HI6027 Case Studies of Business Law and Corporations Law Assessment Answer
Governance and law
- Is Swimming pool Co. liable for Martin’s actions? On what basis in law would this be the case?
- Can the company claim that they are not liable for Martin because he has not followed instructions? Explain.
- Is Martin liable to his employer for any of his actions? On what basis in law would he be liable?
- Has Martin breached any law if he is planning to set up his business? Explain.
In Accordance with the Employment rules and regulation law, it is found that the contract of employment is a contract between an employer and the employees. However, the contract of employment is governed by Statute, Labour Union and Common Law and both employee and employer are abode by the give rules. In the contractual relation, one party is authorized to have control over another party that is employer having control over the employee. The employer can supervise and control the work of the employee (Linos, 2015).
According to the Fair Work Act 2009, there are some employment standards that been given for both employer and employee. On the breach of these standards by the any of the party, other parties would be liable to take compensation from the person who made default in complying with the applicable laws and regulations (Hunter and Waterman, 2016).
The Vicarious Liability in contract arises from the act of employee in a contract of employment (Sinha, 2017). In this, both employer and employee need to understand that they cannot work independently. The employer will be held responsible for the actions of the employee. Employer/Employee is in the Principle and Agent relationship. It would be an actual and apparent authority and in here the employee is acting on the behalf of the employer in-laws to the principal and the agent relationship.
Privity of the Contract-: If the employee acts outside the scope of the employment contract, then the employer is not held liable.
In this case, Employment contract, Laws of the Principal and Agent are violated. There is also the restraint trade on the Employer and employee relationship
- The duty of the employer is to obey, should exercise proper skills and care and must do an act with good faith and fidelity.
- Whereas the duty of employee is to work for what he is getting paid. Often the contract of employment is continuous.
- In certain cases, the contract of employment shall be terminated.
- The Fair Work Act 2009 governs the employment of the maximum of the employees of Australia. The employee can be terminated by giving a reasonable period of time according to the common law.
- The employer can dismiss the employee for the unsatisfactory work. The employee can be terminated also without the notice for the serious misconduct. There are some implied terms which are not mentioned in the contract such as the leaking of confidential information.
- In the case of Houghton v Arms  HCA 59 225 CLR 553; 81 ALJR 466; 231 ALR 534 the liability of employees was in the question as the wrong contract has been made by the employee in the term of his contract (Williams, 2017).
- A "Non-Solicitation covenant" prevents the employee cannot start the competitive firm while doing the job. When an employee had opened a competitive business than the employer has the right to sue the employee (Robinson, Baughman, and Cahill, 2016).
The facts of the case:-
- Martin had been employed by the Swimming pool Co. Pty Ltd as the manager of their Tasmanian sales division.
- Martin used to quote the customers of the cost of installing the various pools.
- On behalf of the company, he draws the new contracts and the duty to ensure that he must draw new contracts.
- Martin has been appointed on the fixed salary but he is eligible for the bonus if he exceeds the annual target
- The company was happy with the work of Martin for the first month of his employment.
- But after a month a lot of customers has made a complaint about what they had ordered to construct was different from the constructed.
- The company found that wrong advice had been given by Martin and also some of the money collected from the clients had not been deposited into the companies’ bank account.
- The company also found that Martin has opened the competitive business of Swimming pool & Co.
According to the scenario, it can be said that in accordance with common law, Martin had conducted a breach of contract of employer and employee. According to the vicarious liability the employer had been held liable for the actions of the employee. However, the Privity of the contract states that the employee work outside the contract than he is liable for his acts. Martin has acted outside the terms of the contract. Therefore the company would not be liable for the act of Martin.
Swimming Pool Company is in contract with the clients. Whenever there is a breach of the contract and the employee and employer both have the rights to sue and ask for damages. Swimming pool co. has the right to ask for damages in accordance with the Fair Work Act 2009.
Martin would have been held liable for the actions as established in the case Houghton v Arms the employee liability for not performing in accordance with the terms of the contract.
According to the employment laws Martin cannot open the competitive business and therefore also be liable.
According to the rule of "Non-Solicitation covenant" prevents the Martin to start the competitive firm while working for the Swimming pool co. which is the employer of Martin. Martin has opened a competitive firm and therefore he had found to be in a breach of this rule.
It has been found that Martin had breached the contract for employment and therefore he is liable to pay damages to the company. He has also breached the "Non-Solicitation covenant" that prevents employees from starting a competitive firm. Therefore Swimming pool Co. is not liable for the actions of Martin.
Part – 2
- What type of company that is required to register in the Australian Securities & Investments Commission (ASIC)
- What could Anzac Coffee name include?
- How would the company be categorized at the end of the financial year and also will examine that it will remain in the same category after the five years?
This is examined as per the Anzac term which also mentions how it would give out to the true Australian flavor. It includes the current business context and would be dependent on the goals of the organization along with the building on to the categorization to the given case.
The process of the name will be done in accordance with sections 148(1), 148(4) and 149(1) (2) part of the Corporations Act. The name should be unique and not be the same as some other company. On registering the Proprietary Company the name of the company will include Pty Ltd (Miller and Jentz, 2017).
It is considered that starting a company is not an easy process. It is first what type of company one should start. In Accordance with the Corporations Act (Cth) 2001 there are few types of companies that can be registered in the ASIC that includes below (Meidinger, 2017):-
Proprietary company- It is either unlimited or limited. It is governed by section 45A (1) of the Corporations Act 2001. These type of company has not been permitted to employ more than 50 employees. They cannot raise money through shares or a public offer. At the end of a financial year, the assets should be less than $12.5 million. In the financial year, the gross operating revenue should be less than $25 million. Most of the companies in Australia are Proprietary Company (Rose, 2017).
In the case of Salomon v. Salomon & Co Ltd  AC 22, the company is the private legal entity that can be sue or sued. The owner of the company would not be held liable for the debts of the company.
Public company - In the public company, there can be more than 50 shareholders and employees. The public company is the listed company of ASX. There must be a minimum of three directors, it would not be a limited company that can also become an unlimited company (Sherwin, 2017).
The party can change the Proprietary company to public company by giving the application to ASIC and providing reasons for changing from Proprietary company to public company laws.
The facts of the case:-
- Discovered a low-cost brew espresso coffee machine
- It costs less than the other coffee machines
- the name Anzac Coffee has been decided for naming the company
- The company formation has to do for the marketing of the discovery
- The company will only consists of the family members
- The company in the first financial year have the gross assets of $5 million and the 20 employees (full time). There must be a gross value of $10 million.
- In a five year plan, the company has the plan to increase its assets to $ 13 million and the revenue estimated is $26 million.
- The company till then will only employ more 5 employees and with another 66 employed for the half time of the full the time equivalent.
As per the facts of the case, it is given that the company will only include family members than the Proprietary Company would be best suitable for the company. There are benefits of company as established in the case of Salomon v. Salomon & Co Ltd. The facts stated that gross assets are $5 million and in accordance with that, the Proprietary Company will only suit them. The gross revenue will be $ 10 million that will also meet the eligibility criteria for the first year of the firm. There are only 20 employees that mean it is not exceeding the limit of 50 employees. According to the Corporation Act, 2001 can register the Proprietary Company. In Australia, most of the companies start with this type of company only. However, the company will not be for the five years can be the Pty Ltd. company because as per the estimation it has been said that more five employees and 66 half time employees that cannot be hired in the proprietorship firm. The assets and revenue will also be increased to $13 million and revenue $ 26milion. It cannot be possible in the Proprietary company because the Proprietary company is less than $12.5 million. Therefore the company should have been required to change its status to the public company afterward. They have to give an application in the ASIC and should provide the reason for changing it to the public company as according to the rule.
The name Anzac Coffee should require to be check that there is no other same or similar name and then can register with in accordance with the sections 148(1), 148(4) and 149(1) (2) part of the Corporations Act. The company name will include Pty Ltd as the name will appear "Anzac Coffee Pty Ltd".
It has been concluded that there are various types of companies that can be registered in ASIC. According to the case study, it has been analyzed that for the first few years they can register the Proprietary Company. Afterward, on the increase of gross revenue and employees, they can change it to Public company through an application in the ASIC.