Conflict of Interest and Principles of Global Convention

This case explores a conflict of interest and violation of global convention principles in a business dealing. It discusses the impact of corruption and exploitation of workers on the company and suggests a way forward. The principles of anti-corruption and elimination of forced labor are applicable in this case. The company should share its experience and take action against such practices.

Scenario 1-
Kumar’s concerns and IT employment issues-
Issue- In the given case, Criss Cross Computer Systems Ltd. engaged in IT services and consultancy
sector in Werribee, hired Pru as an IT specialist. Pru has 20% of shares of the company and a
contract agreement that she can join any other similar firmfor years in Australia, after leaving her job
from the present company. Additionally, a separate agreement also stated that she can not engage
in Restrcited business for minimum 8 years.It also contains well defined description of Restricted
business.Now, Pru decided to sale her shared and wants to join another IT firm in Darwin.
Rule-Restrictions is any contract usually intended to protect the employer. However, employer can
not stop any employee from other jobs untill your new Job affects your old employer. Therefore, the
given case includesunreasonableterms. The unfair contracts terms mentioned in Pt 2-3 of Australian
consumer lawand Pt 2 Div 2 Subdiv BA of theAustraliansecurities and Investemnt commission act
2001. The unfair Contract Terms Laws are also being regulated by Part 2B of Fair Trading Act
1999(vic) which is now repealed (Legislation.vic.gov.au, 2019). Also the regulation of unfair terms is
governed by Consumer Contract Regulations 1999(UK). Also schedule 2 , section 23-28 of the
Australian Consumer law defines unfair contract law with relevant regulations(Classic.austlii.edu.au,
2019).
Argument- Under Australian Consumer law, only court has the power to determine the fairness of
any term in relevant contracts. However, various terms that can be unfair in any contract are-
 that enables one part to avoid or limit their obligation but not the other.
 If only one party has the right to vary the provisions of terms.
 terms that penalises only one party for breaching the contract.
 Termsthat enable only one party to terminate the contract but not the other.
The terms of contract in the given case regardingrestricting the actions of Pru in context of
employment in similar firms or selling the shares held by her leads to biased obligation to Pru and
only one party has the right to interprete the contractual terms, which amounts to unfair terms.The
Federal court of Australia in Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [2017
(Supremecourt.vic.gov.au, 2019)], held that contract provisions imposing time limitation for the
commencement of any action can be misleading. Therefore, the judgement upheld the

enforceability of any provision that have such effect of limitingthe action of consumer. However,
these terms includes enforceability. Also, in Leahey v CSG Business Solutions (Aus) Pty Ltd [2017]
FCA 1098(18 September 2017) (Lee J) (Jade.io, 2019), the court held that the breach with a assured
loss is less likely to be serious. Therefore, the assessment of loss in case ofbreach of
shareholdingcontract must be performed to evaluate the extent.
Conclusion- Therefore, in the given case, KUMAR’s concern about the breach of contract by Pru
needed the evaluation of loss occurred. Also the terms of contract are creating “significant
imbalance” in partiesrights and obligations. The court has decided the fairness of the terms of
contracts at several time byassessing the reasonablemandate for securing the interests
ofadvantageous party. In the given case, Pru filed to serve her notice period which comes under the
fair terms of contracts and Pru has full obligations towards it. In case of breach of shareholding
contract, it accounts to unreasonable and unfair term of contract withlack of serious loss to the Criss
Cross computer systems Ltd.
References
Classic.austlii.edu.au. (2019). COMPETITION AND CONSUMER ACT 2010 - SCHEDULE 2 - TABLE OF
CONTENTS. [online] Available at:
http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/toc-sch2.html [Accessed 6
Sep. 2019].
Jade.io. (2019). BarNet Jade - Find recent Australian legal decisions, judgments, case summaries
for legal professionals (Judgments And Decisions Enhanced). [online] Available at:
https://jade.io/summary/mnc/2017/FCA/1098 [Accessed 6 Sep. 2019].
Legislation.vic.gov.au. (2019). [online] Available at:
http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/PubStatbook.nsf/
edfb620cf7503d1aca256da4001b08af/483E227C3EF9222FCA256E5B00213D8B/$FILE/99-
016a.pdf [Accessed 6 Sep. 2019].
Supremecourt.vic.gov.au. (2019). Brighton Construction Pty Ltd v Multiplex Constructions Pty Ltd
[2018] VSC 246 | The Supreme Court of Victoria. [online] Available at:

https://www.supremecourt.vic.gov.au/court-decisions/judgments-and-sentences/judgment-
summaries/brighton-construction-pty-ltd-v [Accessed 6 Sep. 2019].
Scenario 2-

Issue- In the given case, main issue occurredbetweenConstructs Ltd., a constructioncomapny and Big
Sea Insurance company regarding the terms ofclause 11 of insurance contract whichstates that
“damage to property coverage” shall not apply to liability, arising out of the failure of insured to
render professional advice or any relevant error ofomission.
Rule- The Australian Consumer law( competition and consumer act 2010, sc 2, section 23-28)consists
of the regulation for the unfair terms of contract. However, the contract of insurance is not capable
of relief under any state law, any other act or ordinance (TheFreeDictionary.com, 2019). Therefore,
the Insurance contracts act 1984,will be sole regulator of insurance contracts in Australia. Section
35 of the Insurance contracts act provides for the standard cover which is minimum level of cover in
case of building insurance or home content insurances (Legislation.gov.au, 2019).However, if the
insurer intends to avoid or limit its liabilities regarding minimum cover, then he must prove-
 that insured consumer was aware aboutthe limitation and the exclusion in writing at the
time of contract conclusion.
 A reasonable consumer could have known about the exclusions.
Also section 37 of the insurance Contracts Act 1984, mentions thatthe provision of standard cover
is not available in case of “non-prescribed” types of contracts which include commercial building and
contents (Hqinsurance.com.au, 2019).However insurer still needs to clearly inform the insurer in
writing about certain clauses which have effects of any such term, at the time of conclusion of
insurance contract. Failure to inform about unusual exclusion means prohibition of insurer to rely on
it later.
Apart from this, the section 54 of the Insurance Contracts act 1984, restrict insurer from its
obligations over the terms of policies that requires the action of insured after the contract
conclusion.
Argument- A common view in insurance contracts is that majority of insured persons do not read
the insurance policies in detailfrom the document the recieve from the insurer. It causes exemption
from the protection under section 35 of the Insurance Contracfs act 1984.However, protecting the
insuredfrom the negative impacts of policy terms, variousrules are there such as pre-contractual
disclosure, utmost good faith, rules on reliance on specific terms. Also in Manito woq Platinum Pty
Ltd & Anor v WFI Insurance Limited [2017] WADC 32, (I-law.com, 2019) the court examined the
relevance of section 54 of Insurance Contract Act 1984, and held that objective analysis of the policy
did not support the authenticity of the fact that it was in the common interest of the contractor to

breach the terms of insurance contract. And the ambiguity generated due to unclear consequences
of the breach of insurance contract by Insured, can not be a reasonable ground for insurer to limit its
claims.
Conclusion- Therefore, in the given prima facie, the constructs Ltd. is required to prove the
nondisclosure of terms under the contract document under section 35 of the Insurance act as the
conflict regarding different policy proposals must be resolved . Going by the judgement of the above
case law, it is also required to provedthe nonapplicability of the provisions of Section 54 to restrict
the Big sea Insurance companyfromlimiting its obligations regarding the claims. Court have the
authority to read down the specific terms of insurance contract. Therefore, any potential evidence
regarding reckless actions by the constructs Ltd.must be avoided.
References
Hqinsurance.com.au. (2019). [online] Available at:
http://hqinsurance.com.au/wp-content/uploads/2013/11/Document-Insurance-Contracts-Act-
1984.pdf [Accessed 6 Sep. 2019].
I-law.com. (2019). MANITOWOQ PLATINUM PTY LTD V WFI INSURANCE LTD. [online] Available at:
https://www.i-law.com/ilaw/doc/view.htm?id=390153 [Accessed 6 Sep. 2019].
Legislation.gov.au. (2019). Insurance Contracts Act 1984. [online] Available at:
https://www.legislation.gov.au/Details/C2016C00820 [Accessed 6 Sep. 2019].
TheFreeDictionary.com. (2019). Insurance Contract, General. [online] Available at: https://legal-
dictionary.thefreedictionary.com/Insurance+Contract%2c+General [Accessed 6 Sep. 2019].
Scenario 3-

In the given case, there is a conflict of interest and principles of Global convention as Shaoqing’s
supplier is supplying computer parts at very reasonable price and very good quality but also
embroiled in exploitation of workers.
United Nations Global Compact has ten basic principle for corporate sustainability
(Unglobalcompact.org, 2019). Among those principles, the principle on anti corruption and the the
declarationof fundamental principles and rights of labours at work, will be applicable here. Principle
10 is about abolition of corruption from busines and avoid any kind of bribery or extortion.It also
encourage companies to engage with civil societies to create transparent global economy.United
Nations convention against corruption in 20 is an important tool to fight against corruption Further,
principle 4 of the compact deals with the elimination of forced or compulsary labour which leads to
exploitation of workers (Unglobalcompact.org, 2019).
Corruption is defined as the “abuse of entrusted power for private gains”. In the given case,
Shaoqing’s dealing with the supplier, engaged in the exploitation of workers, for personal gains leads
to violation of United Nation Convention against corruption (Unodc.org, 2019). It may cause
potential risks to Jump Systems Ltd., which can range from reputational risk, financial risk to legal
risk or erosionof internal trust. This can also affect overallethical cultureof the organisation.
Way forward– Companies has option to engage in work againstannual communication on progress
where they also have option to share their experience with stakeholders and advice best practices.
Therefore, Shaoqing must share this informationandpersonalexperienceto make everyone aware
about the nefarious practices of supplier to refrain them from engaging in such activites in
compliance with the global convention. They also have the option for anti corruption call to action
which acts as call to government for adeqaute steps against such practices.
References
Unglobalcompact.org. (2019). Homepage | UN Global Compact. [online] Available at:
https://www.unglobalcompact.org/ [Accessed 6 Sep. 2019].

Unglobalcompact.org. (2019). Principle 4 | UN Global Compact. [online] Available at:
https://www.unglobalcompact.org/what-is-gc/mission/principles/principle-4 [Accessed 6 Sep.
2019].
Unodc.org. (2019). Convention against Corruption. [online] Available at:
https://www.unodc.org/unodc/en/treaties/CAC/ [Accessed 6 Sep. 2019].