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Business Law: Cases and Arguments

Bachelor of Business / Bachelor of Accounting BO1BLAW204

Learning outcomes addressed

a) Demonstrate a working knowledge and understanding of the principles of Australian Business Law within the context of the prescribed readings. 

b) Identify and analyse relevant facts, problems and legal issues from a given scenario and develop an argument in response, discussing available options in the context of business law. 

c) Interpret business law legislation and cases and complete questions based on that legislation and relevant case law in class.

 d) Appreciate the role of compliance and the requirement that organisations and individuals must follow the laws that apply to their industry areas. 

e) Understand and apply the law related to establishing, managing and controlling enterprises

Assessment Description: 

We recommend a minimum total of TEN statute and case references per question. Work that includes sources that are not properly referenced according to the “Harvard Referencing Workbook” will be penalised.

 Question One: 

10% 800 words Answers must be supported by case and statute references. You need to closely consider Chapters 6, 7, 8, where relevant. Angela enters into negotiations with Jessica to purchase her restaurant. During their discussions, Angela asks Jessica what are the annual profits of the restaurant. Jessica tells her that ‘the restaurant has been making $10,000 per year in profits’. She hands her a box of papers and says ‘Here are the accounts, you can check for yourself if you like’. Angela trusts Jessica and only checks the accounts for 2007, which do show profits of $10,000. Relying on what she has told them, Angela decides to purchase the business. However, after a few months, when business is very slow, she has another look at the accounts and realises that the business has only been making $2,000 per year for the last 5 years (since 2008). Advise Angela of her common law rights. 

Questions two:

 15% 1200 words Answers must be supported by case and statute references. You need to closely consider Chapters 5, Sandra Smith purchased a carton of cola from her local corner store. The following week, on a very hot day her husband, Andy, took a can from the refrigerator and drank it. He became violently ill and was rushed to hospital where he remained for three days. On closer inspection of the contents of the can it was found to contain the remains of a cockroach. The family faced large medical expenses, a problem exacerbated because neither parent could work in their casual jobs for a week. The corner store has gone out of business due to bankruptcy and the family wishes to sue the Australian manufacturer, Acme Cola Company Ltd. Advise the Smiths as to their chances if they were to sue Acme for negligence. References must follow the Harvard referencing style. Refer to the Academic Learning Skills handout on Report writing. Please see Academic Learning skills staff for assistance with this, or any assignment.

Answer

Unit: Business law

Question One

The businesses are expanding to different nations due to globalization and therefore there are various contracts and agreements among people, businesses and countries. Angela had a negotiation with Jessica for buying the restaurant wearing Jessica informed that the business had been making $10,000 on yearly basis as profits. There were some documents given out to Angela so that the amount would be verified however Angela checked the documents only for the year 2007 where $10,000 was earned for the year. she did not check for the years after 2007. Without checking other years, she decided to purchase the business but later on she found out that from the year 2008 the prophets have been only of $2,000 on yearly basis. So there has been a dispute among Jessica and Angela who won the resolution of the same through the court procedures.

Here, the common law legal system is applied where the court takes decision based on the previous similar cases. The judgement for previous cases acts as the basis for taking decision for the court. The common law judge is capable of making law by creating precedent. So in this dispute also the trial court will take references from the similar cases which had been there in the past and their rulings.

Contract Law

The common law was initially created by the British law and according to this legal contract is any agreement which has all of the below given features of a contract. These features of constituents of contract are:

  • The agreement is amongst the parties given mutual consent. 
  • There has to be any legal consideration for forming the agreement.
  • The party's getting into agreement must be legally competent
  • The contract must not have such conditions or activities which are illegal or against the public policies.

If any of the above aspects is missing in the agreement then it cannot be termed as a valid contract. The court will not implement such contract. In the past few years there have been betterments to the sales agreements thereby making the buyer to be safe from any kind of error, fraud or negligence by the seller. The seller also holds a legal responsibility and has to adhere to the terms of contract. 

In case of any flaws or defects in the items sold, the aedilitian remedies cannot be applied. For any sales’ liability, there are three types of flaws that are eligible as a liability to the seller:

  • Manufacturing Defect – The claimant should be capable of proving that the item was faulty when it left the manufacturing plant. This is generally confirmed by proving a failure in the creation or a constituent or a component of the item prior to it reaching the customer.
  • Design Defect – The plaintiff has to be capable of proving that the creation was insecure for its projected user.
  • Failure to Warn – Just like the given case, the plaintiff should be capable of proving prove that she was not correctly warned regarding the hazards that the creation poses even throughout correct usage (Firm, 2018). So, in this case Angela was not informed of the low profitability of the business. The failure to warn can also involve the full absence of a caution, but usually, an inappropriate or insufficient warning is generally given that leads to this issue. 

The conventional rule to “Caveat Emptor” (purchaser Beware) was removed by a series of Florida cases coming completely in the requirement for exposure declared by the Florida Supreme Court in Johnson v. Davis, So.2d 625 (Fla. 1985) (Justia Law, 2018). Thus it is shown that where the seller of a house knows about conditions tangibly influencing the worth of the home yet which conditions are not promptly hidden (covered up) and which are not recognized by the purchaser, the seller is under obligation to reveal.

Also, cases have been built up the rule in regards to "relative negligence", like in different vehicle cases, where in the purchaser can't take cover behind the inadvertent carelessness of the seller who distorts where the purchaser is also negligent to find the blunder. These new relative negligence cases in land exposure law show that the judges as a definitive "discoverer of reality" should path the greater part of the conditions to decide the rate to which the seller or the purchaser or the land specialists are responsible. Warfield v. Stewart (Law360.com, 2018), which is a new Central Florida case, stated that the purchasers, who were advanced in land zoning and allowing matters, may have been careless in finding the difference by their own audit, however that the jury could evaluate the similar carelessness of the purchasers, the seller and the land specialists.

So the contractor shows the negligence of seller and Angela has also ignored the same. The wrong presentation has been there by the seller therefore the buyer can claim for compensation and also it is important that the contract is stated as null and void or it get back to the previous situation. Incase Angela has suffered from any kind of damaged then it also has to be paid for. This is a negligent case therefore Angela can ask for compensation (Brentfinchlaw.com, 2018).

Question two

The other case which has been provided here is a case of negligence. Just like the previous face, the common law can be used which would act as precedent, which has been derived from Donoghue v Stevenson [1932], UKHL 100. It is one of the similar cases where the negligence was seen in terms of the doctrine of duty of care. Just like the given case, in Donoghue v Stevenson also Mrs. Donoghue consumed Ginger beer from a Snack Bar in Paisley. After gulping the drink, she got an well because there was a diseased snail in the bottle and therefore the manufacturer of Ginger beer was suit that is Mr Stevenson point as per the judgement given by house of Lords it was the duty of the manufacturer which is known as the duty of care towards the consumer and this duty was not fulfilled and the manufacturer was unable to ensure that the use of goods provided by him don't bring any harm to the consumer.

In this case certain points were given out during the judgement which can be used in the present case of Sandra and the Australian Cola company which is Acme Cola Company Limited. In the past case the judge that is Lord Atkin felt that there has been no authoritative common statement in the case of law with respect to an individual’s duty to anybody who is not part of the contract. So after the case of general principle has been given out to each case where in such situations occurred point such cases can be considered as duty of care under a contract or fraud instead of the negligence.

In another case Lord Buckmaster applied totally different interpretation of the past case of Lord at king. He stated that the common law was that there has been no duty of care obliged towards third party out of the contract. The main case here was orbiter dicta statement which was there to support the duty of care in different cases. Logical consequences of applying a duty would be applicable to all types of things and to every person who utilizes them.

Likewise, in the given case Sandra has to be paid for the negligence towards duty of care. It would include the medical expenses and loss of earnings for Sandra. When a court decides if a duty of care is to be indebted, it will allow for various legal values and legal strategy aspects. Where a circumstance is a fresh one – where the association is not a set-up connection with a duty of care, the courts consider many aspects. These can comprise:

  • the type of harm faced by the claimant (like, bodily, financial, psychological);
  • the defendant’s influence over the circumstances that led to the damage, and the plaintiff’s defencelessness to that harm;
  • the type of the association of the claimant and defendant, in comparison to other duty relations;
  • principled and honourable contemplations, together with constitutional rights thoughts; and
  • constancy and coherency of legal values and relations;

There are a few easily setup relations where a duty of care is present, like occupiers accountability, and motor vehicle accountability. External to the set up established relations, the courts will think about the factors stated above in deciding about a duty of care.

Negligence is when somebody is obliged to other a duty of care, however has been unsuccessful to act along with a fair standard of care and this has led the plaintiff of damage. Sandra could not take legal action in opposition to the Cola company for being negligent until Sandra suffers any damage or loss consequently.

Sandra will have to prove have to demonstrate 3 things: 

  • That the person owed you a duty of care; 
  • That the person did something or failed to do something that a reasonable person in the same circumstances wouldn't have done; 
  • That you suffered some harm or loss because of what the person did or didn't do.

In case Sandra is thinking of suing for personal harm, she may require having her medical condition evaluated by a physician (which she did) prior to she thought of going to court. The physician will have to set up what level of harm that injury has caused since one cannot get recompensed for every injury until she had a particular level of injury.

While making decision on a judgment in a negligence case, juries have instructions to evaluate the details, declaration, and substantiation in deciding about if the below elements were fulfilled:

  • Duty: The defendant owed a legal duty of care to the claimant (Acme Cola Company Limited owed duty of care to Sandra).
  • Breach of Duty: The cola company breached that legal duty by inability to provide duty of care.
  • Cause in Fact: however for the defendant’s inability to fulfill their duty of care, Sandra would not have been harmed.
  • Proximate Cause: The actions or inactions of Cola company were the real cause of Sandra’s harm.
  • Damages: Sandra was harmed, really injured and suffered a loss owing to the breach by manufacturer i.e Acme Cola company

One more example of such a case is 3M UNITED KINGDOM PLC & ANOR V LINKLATERS & PAINES (A FIRM) [2006] EWCA CIV 530 (03 MAY 2006).  Similarly, Other cases that can be found useful to think about in this situation are as below:

  • ADT v BDO Binder Hamlyn (1995)
  • JEB Fasteners Ltd v Marks, Bloom & Co (1982)
  • James McNaghten Paper Group Ltd v Hicks Anderson & Co (1991)
  • Morgan Crucible v Hill Samuel Bank Ltd (1991)
  • NRG v Bacon & Woodrow and Ernst & Young (1996) (http://www.accaglobal.com, 2018)

Note that the law of negligence thinks of predictability two times: once corresponding to duty of care and yet again corresponding to inaccessibility. In case there is no duty of care, the issue of remoteness does not take place. Caparo v Dickman is a helpful design of this: it might be predictable that active shareholders would depend on an audit report in determining if or not to raise their shareholding (DuPlessis and Trenholm, 1991). However, the assessor did not owe a duty of care to possible investors. This was as per other features of the duty test: nearness and the issue of if it was reasonable, just and sensible to enforce a duty.

So, in the given situation, the question is if Cola company is legally liable for harms might set in motion if there is a “duty of care” to defend in opposition to injuries for anyone who is not likely to be in the location where the accident takes place.

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