If for any reason there is a default or a display of unwillingness to repay the loan from Tco’s side in the future to be paid to Southpoc, the prime and first contact that Southpoc will make is with the corporate loans manager who unfortunately did not study the proposal of Northpic’s half loan takeover. Southpoc, in any event of a default or non-repayment from Tco can claim damages from Tco as well as the corporate loans manager. A company is also entitled to assume that his personnel and company employees are doing their duties with all diligence and according to the rules and regulations . This kind of lethargic behaviour is also responsible to various small equity investors who keep invested in a company on the basis of trust that they are obligating to their duty with complete loyalty. Franks argues that small shareholders invest more in equity when implicit contracts are enforced by certain informal mechanisms which foster this kind of growth. If such kind of mechanisms persists, small investors and even the bank will restrict funding and investing in corporations. Another legal relationship emerges when Southpoc asks Tco to pledge a guarantee of $5 million which is being deposited with Eastpac Bank Plc, and Tco obliges to the requirement. Depending on the agreement between Tco and Eastpac Bank which mentions about the use of the deposit to as a pledge, Eastpac Bank can claim any damages from Tco. In the future, if Tco is unable to repay its loan amount, and having taken the custody of the paintings from Tco due to burglary concerns closer to Tco’s office, and if Southpoc, for recovering the loan amount refuses to release the paintings until they complete the loan repayment, Tco can take action against Southpoc as there was no consideration that the paintings can be used as a collateral or be used by auctioning to recover the loan.