the sum involved is undefined. Generally, the company managers did not impose any of their duty to prevent the firm from trading in any insolvent activity.