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HI6027 Case Studies of Business Law and Corporations Law Assessment Answer

Assessment Details and Submission Guidelines
Trimester
T1 2019
Unit Code
HI6027
Unit Title
Business and Corporate Law
Assessment Type
Group Assignment
Assessment Title
Case Studies of Business Law and Corporations Law
Purpose of the assessment (with ULO Mapping)
The purpose of the Group Assignment is to provide students with an opportunity to work in a collaborative environment in solving two case problems by citing the relevant legal rules and cases and applying these to the facts of the case.
In this Group Assignments, students are required to:
  • Assess the obligations, rights and remedies available to parties in particular commercial relationships. (ULO 3)
  • Critically examine the foundations of Australian company law. (ULO 4)
  • Critically discuss and apply contract and tort law in business circumstances. (ULO 5)
  • Critically discuss and apply the legal framework that regulates a company’s dealings with outsiders. (ULO 7)
Weight
20 % of the total assessments
Total Marks
20
Word limit
Group Written Report of maximum 2,000 words and a 10 minute presentation
Submission Guidelines
  • All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page.
  • The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.
  • Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.

Purpose:

Assignment Specifications

The Group Assignment aims to provide students with an opportunity to work in a collaborative environment in solving two case problems by citing the relevant legal rules and cases and applying these to the facts of the case.

Students are to form groups, with a minimum of 3 and a maximum of 5 students per group. The assignment consists of 2 parts: a 2,000 words written report and an 8-10 minutes (maximum) in-class or video presentation.

Instructions: Please read and re-read carefully to avoid mistakes.

Group Report

  1. This group assignment consists of 2 parts. Part A is a case study on contract law, and Part B is a question involving Corporations Law. Both questions must be answered.
  2. The total word limit for the group report is 2,000 words (+/- 10% allowed) with each part having a maximum word count of 1,000 words. Word count limits are strictly enforced. A deduction of 2 marks will be imposed for every 50 words over the word count for either part of the report. Anything over the word count will not be read by your lecturer.
  3. The total word count for the report as well as each part must be clearly written on the cover sheet of the assignment. A paper will not be marked if the word counts are not written on the cover sheet.
  4. The group report is worth 10% of total marks for this assignment.
  5. Each group must submit a draft of their report on Blackboard according to the due dates below. If a draft is not submitted, the final report will not be marked.
  • by week 8 if class is in the normal mode
  • by week 4 if class is in block mode 1
  • by week 9 is class is in block mode 2

Part A: Contract Law Question

  1. Refer to the prescribed textbook: Fitzpatrick J, Symes C, Veljanovski A & Parker D, Business and Corporations Law 3rd ed. (2017), LexisNexis Butterworths Australia.
  2. From Part 1 - Business, Chapters 2 to 6 on Contract Law, refer to the Problem Questions at the end of the chapter and choose one (1) question. Note: it must be a case problem- type question and not a short answer question.
  3. You must send your lecturer the number of your question and the page on which it appears for approval. Do not start work on a question without obtaining your lecturer’s prior approval.
  4. In not more than 1,000 words, answer your chosen legal case question using the IRAC method.
  5. Your answer must be supported by relevant law and cases decided by Australian courts (preferably the High Court) and/or scholarly articles. A minimum of 3 references are required for this part of the report.
  6. Your references must be listed in a Reference list at the end of the Part A question.

Part B: Corporations Law Questions

  1. Again, refer to Business and Corporations Law 3rd edition by Fitzpatrick et al.
  2. This time, refer to Part 2 - Corporations, Chapters 7 to 10 on Corporations. Refer to the Problem Questions at the end of the chapter and choose one (1) question. Note: it must be a case problem-type question and not a short answer question.
  3. You must send your lecturer the number of your question and the page on which it appears for approval. Do not start work on a question without obtaining your lecturer’s prior approval.
  4. In not more than 1,000 words, answer your chosen legal case question using the IRAC method.
  5. Your answer must be supported by relevant law and cases decided by Australian courts (preferably the High Court) and/or scholarly articles. A minimum of 3 references are required for this part of the report.
  6. Your references must be listed in a Reference list at the end of the Part B question.

Group Presentation

  1. Summarise your answers for Parts A and B of the group report.
  2. Present and discuss the summary of your answers in 10 minutes (5 minutes for each part).
  3. The Presentation will be done in class or video recording. Your lecturer will advise which is more appropriate.
  • Whether in-class or video presentation, all members must present. The group will be marked down if not all members present.
  1. Video link must be uploaded to a publicly-viewable video sharing platform (ex. Youtube, Dropbox, Google drive) and the video link uploaded on Blackboard.
  2. A video presentation consists of both images and audio. For this reason, a plain Power Point presentation showing slides even with accompanying voice recording is not considered a video and, hence, not allowed.
  3. The group presentation is worth 10% of total marks for this assignment.

Important Reminders:

  • You must email your lecturer your list of group members and chosen questions by week 4.
  • You must obtain approval by email from your lecturer of your group and chosen questions before starting work on it. Please note: failure to obtain lecturer approval will result in a failing mark for the entire group for the group assignment.
  • All group report submissions must be de done online and run through SafeAssign. No hard copies are to be submitted. Only one group member needs to submit for the whole group.
  • Please fill in the “Rubric Group Report” sheet (available in Blackboard under “Assignments and Due dates) and attach as a cover sheet to your group report and upload on Blackboard.
  • Each team member also must also submit to their lecturer a “Peer Evaluation of Individual Participation in Group Assignment” sheet (available in Blackboard under “Assignments and Due dates) with their presentation/video.
  • No submission of either the group report or video presentation link on Blackboard/SafeAssign (if doing a video presentation) is equivalent to non-submission, which will merit a mark of 0 (zero) for the group assignment.
  • GROUPS OF LESS THAN 3 AND MORE THAN 5 PEOPLE WILL RECEIVE A PENALTY OF 10 marks (50%).
  • Group report must be submitted via SafeAssign on Blackboard and show a similarity percentage figure. Any group report that does not show a SafeAssign similarity percentage will not be marked and be required to re-submit.
  • Late submissions will be subject to Holmes Institute policy on student assessment submission and late penalties (please refer to subject outline and Student handbook).
  • All reports are expected to observe proper referencing in accordance with the Australian Guide to Legal Citation (AGLC). A copy of the AGLC may be read online for free via this link:

https://law.unimelb.edu.au/data/assets/pdf_file/0005/2877782/AGLC3.pdf

  • In general, for written reports, a SafeAssign similarity percentage of 25% or below is acceptable. Regardless of the similarity figure, all group reports must use in-text citation and observe proper referencing rules.

Answer

Governance and law

Part-1

Issue

  1. Is Swimming pool Co. liable for Martin’s actions? On what basis in law would this be the case?
  2. Can the company claim that they are not liable for Martin because he has not followed instructions? Explain.
  3. Is Martin liable to his employer for any of his actions? On what basis in law would he be liable?
  4. Has Martin breached any law if he is planning to set up his business? Explain.

Rule:

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 [2006] 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).

Application: 

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. 

Conclusion

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

Issue

  • 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.

Rule

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 [1897] 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 directorsit 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. 

Application

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".  

Conclusion 

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.

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