Problem Questions Analysis: Corporate Law

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Question :


Tina appoints Brad as checkout operator at her independent garage which she operates as a sole trader. The business operates both as a service station and as a used-car lot.

Tina contracts glandular fever, and during the four months she is off work, she tells Brad that he can order petrol while she is sick. During this period, Brad negotiates supplies with Caltex. Brad orders fuel from Caltex every fortnight. Tina returns from her illness, and tells Brad that he should no longer order petrol and that matters will be conducted as they were before she was ill. However Brad, who enjoys the increased status of dealing with the oil companies, ignores Tina’s instruction, phones Caltex and orders 30 000 litres of fuel. When the truck arrives to deliver the fuel, Tina is furious (as she has already entered into a more advantageous arrangement with BP). She phones Caltex, and denies that there is a contract between her and Caltex, stating that Brad was acting contrary to instructions when he placed the order.

Tina employs Paul as a salesman of the used vehicles.   Paul has several years experience in the second hand vehicle market. Tina has a number of vehicles on display, including a 2012 Holden Commodore Wagon, priced at $ 19 000. She does not realise that the vehicle could easily fetch $ 25 000. Paul however does know this, and also that his next door neighbour, Fred, wants to purchase just such a vehicle. Paul says that he needs a vehicle himself, and buys the wagon from Tina for $ 19 000. He then sells it to Fred for $ 25 000;Tina is furious when she finds out what has happened.

Advise Tina as to her legal position in relation to the above situations, citing relevant authority.

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Answer :



Tina has her own independent garage and she is the sole trader of the business. Tina has a partner in the business that is Brad. Brad mainly works as a checkout operator in Tina’s garage. The business operates both as the service station and as a used-car lot with consideration of Tina’s authority. During Tina’s glandular fever, she takes an off and provide the whole responsibility to Brad. As she takes the four months off Brad is the main responsible person for the entire trading system and the operation procedure will take care by Brad. Tina gives a responsibility that is more like a permission that Brad can order petrol during her absence. When Tina was absent Brat has ordered petrol from Caltex and negotiates with that company. Every fortnight Brat order petrol from Caltex. When Tina get back from her off and order Brad that he cannot able to continue this negotiation process with Caltex. Before she was ill, she herself permitted Brat for the same but now as she gets back in the business, being a sole trader she has the authority to stop this procedure that Brad was continuing during Tian’s absence. Brad has enjoyed this process as he can able to gain good amount of money and increased status of dealing with the oil companies. Brat then ignored Tina’s instruction and gives order to Caltex of 30000 liters of fuel. As Tina was into a more advantageous arrangement with BP so when the truck arrives with fuel Tina get furious and phoned Caltex that there is already a contract between her and Caltex. She also states that fact, Brat was acting contrary to instructions regarding the order placement. 

As Tina has another business where the she deals with used vehicles so for that business Tina employs Paul as a salesman of the used vehicle. Paul is an experienced dealer in the second-hand vehicle market and Tina appointed him foe this business. 2012 Holden Commodore Wagon, priced at $ 19 000 is displayed in vehicles in Tina’s outlet store and Tina does not realize that the vehicle can fetch $25000. Paul is very much known to this factor and as his neighbour Fred wants to purchase same kind of a vehicle Paul plays a trick here. Paul buys that wagon from Tina for $19000 and then sells it to Fred for $25000. After get to know the entire process Tina get furious and takes legal help to solve this problem. 


As Tina has the sole proprietorship so she has the authority to maintain, control and manage the entire business activities. And in the governing act Tina has no specific statue. Brad is the partner of Tina and his incorporation in the business is voluntary whereas Tina’s incorporation is required. The liability of the shop is borne by the proprietor only and that same thing is shared by the partners. Tina is solely responsible for the profit and loss for the company where Brad’s responsibility in profit and loss is shared in agreed ratio (Sibanda, 2015). Tina has the sole authority to take decision for the company but Brad here does not listen to her and continues to take supply from Caltex even if Tina is not approving of that fact. It falls under the law of unfair trade practices, as the entire business process falls under the unfair and deceptive business structure and Brat has no authority while be in the same business with Tina, where Tina is the sole proprietor in the business. Tina gave permission to Brat during her illness but after that she strictly state that Brat cannot continue with Caltex and here Brat falsely suggest and promise the entire thing to Tina. Unfair trade practices further ensure the fact that goods and the services within the business have proper sponsorship, approval, characteristics, uses and benefits and moreover unique performance. Brad has made a false and misleading representation in front of Tina as he is not permitted to progress with this kind of business partnership. 

On the other hand, Tina can charge on Paul as he sold the car to his neighbour worth $25000 where as he stated to Tina that he is taking the car worth $19000. As a partner, he violets the rules and regulations for the partnership process. This unexpected event by Paul hinder Tina from taking a progression in the contract as Paul is working under Tina and he cannot do such kind of a things with the main proprietor of the business. Paul is working with Tina and it is his responsibility that to show success for their business but he sold the car to his neighbour for $19000 and take the extra amount of money from Tina that is $9000 as the wagon priced $25000. It is basically a loss to the business and Tina has to face this loss as it won’t affect the salary of Paul.


In the first case Tina will follow the process for statutory law and by the help of the legislation process Tina will come out from this mess. This type of statutory law passed by the executive agencies and take help from the court for the final verdict (Dokken et al. 2014). The usual process of legislation get followed in the section of statutory law. Statutory law will enact where Tina will take help from the unfair trade policy where Brad without her permission continues to take supply from Caltex. As a consumer in the business Tina has a main authority and when she instructed to stop this process Brad continues to do that and this is an unfair trade law, considers under an irrelevant consideration and Tina can take help from Consumer Protection Act (Watson, 2016). In monopolistic and restrictive trade practices the legislation will deal with the MRTP act which will help Tina to get out from this legal mess and it will conclude that without the permission of the sole proprietor the partner cannot deal with the other authority being in the same business and as the supply of Caltex is still continuing with the main trader (Svoboda & Smutná, 2016).  

With the help of the breach of contract the certain obligations that Tina has applied on Paul is justified as Paul has taken an entire wrong decision being in the same industry he is selling the wagon with increased price value to the other customer and for this the business can face loss (Christiansen & Eskridge, 2014). The breach of contract law clearly stated the fact that both of the parties in business are equally responsible to enforce any contract and Paul has no authority to sell the car with a value that fetch loss to the business and personally bring profit to himself. 


With the help of the statutory law process Tina will take help to solve both the problems as soon as possible as it is a business so she needs to take the logical decision by the help of the legislation process.