Case Study Analysis

This case study analysis discusses the issues related to contract law and company registration. It covers topics such as the capacity of minors to contract, enforcement of contracts, and liability of minors. It also explores the types of companies and the process of company registration. The conclusion provides insights into the categorization of the company and the inclusion of 'Anzac Coffee' in the company name. References are provided for further reading.

Running head: CASE STUDY ANALYSIS
CASE STUDY ANALYSIS
Name of the Student:
Name of the University:
Author Note:

1CASE STUDY ANALYSIS
Part A:
a) Issue:
The issue involved in this case is whether John is bound by the contract to buy the tools.
Rules:
For a valid contract, one of the essential conditions to be satisfied is that all the parties to
the contract must have the capacity to contract as given in Minors (Property and Contracts) Act
1970 (NSW). Under common law, a contract entered by the minor is usually voidable. A minor
is a person below 18 years of age as per section 8 of Minors (Property and Contracts) Act 1970
(NSW).
Under both common law and statute, the minors are restricted to contract. As per
common law, a contract entered by a minor is voidable. A minor is not bound by a contract as
given in section 17 of Minors (Property and Contracts) Act 1970 (NSW). But there are few
exceptions to this rule. A contract for necessities by a minor is binding on parties as found in the
case of Nash v Inman [1908] 2 KB1. This is provided in section 7 of the Goods Act (Vic.).
Again, a contract entered into by a minor for employment is binding except in the cases
of oppression or unfair means inflicted on the minor. A minor can terminate or approve such
contract on reaching adult hood as given in section 30 of Minors (Property and Contracts) Act
1970 (NSW).
The contracts not covered by either of the above mentioned exceptions are voidable.
When the contract results into permanent acquisition of the property or includes any continuous

2CASE STUDY ANALYSIS
duty like in partnerships, then such contract is binding until and unless it has been avoided by the
minor. However until then the minors remain bound by the obligations of the contract.
All other contracts are not binding on minors unless the contract is being ratified by the
minors after they become adult by taking some positive steps to approve it.
Application:
As per the rules enumerated above, John is 16 years of age. Hence he is a minor. He buys
a set of tools for his plumbing apprenticeship which is about to start after he finishes his school
in six months. Thus it is seen that he buys the tools for plumbing apprenticeship. Apprenticeship
is different from employment. Moreover, he did not purchase the tools for incurring the
necessities.
Conclusion:
Thus from the above discussion, it can be said that John cannot be bound by the contract
to purchase the tools neither by applying the common law or statutory laws of Australia.
b) Issues:
The issue involved here is whether John can enforce the contract to get profit from the sale of his
AppTools shares.
Rules:
Under both common law and statute, the minors are restricted to contract. As per
common law, a contract entered by a minor is voidable. But there are few exceptions to this rule.
A contract for necessities by a minor is binding on parties as found in the case of Nash v Inman

3CASE STUDY ANALYSIS
[1908] 2 KB1. This is provided in section 7 of the Goods Act (Vic.). Moreover, if the contract is
for the benefits of the minors, it can be enforced.
Again, a contract entered into by a minor for employment is binding except in the cases
of oppression or unfair means inflicted on the minor. A minor can terminate such contract on
reaching adult hood.
Application:
As per the facts of the case, John through his broker has invested in AppTools Ltd
(AppTools) and BuzzTools Ltd (BuzzTools). He gains profit in AppTools where his money got
doubled. He instructs his broker to sell it off. Thus it is seen that he gain profit through the
selling of the AppTools shares. Moreover, he invested in the shares as well as sold the shares
through the broker. Here the broker is an adult person and can be regarded as the next friend or
guardian of the minor John. Thus he did not buy the shares himself but through a middle man,
that is the broker.
Conclusion:
From the rules enumerated above and the facts of the case, John can enforce the contract
to get the profit from selling the AppTools share as such sale of the shares will cause benefits to
John.
c) Issue:
The issue involved here in the case study analysis is whether John can be sued by the
liquidator to recover the money owed by him on the BuzzTool shares.

4CASE STUDY ANALYSIS
Rules:
For a valid contract, one of the essential conditions to be satisfied is that all the parties to
the contract must have the capacity to contract as given in Minors (Property and Contracts) Act
1970 (NSW). Under common law, a contract entered by the minor is usually voidable. A minor
is a person below 18 years of age.
Under both common law and statute, the minors are restricted to contract. As per
common law, a contract entered by a minor is voidable. But there are few exceptions to this rule.
A contract for necessities by a minor is binding on parties as found in the case of Nash v Inman
[1908] 2 KB1. This is provided in section 7 of the Goods Act (Vic.).
In addition to these, a minor cannot sue or be sued directly. In general they can be sued
through a parent or guardian for the civil liabilities.
Moreover, a shareholder cannot be held personally liable for the loss or debts incurred by
the company. The debts can be paid off by disposing off the assets of the company.
Application:
As from the facts of the case, it is seen that one month after John buys the BuzzTool
shares, the company goes to liquidation. John’s shares were partially paid and thus the liquidator
is trying to recover the remaining money from John. Thus here, the liquidator cannot sue directly
John as he is a minor.
Conclusion:
From the rules and facts discussed above, John cannot be sued by liquidator as he is a
minor.

5CASE STUDY ANALYSIS
Part B:
Issues:
The issues involved in the present case study analysis are that what type of company is
to be registered with ASIC, what will be the status of the company at the end of the first financial
year and whether it would remain in the same category in the next 5 years. Another issue is that
whether the company name could include ‘Anzac Coffee’.
Rules/Law:
As per the provisions enumerated in the Corporations Act 2001 (Cth), in Australia there
are mainly two types of companies, the proprietary companies and the public companies. In this
regard Part 1.5 containing Small business guide must be referred. Most of the small plus medium
sized businesses prefer to register as a proprietary company. Provisions related to proprietary
company are given under section 45A of the Division 5A of the said act.
A proprietary company can be either large or small depending upon certain criteria. A
small proprietary company is one if for a financial year it satisfies at least two of the below
mentioned conditions. The conditions are the consolidated revenue for the financial year of the
company and any other entitles it manages is less than 25 million $, the valuation of the
consolidated gross assets at the end of the financial year of the company and any other entitles
under control is less than 12.5 million $ and the company and any other entitles under its control
have less than 50 employees at the end of the relevant financial year. These are given under
section 45A (2) of the said act.
On the other hand, as per section 45A (3), a proprietary company is regarded as the large
proprietary company if it fulfils any of the below mentioned conditions which are follows. The

6CASE STUDY ANALYSIS
consolidated revenue of the company together with its entitles, if any, for a given financial year
is 25 million $ or more, the gross consolidated assets value at the end of the given financial year
is 12.5 million $ or more and the company along with its entitles have at least 50 or more
employees at the end of that particular financial year. As per section 112 (1), a proprietary
company can be limited by shares or an unlimited company with a share capital.
For selecting the name of the company the provisions enumerated in Division 1 of Part
2B.6, must be considered. The relevant sections to be considered here are from section 147 to
section 156. Firstly section 147 must be referred to find out whether the chosen name to be given
to the company is already in use or not. Section 149 is to be considered too to find out what
abbreviations can be used with the name of the company.
As per Part 1.5 containing Small business guide, and sections 119 and 147 to 161, a
company when registered, ASIC allocates a unique 9 digit number known as the Australian
Company Number (ACN). Such company may use its ACN as its name.
Application:
As per the facts of the given case, it is seen that a less expensive method of brewing
expresso coffee drinks by using gas stoves at home is being discovered. In using such
manner, the expensive coffee making machines are not needed.
A company is about to be formed to market the discovery and such company will
consist of only family members. It is envisaged that the end of the first financial year, the
company is expected to incur gross assets of minimum 5 million $, a gross revenue of $ 10
million and to employ 20 full time employees. Thus as per section 45A (2) of the said act,
the company is a small proprietary business as its gross assets is less than 12.5 million $,

7CASE STUDY ANALYSIS
gross revenue is less than 25 million $ and number of employees is less than 50 at the end of
the first financial year.
The five year plan shows that by the end of 5 year period, the assets of the company
will be around 13 million $ , the estimated value of the gross revenue will be around 26
million $ and the number of employees will 20 full time people along with 66 people
employed for half the time of a equal full time employee. Thus from this data, it can be said
that as per section 45A (3) of the said act, by the end of 5 year period, the company will be
categorized as the large proprietary company. Thus after 5 year period, the company’s asset
will be more than 12.5 million dollar, its gross revenue will be more than 25 million $ and
number of employees will be more than 50.
For including the ‘Anzac Coffee’ in the company name, first it has to be checked that
whether similar name is available or not as per section 147 of the said act. As company name
cannot be identical to an existing name. Then it has to be checked that whether such ‘Anzac
Coffee’ term is restricted or not as some of the names may mis lead people and for this,
approval of government minister is also needed.
Moreover as it is a proprietary company it may use ‘Pty’ after the name of the
company.
Conclusion:
A close perusal of the rules of law and the facts of the case, it can be said that as per
section 45A (3) of the said act, by the end of 5 year period, the company will be categorized
as the large proprietary company. Thus after 5 year period, the company’s asset will be more

8CASE STUDY ANALYSIS
than 12.5 million dollar, its gross revenue will be more than 25 million $ and number of
employees will be more than 50.
Further, the company can use the term ‘Anzac coffee’ if no such company is using that
name, or it is not a brand name or it is not restricted.

9CASE STUDY ANALYSIS
References:
Goods Act (Vic.).
McKendrick, E. and Liu, Q., 2015. Contract Law: Australian Edition. Macmillan International
Higher Education.
Nash v Inman [1908] 2 KB1.
The Corporations Act 2001 (Cth).
The Minors (Property and Contracts) Act 1970 (NSW).