ACCC actions against Ultra Tune and Geowash

This article discusses the actions taken by the ACCC against Ultra Tune and Geowash for breaching the Australian Consumer Law. It provides a summary of the cases and discusses their significance in relation to corporate law in Australia.

COMMERCIAL LAW
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Table of Contents
Introduction......................................................................................................................................3
Article: ACCC actions against Ultra Tune and Geowash...............................................................3
Summary of article..........................................................................................................................3
Discussion about significance of article..........................................................................................4
Conclusion.......................................................................................................................................4
Reference list...................................................................................................................................5
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Introduction
This assignment is focusing on article based on action taken by Australian Competition and
Consumer Commission (ACCC) against Geowash and Ultra Tune for breaching of the Australian
Consumer Law (ACL). Relevance of this article to the corporate Act of Australia is being
discussed in this study.
Article: ACCC actions against Ultra Tune and Geowash
Summary of article
Cowell Clarke, a renowned commercial lawyer, has developed this article to mention penalty for
breach of duty of directs and franchises code of practice. This article has focused on two
different judgments made in January and February of 2019 respectively regarding breach of ACL
by Ultra Tune and Geowash. At first, this article has mentioned about the case study of ACCC v
Ultra Tune. In that case, ACCC has found that director of Ultra Tune has failed to provide proper
legal disclosure to their franchises. On another hand, it has been found that this company has
made false representation to franchises. Breach of the obligation of “good faith” was the central
point of this case. It has been mentioned that franchisors are not supposed to use power and
opportunity to misrepresent their business to anyone. As mentioned by Hedges et al. (2016), it is
important for directors of a company to co-operate with franchisees and this cannot be possible
with any kind of misrepresentation. At the end of this case, the federal court has ordered Ultra
Tune to pay a penalty of $2.6 due to breach of “Good Faith” duty of franchises and Australian
consumer law.
On another hand, this article has been focused on describing the case study of ACCC v Geowash
Pty Ltd. This company has provided false information regarding corporate clients, monthly
income and expense of establishment for franchises. It has been found that directors of this firm
have breached legal system related to prohibition on misleading as well as deceptive conduct.
Federal court has accused directors of this company as they have failed to act in good faith as
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mentioned in the franchising code of conduct (Lexology.com,2019). However, this article has
mentioned that decision of penalty for this case is due and will be proceeding in near future.
Discussion about significance of article
Corporate law of Australia provides clear overview of legal principles that must be followed by
organizations of this country. It has included duties of directors while operating and managing
business process. Chosen article has provided clear overview of two similar case studies. In both
of the cases, it has been found that directors fail to perform their duty of franchisor and they have
faced legal issues due to this reason. As mentioned by Clarke et al. (2017), act of good faith is to
avoid misuse of power and opportunities to have benefit. In both cases, directors have used their
power and opportunities to mislead franchisors. Misrepresentation of important aspects of
companies has misled their franchises. As suggested by Gray et al. (2016), discussion of this
topic is adding significance values to director’s duty mentioned by the corporate law. According
to corporate law, it is one of the main duties of director to act in good faith. They can only use
their power and opportunities to ensure benefit for their company (Schaltegger et al., 2017). This
legal guideline is indicating that directors must not misuse power to cheat on any people.
This article is postulating about the Franchises code of conduct that is similar to duty of
directors. ACCC has reviewed all allegation related to this breach of this code and have made the
judgment for the first case. It was considered a clear case of breach of duty by the federal court
and due to this reason; that company was instructed to pay the penalty mentioned by the court.
Another case was similar by nature; however, decision of judgment is pending for that second
case. This article is providing a significant contribution to understanding possible consequences
for breach of duty by directors of Australia based organization. Selection of this particular article
has helped to understand legal system of Australia for the directors of companies.
Conclusion
From the above discussion, it can be concluded that directors of organizations are bound to
perform their duty as mentioned in the Corporate Law of Australia. Breach of any of the
mentioned duties may force directors to face legal issues. On another hand, ACL has been
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developed to protect the rights of consumers and this legal system helps to proceed against
directors in case of breach of duties.
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Reference list
Clarke, M.A., Hooley, R.J., Munday, R.J., Sealy, L.S., Tettenborn, A.M. and Turner, P.G.,
2017. Commercial law: Text, cases, and materials. Oxford University Press.
Dixon, O. and Hill, J.G., 2018. The Protection of Investors and the Compensation for their
Losses: Australia. European Corporate Governance Institute (ECGI)-Law Working Paper,
(421).
Gray, S., Harymawan, I. and Nowland, J., 2016. Political and government connections on
corporate boards in Australia: Good for business?. Australian Journal of Management, 41(1),
pp.3-26.
Hedges, J., Bird, H.L., Gilligan, G., Godwin, A. and Ramsay, I., 2016. An Empirical Analysis of
Public Enforcement of Directors’ Duties in Australia: Preliminary Findings. CIFR Paper, (105).
Lexology.com. (2019). ACCC actions against Ultra Tune and Geowash. Available at:
https://www.lexology.com/library/detail.aspx?g=4cb274b1-7746-4104-a61f-d07d670d1883
[Accessed on 14th April 2019]
Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental
management: Striving for sustainability. Abingdon: Routledge.
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