Amazon's Contemporary Business Law Challenges in Australia and the US

This report provides a detailed analysis of the contemporary business laws impacting Amazon's operations in Australia and the United States. It begins by outlining the basis of law and legal systems in both countries, highlighting similarities and differences in their parliamentary democracies and common law systems. The report then examines various business structures available in each country, including sole proprietorships, partnerships, companies, and trusts, discussing their advantages and disadvantages. It further delves into insolvency laws, consumer and competition laws, labor laws, and taxation laws, comparing the regulatory frameworks in Australia and the US. Additionally, the report explores the law of property, tort of negligence, and contract law, providing a comprehensive overview of the legal challenges and considerations for Amazon's business activities in both jurisdictions. The report concludes by summarizing the key legal aspects that Amazon must navigate to ensure compliance and success in the Australian and US markets.

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Contemporary Business Law
Laws which impact Amazon in Australia and US
10-Apr-18
(Student Details: )

Contemporary Business Law
Table of Contents
Introduction......................................................................................................................................4
Basis of Law/ Legal System............................................................................................................5
Australia.......................................................................................................................................5
U.S...............................................................................................................................................6
Business Structures..........................................................................................................................7
Australia.......................................................................................................................................7
U.S.............................................................................................................................................10
Insolvency......................................................................................................................................10
Australia.....................................................................................................................................10
U.S.............................................................................................................................................11
Consumer Law and Competition Law...........................................................................................12
Australia.....................................................................................................................................12
U.S.............................................................................................................................................15
Labour Law....................................................................................................................................17
Australia.....................................................................................................................................17
U.S.............................................................................................................................................17
Taxation Law.................................................................................................................................18
Australia.....................................................................................................................................18
U.S.............................................................................................................................................19
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Law of Property.............................................................................................................................20
Australia.....................................................................................................................................20
U.S.............................................................................................................................................21
Tort of Negligence.........................................................................................................................21
Australia.....................................................................................................................................22
U.S.............................................................................................................................................24
Contract Law.................................................................................................................................24
Australia.....................................................................................................................................24
U.S.............................................................................................................................................26
Conclusion.....................................................................................................................................27
Bibliography..................................................................................................................................28
Articles/ Books/ Journals...........................................................................................................28
Cases..........................................................................................................................................30
Legislations................................................................................................................................30
Others.........................................................................................................................................32
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Introduction
Amazon.com. Inc., otherwise simply referred to as Amazon is the US based cloud computing
and electronic commerce company, which is headquartered at Seattle, Washington. The company
was established on 05th July, 1994 by Jeff Bezo1s. In a short span, the company became the
largest internet retailer across the globe in terms of market capitalization and revenue. It comes
just second when it comes to the sales figures2. The company had initially started itself as an
online bookstore but it went on to diversify itself in downloading and streaming of videos, MP3s,
audio books, and went forth with its entering streams like food, toys, furniture, jewellery,
apparel, electronics, video games and software. Amazon also produces the consumer electronics
like Echo, Fire TV, Fire tablets, and the most famous Kindle e-reader, along with providing
cloud infrastructure services. Amazon is often taken as a seller of low end products due to its in
house brand of AmazonBasics3.
Amazon is truly a global company and has its operations spread across the globe. It also caters to
different nations by bringing forth different retail websites for UK, US, Ireland, Spain, Italy,
Germany, Canada, France, Australia, Brazil, India, Mexico, Japan and China. It goes beyond the
international boundaries to ship products in varied nations. Due to the large scale of operations of
Amazon, spread across the globe, the laws of different nations, where Amazon conducts its
business, are applied on the company4. These include the laws of contract, property tort,
insolvency, consumer, competition, labour and taxation. There are certain laws which are similar
in the nations and then there are laws which differentiate on varied basis. This discussion aims at
highlighting the different laws which apply on the business of Amazon, particularly when they
conduct business in Australia and US.
1 Tom Robinson, Jeff Bezos: Amazon.com Architect (ABDO, 2009)
2 Nancy Richter, Paul Jackson and Thomas Schildhauer, Entrepreneurial Innovation and Leadership: Preparing for
a Digital Future (Springer, 2018)
3 Amazon, Echo, Fire Tablet, Kindle E-reader, & Fire TV Accessories (2018) <https://www.amazon.com/Kindle-
Accessories-Electronics/b?ie=UTF8&node=370783011>
4 Erika Wittekind, Amazon.com: The Company and Its Founder: The Company and Its Founder (ABDO, 2012)
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Basis of Law/ Legal System
Legal system of any nation refer to the procedures and processes which are made use of, for the
purpose of interpreting and enforcing different legislations or laws. Based on the different
jurisdictions and ideologies, different legal systems exist5. In order to conduct business in any
nation, it is important for the companies to be clear on what exactly the legal system of such
nation is. All these laws of the two nations have to be kept at the centre by Amazon to be an
example of corporate citizen.
Australia
In Australia, there exists a parliamentary democracy6. The constitution of the nation had been
established in 1901 as a federal system of government. This system provides that the powers
have to be distributed in between the national government, which is otherwise referred to as the
Commonwealth, and the six states in the nation. Apart from the six states in the nation, there are
three self-governing territories. The boundaries of law making in between the state/ territories
and the commonwealth are defined by the constitution of the nation7. At the time of colonisation,
Australia inherited the legal system, which is a common law system, from England. There are
two major sources of laws in the nation, which includes the statutes, and the cases. The statutes
or the legislations are the legal rules which the parliament makes and these are the ones through
which the parliament gets delegated authority. The other source of cases refers to the decisions
which are made by the judges in courts, which are otherwise referred to as the precedents8.
There is a division of powers in the nation, whereby the functions of government are divided
under legislative, executive and judicial. This doctrine of separation of powers is meant to keep
checks and balances where one institution is given a single power, and the functioning of one
branch is not to be interfered with, by the other branch9. There are a number of basis on which
the law in the nation is divided, one of which is the civil and criminal branches of law. The civil
5 US Legal, Legal System Law and Legal Definition (2018) <https://definitions.uslegal.com/l/legal-system/>
6 Australian National University, The Australian Legal System (2018) <http://libguides.anu.edu.au/c.php?
g=634887&p=4547083>
7 Nicholas Aroney, The Constitution of a Federal Commonwealth: The Making and Meaning of the Australian
Constitution (Cambridge University Press, 2009)
8 John Carvan, Understanding the Australian Legal System (Lawbook Company, 2009)
9 Roger Masterman, The Separation of Powers in the Contemporary Constitution: Judicial Competence and
Independence in the United Kingdom (Cambridge University Press, 2010)
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law includes the cases where the instances are not serious in nature, and include instances of
tortious acts like negligence. In comparison to civil law, the criminal law covers instances like
manslaughter and murder, where the aim is to punish the guilty. In doing so, certain requirements
like showing mens rea are required10. With these separations and demarcations, the efficiency of
the law is enhanced. The separation of law further ensures that there is specialization and
efficiency in the varied fields and aspects of law.
U.S.
As is the case in Australia, in US also, the legal system covers the federal and state governmental
divisions. However, there is a lot more complexity involved in the legal system of US. For
gaining a proper understanding of the legal system of US, there is a need to understand which
rules, regulations or laws are applicable. Basically, there is a need to understand the laws which
have a controlling effect or priority in the nation. In US, the constitution of the nation is the
highest law of land11. The US Congress enacts the Federal Laws which come next in hierarchy.
However, this does not infer that Federal Congress can adopt laws which control the states in
every situation. This cannot be done till the time the law can be applied to the states based on the
precedents and the US Constitution. Each state in US has a legislature where the state laws are
adopted and are referred to as the statutes. These statutes are often complied in what is
commonly referred to as a Code. This is basically just a codification of the applicable statutes12.
There are a number of other similarities in between the legal systems of the two nations. Both the
nations have adopted the doctrine of separation, where the powers are divided in between
executive, judiciary and legislative branches. There is also the bifurcation of laws on the basis of
civil and criminal jurisdictions. There is also a commonality in terms of law having two sources
of court cases and statues13.
10 Linda E. Carter and Fausto Pocar, International Criminal Procedure: The Interface of Civil Law and Common
Law Legal Systems (Edward Elgar, 2013)
11 Jenna Ellis Esq., The Legal Basis for a Moral Constitution: A Guide for Christians to Understand America's
Constitutional Crisis (WestBow Press 2015)
12 US Legal, US Legal System (2018) <https://system.uslegal.com/>
13 Find Law, The U.S. Legal System (2018) <http://corporate.findlaw.com/litigation-disputes/the-u-s-legal-
system.html>
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Business Structures
Each nation has different business structures, through which the business can be conducted by
the organizations. Before entering in any nation, or even to run and expand the business, the
division of business structure becomes very crucial. When conducting business in US and
Australia, Amazon needs to carefully evaluate these structures, and adopt the structure which
best suits their needs.
Australia
Australia has majorly four distinctive business structures, which can be adopted for conducting
business in the nation. These include sole trader, company, trust and partnership14. Each of these
structures comes with their set of unique features and reasons to be adopted or to be skipped
over. There are some other structures as well in the nation which are incorporate associations and
joint venture15.
A sole trader is the easiest form of business structure in the nation, where a person conducts their
business in an independent manner and has the responsibility for every aspect of the business.
This model is also the least expensive model, coupled with minimal regulatory requirements16.
The responsibility in case of sol trader is with the person who owns the business, and this
responsibility is for debts and losses suffered by the businesses. The business name of the sole
trader is to be registered with the ASIC, i.e. Australian Securities and Investments Commissions,
based on the provisions of the Business Names Registration Act, 2011 (Cth)17. The sole trader
form is not treated separately from the owner.
Just because the business is run by a single person, does not mean that other people cannot be
hired in to do the work. The sole trader can employ people, so long as they are provided with
superannuation, compensation insurance for workers and payroll tax. The taxes of the business
can be clubbed up with personal taxes, and can be paid under Tax File Number of the
14 Australian Government, Business structure (2018) <https://www.business.gov.au/info/plan-and-start/start-your-
business/business-structure>
15 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
16 Veechi Curtis, Getting Started In Small Business For Dummies (John Wiley & Sons, 3rd ed., 2016)
17 Business Names Registration Act, 2011 (Cth)
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individual18. However, the sole traders have unlimited liability. This means that for the debts of
the sole trader, the personal assets of the sole trader can be attached. But this form brings with it
a level of simplicity and flexibility which makes it as the structure of choice for a number of
businesses19.
The next business structure form is partnership. A partnership can be created when two or more
individuals, up to a limit of twenty people, come together to run a business with common
purpose, for earning profits. The partnership can be formed where the features of a partnership
are met, even when the same are not reduced into writing in a partnership deed, as it is not an
obligatory document20. Each jurisdiction in Australia has a different partnership act. For instance,
in New South Wales, the Partnership Act, 189221 is applicable. There is equal responsibility
under the partnership, whereby the partners are jointly and severally liable for the debts of the
firm. There is applicability of agency law on partnership, which make all the partners binding to
one another. Again, this is a relatively easier and inexpensive mode of setting up a business.
However, instances like quarrels and fights can run in partnership ending. There is also the con
of unlimited liability amongst the partners22.
The most common form of running business in Australia is the corporations form. Under this
form, the business is run by the management on behalf of the shareholders. The companies in
Australia are governed by the Corporations Act, 200123 and are regulated by the ASIC. As
against the business structures of partnership and sole trader, the company is deemed as a
separate legal entity. This means that for the debts of the company, the shareholders cannot be
made liable. They can only be made liable in the event of company being wound up, where they
have any unpaid amount left on the shares. Beyond that, they cannot be made liable. The
directors of the company run the daily operations24.
18 Department of Industry, Innovation and Science, Sole trader (7 June 2017)
<https://www.business.gov.au/info/plan-and-start/start-your-business/business-structure/business-structures-and-
types/sole-trader>
19 Roger Vickery and MaryAnne Flood, Australian business law: compliance and practice (Pearson Australia, 2012)
20 Joseph Story, Commentaries on the Law of Partnership, as a Branch of Commercial and Maritime Jurisprudence,
with Occasional Illustrations from the Civil and Foreign Law (The Lawbook Exchange, Ltd., 2007)
21 Partnership Act, 1892 (NSW)
22 Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)
23 Corporations Act, 2001 (Cth)
24 Phillip Lipton, Abe Herzberg, and Michelle Welsh, Understanding Company Law (Thomson Reuters, 18th ed,
2016)
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Within the company structure, there are two sub classifications, i.e. public company and private
company25; and these are further divided on separate basis, where the public companies can be
unlimited public company with share capital, no liability company, company which is limited by
guarantee, or lastly, they can be the company limited through shares. The proprietary companies,
as is the case with the other form, also have subtypes where one the company can be limited by
share and the other one is where it is unlimited with share capital. The chief difference between
the public and proprietary companies is that the former can issue shares to anyone, but the latter
are restricted to issuance of shares to friends and families, and cannot issue shares to the general
public26.
Apart from these three leading structures, there are structures like trust. Through trust, an
obligation is imposed on the trustee to hold the assets or property for the other person’s benefit,
which are referred to as the beneficiaries. This is a complex business structure and requires
assistance in the setting up process. The operations of business are limited to the conditions
which have been placed in the trust deed27. There are different types of trusts including express
and non-express trusts. The other structure is joint venture, whereby two or more parties come
together and pool their resources for fulfilling a specific task. Once the task is done, the joint
venture comes to an end. There are also the incorporated associations which are deemed as
registered legal entity formed for charitable, recreational and cultural purposes. Then there are
structures like limited partnerships, no liability corporations and the like28. Amazon can enter the
markets of Australia through company structure, as this is the most appropriate due to the sheer
power of the company. A structure like joint venture or even partnerships is not suitable due to
the magnitude of operations of Amazon and due to its ability of tapping in the suppliers and
consumers, as it is already an established brand.
U.S.
There are similar business structures in US as well, where the business can be conducted through
sole proprietorship, partnership, corporation, S corporation, and Limited Liability Company29.
The sole proprietorship matches sole trader form and the partnership is common. When it comes
25 Corporations Act 2001, s112
26 Julie Cassidy, Concise Corporations Law (The Federation Press, 5th ed, 2006)
27 Iain McDonald and Anne Street, Equity and Trusts (Oxford University Press, 5th ed, 2016)
28 Ann Carrington, Business Structures and Incorporation (Aauvi House Publishing Group, 2012)
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to companies, the theme continues to be the same, but there is variance in the types of
corporations. In US, there are S Corporation and C Corporation30. Then there are the limited
liability company, which are allowed by the state statute31. Again, there are other business
structures in US as well which includes the joint ventures. In US, it already works as a company.
Insolvency
Insolvency and bankruptcy are important part of any business structure, as this is the procedure
which has to be followed when the debts of the business are due and the same cannot be paid.
Even though Amazon is not faced with bankruptcy till now, there is a need to be vigilant about
these norms, particularly in dealing with the ones who have declared themselves as bankrupt or
insolvent, and are associated with Amazon.
Australia
Bankruptcy had been originally designed to keep people out of jail where they were unable to
pay off their debts. Upon a person becoming bankrupt, a trustee gets appointed by the
government authority to take over their financial affairs. The law on bankruptcy in the nation is
governed through the Bankruptcy Act, 199632. The personal bankruptcy comes in two forms, i.e.
voluntary and involuntary. The personal insolvency procedures applicable on persons, instead of
company, are deemed as the bankruptcy and personal insolvency agreements33.
The laws of Australia regarding insolvency and bankruptcy are quite detailed. In the nation, there
are three common corporate insolvency procedures and these include receivership, voluntary
administration and liquidation. Under section 588G of the Corporations Act, the directors are
deemed to have incurred an offence, where they incur debts when the company is insolvent, or
where they are aware that undertaking the particular debt would make the company insolvent,
even when it was solvent at the time of taking such decision34. In liquidation, a liquidator is
29 IRS, Business Structures (2018) <https://www.irs.gov/businesses/small-businesses-self-employed/business-
structures>
30 IRS, Forming a Corporation (2018) <https://www.irs.gov/businesses/small-businesses-self-employed/forming-a-
corporation>
31 IRS, Limited Liability Company (LLC) (2018)
<https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc>
32 Bankruptcy Act, 1996 (Cth)
33 ASIC, Insolvency (2018) <http://asic.gov.au/regulatory-resources/insolvency/>
34 Corporations Act 2001, s588G
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appointed for winding up the company; in voluntary administration, a voluntary administrator
investigates and reports on the financial position of the company; and in a receivership, a
manager or receiver, appointed by court or secured creditor undertakes the winding up process.
The intricacies of the three separate them from each other35.
U.S.
Bankruptcy in US is governed through the federal law. Under Clause 4, Section 8, Article 1 of
the US Constitution, the authority is given to the Congress for enacting uniform laws on the
matter of bankruptcies across the nation. The Congress exercises their authority and this has been
done since 1801. The most recent one was the adoption of Bankruptcy Reform Act of 197836,
which has been amended a number of times, and has been codified in Title 11 of US Code37,
which is otherwise referred to as the Bankruptcy Code. The most significant change in this code
was seen through BAPCPA, which stands for the Bankruptcy Abuse Prevention and Consumer
Protection Act of 200538.
The bankruptcy code imposes certain liabilities on the directors of the parent company. This
liability s raised when the director of solvent companies fail in fulfilling their duty of loyalty and
duty of care, which they owed towards the shareholders and the company. There is the defence
of business judgement rule, which is also found under the Australian laws. This requires the
directors to show that they had carried on proper due diligence. This code recognizes different
types of insolvencies and presents provisions according to such types. For instance, Chapter 15
of the Bankruptcy Code provides for cross border insolvency and expects maximum cooperation
from the trustees, courts and authorized persons regarding foreign representatives and foreign
courts39.
35 Michael Murray and Jason Harris, Keay's Insolvency: Personal and Corporate Law and Practice (Thomson
Reuters Australia, Limited, 9th ed, 2016)
36 Bankruptcy Reform Act of 1978
37 Title 11 of United States Code
38 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
39 Fredric Sosnick and Ronni Arnold, Restructuring & Insolvency in the USA (15 December 2017)
<https://www.lexology.com/library/detail.aspx?g=4cfbd481-874d-4f18-9a2a-4df7e08e352b>
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Consumer Law and Competition Law
The consumer and competition laws are drawn in any nation to keep in mind the interests of the
consumers, where not only are they properly protected, but it is also ensured that there is fair
competition in the nation, which can ensure that a healthy competition exists, which benefits the
every party.
Australia
In Australia, the Competition and Consumer Act, 201040 (CCA) is the primary legislation in this
context. CCA became applicable in nation from January 01st, 2011 before which these provisions
were covered under the Trade Practices Act, 197441 (TPA). CCA is a legislative instrument for
competition law, where the goal is to promote competition and fair trading, along with protecting
the consumers in an adequate manner. The act is administered by the ACCC, i.e. Australian
Competition and Consumer Commission. Schedule 1 of this act is focused on the competition
part and Schedule 2 is based on consumer law, which is otherwise referred to as the Australian
Consumer Law.
The prominent provisions of ACL, which are commonly given relief to parties under are section
18, 21 and 29. Section 18 of the ACL refers to misleading or deceptive conduct and provides that
an individual involved in trade or commerce is restricted from being engaged on misleading or
deceptive conduct, or such conduct which is likely to mislead or deceive42. These provisions
were earlier covered under section 52 of the erstwhile act of TPA43. In context of Amazon, it
becomes crucial for the company to ensure that the provisions of this act are not breached. This
is due to the fact that a breach of these provisions can result in a liability being attracted for the
company.
Indulging in breach of section 18 of ACL proved costly for TPG as was seen in Australian
Competition and Consumer Commission v TPG Internet Pty Ltd44. In this case, TPG was held
liable for holding a misleading headline advertisement. In this case, the fine print disclaimer was
40 Competition and Consumer Act, 2010 (Cth)
41 Trade Practices Act, 1974 (Cth)
42 ACL, s18
43 Trade Practices Act 1974, s52
44 Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54
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