HI6027 Business and Corporate Law Online Exam - T3 2019, Holmes

This document presents a complete solution to the HI6027 Business and Corporate Law online exam from Trimester 3, 2019, at Holmes Institute. The exam consists of three sections: Section A features a short answer question focusing on the characteristics of a good legal system and a relevant example. Section B includes three case studies assessing understanding of contract terms, fraudulent misrepresentation, negligence, and Australian Consumer Law. Section C comprises a critical thinking question. The solution demonstrates application of legal principles, case law, and legislation to the given scenarios. The answers cover topics such as the Australian Legal System, contract formation, terms of a contract, tort and negligence, and consumer protection. The document includes detailed explanations, legal reasoning, and relevant case law to support the answers provided for each question, ensuring a comprehensive understanding of the subject matter.

Student Number: (enter on the line below)
NEC2080
Student Name: (enter on the line below)
HARIKRISHNA MUKKALA
HI6027 Business and Corporate Law
Online Exam
Trimester 3 2019
Instructions:
The exam consists of five (5) questions divided into three (3) Sections.
Answer all questions in the answer boxes provided in this paper.
Section A – 1 Short Answer question (10 marks)
Section B – 3 Case Studies / Problem-type questions (30 marks)
Section C – 1 Critical Thinking question (10 marks)
Assessment Weight:
This exam accounts for 50 percent (50%) of total marks.
Question 1 10 marks
Question 2 10 marks
Question 3 10 marks
Question 4 10 marks
Question 5 10 marks
Total marks 50 marks
HI6027 Online Exam T3 2019

Part A – Short Answer Question (10 marks)
Question 1
List the characteristics of what would be considered to be a good legal system. Give an
example of an actual law which you would consider fulfils the requirements of ‘good law’.
ANSWER: ** Answer box will enlarge as you type
Law is a set of rules that controls the human conducts. It actually differentiates
between a simple act and a legal act. Law can be said to be comprise of various Acts,
guidelines, policies and provisions. It is necessary for human being to follow the
guidelines and principles stated by the legal framework, otherwise adequate
punishment or penalty or both will impose upon the person. A good legal system can
be referred to such system where there exist transparency between the legal
principle and decision. It is an accepted fact that, people goes to the court in case
there right guaranteed by one or more legal guidelines has been breached or loss,
damage or detriment caused to the person due to some misconduct of another.
Therefore, it is necessary for the person dealing with the legal right of another to
maintain justice and fairness. Furthermore, there should not be any biased intention
or conduct while dealing with these legal rules as these may result in detriment to
another person’s interest who has some right and who came before the court of law
with an expectation that court will secure and promote such right. However, a good
legal system is that, where there is proper hierarchy of courts. That means there
should be three layers of court; lower court, high court and Supreme Court. Further,
a good legal system must ensure its rule and regulations are not influenced by any
superior authority and there exist fairness in the same.
A good law example can be Constitution of Australia, which was enacted in 1900. It is
the pillar of the whole Australian legal rules and regulations. This is said to be one of
the good law because it distributes power concurrently in various aspect upon both
the Commonwealth and State Government. It further contains existence of local
laws in upon many subjects. The constitution talks about equality, equal distribution
of power of people and also guarantees various rights of the citizens of Australia.
Part B – Case Studies / Problem-type questions (30 marks)
Instructions: Your answers must be supported by legal reasoning and case law or
legislation in order to gain a passin. g grade.
Question 2 (10 marks)
Belinda wants to buy a second-hand car and visits a number of car dealers before deciding to
purchase an as new 1998 Ford Mustang from American Car Sales. The sales person, Jaxson,
tells Belinda that the car was manufactured in 1998 and had only done 54,000 kms.
Three months later, Belinda has the Mustang serviced with her local mechanic who was a
Mustang enthusiast. He comments on the fact that the car was in pretty good condition for a
1994 Mustang, though he was surprised that it had only done 54,000 kms. He would not
have been surprised if it had done 100,000 kms.
HI6027 Online Exam T3 2019

Belinda makes further inquiries and discovers that the Mustang was in fact made in 1994
and she has paid about $5,000 more than the actual market value of the car. Belinda intends
to approach American Car Sales about this issue.
Does Belinda have any contractual rights against American Car Sales?
Required:
You are expected to discuss legal rules learned regarding terms of a contract, in particular
statements and representations, and conditions and warranties.
Do not answer this question based on Australian Consumer Law principles. No credit will be
given if you do so.
ANSWER:
Belinda can sue the American Car Sales for fraudulent misrepresentation where the
company even after knowing the reality that the car has actually fact made in 1994 instead
of 1998, fraudulently misrepresented the same and sold it to Belinda by stating that the car
was made in 1998. It has been held by the court in Derry v Peek (1889) App Case 337, that
whenever, a person fraudulently, or knowing the actual truth or recklessly represented some
fact to another, it is said to be fraudulent misrepresentation. Further, under the warranty
term of a contract, Belinda was supposed to believe that the statement made by the
American Car Sales about the car is true. This because in case of warranty, the buyer acts
upon the fact of due diligence that each information provided by the seller about the subject
of sale is said to be relevant.
Therefore, in this case, Belinda can either repudiate the contract or claim damages for such
false representation. However, under the contract of warranty, Belinda can only claim
damages for such breach
HI6027 Online Exam T3 2019

Question 3 (10 marks)
A news story from 2017 reported that Sydney woman was hospitalised after glass found
in takeaway coffee.
According to the report, the woman, 39 year-old Natalie Grabowski, was hospitalised
with internal bleeding after swallowing glass she believes was in the ice served with her
takeaway iced coffee at a popular inner-west cafe.
She had bought the cold brew coffee from BrewCity Redfern on Redfern’s O’Connell St
one Sunday morning earlier this month. On taking her first gulp of the iced coffee,
Natalie felt something scratch her throat. According to her, it felt “hard and sharp, and
just not right.” She then spat out the small pieces of ice she had not yet swallowed, and
rolled them in her fingers trying to figure out what was wrong. One of the pieces wasn’t
melting and cut her finger. She then realised it was actually a small piece of sharp glass.
Later that morning, she felt suddenly sick. Things didn’t look right when she went to the
toilet. Colleagues called an ambulance which transported Natalie to the nearest surgical
hospital.
After two days of “humiliating” tests and procedures, much of that time spent in
discomfort and pain, Natalie was discharged without having to go under the knife.
Medical reports said she had suffered rectal bleeding after ingesting the piece of glass.
The distressed coffee lover said while her injuries seem to have passed, she feels like
the incident will affect her forever.
Required:
a) What elements must Natalie prove to be able to succeed in an action in negligence
against the coffee shop? Identify and briefly explain each element. (3 mark)
ANSWER:
In this case, Natalie can sue the coffee shop for negligence. However, the onus of
proving the same is upon her. Therefore she has to prove the following,
1. The coffee shop has a duty of care towards the customer,
2. The coffee shop has breached the duty of care,
3. Natalie has suffered injury,
4. There is proximate relationship between such breach and the loss or injury caused
to Natalie
b) Apply each element to the facts of this case and determine whether Natalie will be
successful in her negligence claim. (7 marks)
ANSWER:
Natalie firstly has to establish the fact that the coffee shop has a duty of care which
they owe to their customer by ensuring the quality of food they are serving to the
customer. Further the coffee shop has a duty to check on the fact of security of the
customer by further ensuring the fact that the customer any injury or loss after
consuming the food from their outlet. In the case of Donoghue v Stevenson [1932]
UKHL 100, the court has held that duty of care is one of the essential elements to
establish the existence of negligence in any case.
HI6027 Online Exam T3 2019

Secondly, Natalie has to establish the fact that, the coffee shop has breached the
duty of care for their customer by negligently providing ice in the coffee bought by
her from the coffee shop.
Thirdly, Natalie has to proof the relationship of proximate between the alleged
injuries that have caused to her due to the broken glass pieces that were present in
the coffee. The proximity of relationship is basically means Natalie has to prove that
the injury she has suffered is only because of the negligence on the part of coffee
shop while serving her the coffee. If they were cautious enough in serving their
customer, Natalie would not have suffered such physical injury. In the case of,
Caparo Industries PLC v Dickman [1990] UKHL 2, the court held that, in order to proof
breach of duty of care, a person has to proof that the injury was foreseeable in case
of breach of duty, there exist a proximity of relationship between the harm caused
and the breach and it is justifiable to impose liable upon the person caused such
breach. Therefore, upon establishing all such facts, Natalie can claim damages for the
physical and mental injury caused to her for such negligent act of the coffee shop
*** Do not answer these questions based on any principles of Australian Consumer Law. No
credit will be given if you do so.
HI6027 Online Exam T3 2019

Question 4 (10 marks)
Carlos went to a fish shop and asked for 1 kilo of two fresh prawns for dinner. The fish shop
owner explained that he had no fresh prawns but that he had some boiled ones, which he
sold to Carlos. It turned out that the prawns weren’t fresh and Carlos, after eating them,
became seriously ill.
Required:
a) Does Carlos have any action open to him against the fish shop under the Australian
Consumer Law? You must specify which sections of the ACL apply to this case. (2 marks)
ANSWER:
Yes Carlos can ask for refund or replacement for such boiled prawns from the fish
shop under Section 54 of Competition and Consumer Act 2010 (Cth), Schedule 2 of
Australian Consumer Law.
b) What does Carlos need to prove to succeed in claiming against the fish shop based on
Australian Consumer Law? (8 marks)
ANSWER:
Carlos need to proof that when Carlos went to the shop to buy such prawns the shop
owner did not mention him that the prawns are not fresh. Carlos can further claim
that, under Section 54 of Competition and Consumer Act 2010 (Cth), it is the duty of
the seller who is supplying or selling any goods to a customer, must ensure that the
goods are defect free and they are suitable for the purpose for which it has been
supply to the customer. Furthermore, the section ensures that, if a good is not fit for
the purpose for which it has been sold to the customer, then the seller has a duty to
inform about the same to the consumer before selling of the product. Furthermore,
it is the duty of the seller to ensure the safety of the consumer by selling safer goods.
In this case, by eating those perished prawns, Carlos became ill. Furthermore, the
shop owner had a duty of care towards the product he is selling to his customer. In
the case of Regent Holdings Pty Ltd v State of Victoria and Anor[2012] VSCA 221; 36
VR 424, the court held that, a seller need to ensure duty of care towards the product
they are selling to their customer, breach of which can attract damages. Therefore,
Carlos can claim refund or return for the perished fish
*** Do not answer these questions based on any principles of Contract Law. No credit will
be given if you do so.
Part C – Critical Thinking (10 marks)
Question 5
If the directors of a company make a decision, which later on proves not to be a good
decision and causes the company to lose money, will the directors be liable for failure
to exercise their duty of care and diligence?
ANSWER:
HI6027 Online Exam T3 2019

A director is person who is the member of the board of directors of a company. A
director has to look after the day to day affair of a company. He or she is an active
participant of the management of the company. A director owes duty towards the
employee, creditors and sometime upon the individual members in specific cases, as
well as wholly own subsidiary bodies. A director is said to be in a fiduciary
relationship with the company. This specifies that in case of failure of a company, a
director can be held liable individually for such failure. Furthermore, in case the
company owes any money to their investor or shareholder, the director can be held
liable for such money. In addition to this, the directors are liable to various civil and
criminal liabilities for breach of their duties as a director. Therefore, director as a
representative of the company must ensure adequate compliance before taking any
decision on behalf of the company. The follow are the fundamental duties that
needs to be ensured by a director in a company,
1. Every director of a company must ensure that he or she have acted in good faith
that is in such a way which is best for interest of the company. Decisions on behalf of
the company must have taken by the directors keeping in mind the whole company’s
interest not of his or her personal interest or benefit.
2. A director must not act beyond his or her authority and must perform only such
duties which he or she is suppose to perform for the company.
3. It is the fundamental duty of a director to ensure standard of care as a
professional as well as ensure proper due diligence while acting on behalf of the
company. It is necessary because if the director is acting in a biased way, it might
affect the whole company including its employees, shareholders and other members
of the company. Therefore, it is necessary for a director to hold the requisite skills to
ensure the due diligence factor in specific situations
4. A director must not engage in any act that has can be resulted in conflict of
interest. Such conflict of interest can be existed in the form of real or apparent
conflict. Therefore, it is advisable for a director to act for the interest of the company
instead of their personal interest, so that the company does not have to suffer any
detriment for such an act of the director.
Therefore, it can be said that, if the director of a company failed to comply with the
above-mentioned or any other specific duties, they can be held guilty of breach of
duties.
END OF EXAMINATION PAPER
HI6027 Online Exam T3 2019