Business Law Report: Australian Business Law and Legal Positions

This report delves into Australian business law, addressing two case studies. The first case concerns Michael and his sons, providing advice on incorporating their family business into a company, outlining the necessary steps, and discussing the advantages and disadvantages of this structure. It also addresses concerns about Michael's potential exclusion from the business by ensuring his role as a director and defining his shareholding. The second case examines Poolworths Ltd's legal position regarding a contract dispute with Golden Gate Technologies (GGT) Ltd. The report analyzes the validity of a contract between Poolworths' CIO, Brendan, and a GGT salesman, focusing on the salesman's limited authority to offer discounts and the resulting implications under contract law. The report concludes that the contract is void due to the salesman's lack of authority and advises Poolworths Ltd on their legal standing.

BUSINESS LAW

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1 ..................................................................................................................................1
Advise Michael and his sons of the steps that they need to undertake for incorporate and
register a company and also advantages and disadvantages of running a business as a
company. .....................................................................................................................................1
QUESTION 2...................................................................................................................................4
Advise the Poolworths Ltd about their legal position .................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business law refers to laws which governs dealings between matter of commercial and
people. It involves prevention of problems which could hurt the entity and cause disputes on
legal basis (Ingram, 2015). This report will lay emphasis on solutions which occurred in
businesses presented in the given case study. The report will provide solution along with
appropriate regulation and rules in those situation. This report will cover by an advice to Michael
and this sons for steps they need to undertake for registration and incorporation for a company
along with advantages and disadvantages of running business as a company will also be
discussed in the report. The report will also covers an advise for legal position of Poolworths Ltd
for the case given.
QUESTION 1
Advise Michael and his sons of the steps that they need to undertake for incorporate and register
a company and also advantages and disadvantages of running a business as a company.
Case summary
Michael owns a restaurant as a family business. By identifying prevailing opportunity
and growth Michael purchased an another restaurant for the purpose of expansion. His son want
to get converted this family businesses in a family run company. In addition to they want to
change name of the company as “Sicilian Treats”. Michael is not able to understand any benefit
for running a company. Also, he is in trouble that his son might push him out of the business.
Issue
Advise advantages and disadvantages of running a business into a company. Also, the
steps for formation and incorporation of company so that trouble of push out from business can
resolved along with change in name of business.
Rules
Companies law : The Australian company law provides guidelines, regulation and rules to
comply with every company running in the country. The company law prevents, monitor and
control activities of business of a company in order to ensure elimination of misrepresentation,
fraud and other activities. The corporations act 2001 and companies act 1961 are covered under
company law of the country. The act under these laws provides a range of guidelines, standards
and rules which need to be complied with the company at the performance time with various
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activities of businesses. The law consist of rules and laws which are related to activities that
begins from incorporation and ends till liquidation.
Formation of a company : The company act, 2001 provide numerous rules, regulation and
guidelines which need to be followed by promoters for formulation of a company. The law
provides certain steps to form a company (Benyam, Rolfe, and Kinnear, 2019).
 Firstly promoters need to choose legal structure of business like sole trader, company,
partnership, trust, etc (Ingram, 2015).
 Then, after choosing legal structure business type need to choose by entity such as online
business, franchise and independent contractor.
 After this, business need to register in Australian Business Number (ABN). The
businesses need to fill various forms for this purpose.
 Then comes, choosing a name of businesses which should be identical and not similar to
any other business running in the country.
 The appropriate name chosen by the company need to be registered on this stage.
 After that domain name need to registered for the company.
 Memorandum of association and article of association set up for the company at this
stage (Rimmer, 2017).
 The documents as per corporation act 2001 need to create and maintain on this stage.
 The ownership of company set up.
 The companies registration executed by applying on Australian Government Business
Regulation Service.
Business restructuring : The business is decided to convert into a different type of structure of
business. The resultant is in adapting overall business controlling as well as ownership structure.
Incorporation of a company over a sole trader : Incorporation of a company avails various
benefits to their owners along with certain disadvantage for the formation of a company.
Advantages
 The company holds limited liability of owners i.e. shareholders of the company over debt
of a company to a share hold by them (Rowland, 2016).
 The shareholders of company aren't liable for the companies to pay tax on profit whereas
in sole proprietor there is no such benefit avail to owners.
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 The benefit of company is that owners have separate legal entry than a company
according to The Corporation Act, 2001 (Bray, and Rasmussen, 2018). With this law, the
company could remain running even after owner's death.
 The ownership of a company can easily be transferable through selling shares to other
company or party.
Disadvantages
 The company required huge amount of cost in formation which term as the biggest
disadvantage of companies formation (Kraal, 2019).
 Also, the company while incorporation need to ascertain various formalities including
legislation and documentation (Benyam, Rolfe, and Kinnear, 2019). This way the
company incorporation is a complex legal process and requires huge amount of time and
money.
 Corporation Tax is to be paid by the company every year on the profit which is generated
by them during a specific time.
 The incorporation as well as winding up process of a company is very lengthy and
difficult for a company because it increases their expenses (Bray, and Rasmussen, 2018).
The structure of ownership of a company : It is necessary to develop memorandum of
association and article of association at the time of incorporation of a company. The clause of
directorship and ownership in these documents where the directors name should be written so
that to remain control of ownership. Also, this clause requires shares amount which held by
every direction of the company. The name of directors which is mentioned in article of
association and memorandum of association are owners of the company and holding of shares
remain same until any change in these documents.
Application
The rules which are mentioned above for the company law are applicable on present
scenario case. By the application of these rules, it has been analysed that Michael and their sons
decided to convert their business into a company (Clapham, 2015). Therefore, they need to
follow all the stages of incorporation of company which was specified above which comprises of
Companies act, 1961 and Corporation act, 2001. It was also mentioned in the case that they want
to change their name of business for incorporation. Therefore, the chosen name should be
identical and any similarity with other existing Australian business should not be allowed.
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Conclusion
The above rules of corporation act, 2001 has been analysed and it has concluded that the
application of this law on current scenario will be advise to Michael that he must be agree with
their son's idea of converting existing business into a company because this incorporation
provide several benefits to them (Solaiman, and Ali, 2015). The trouble of pushing Michael out
of the company will be solved by ensuring his name in list of directors along with amount of
shares he want as a profit.
QUESTION 2
Advise the Poolworths Ltd about their legal position
Case summary
A salesman George of Golden Gate Technologies (GGT) Ltd who has developed a
software. George is allowed to provide a maximum discount of 10% to their customers. CIO
(Chief Information Office) of Poolworths Ltd that is Brendan approaches to George for
purchasing software. George provided him discount of 15%. After further discussion with
colleagues it has found out that the salesman are not authorized to offer discount of 15%. When
Brendan contacted with managers of Golden Gate Technologies Ltd, they refused to accept
discount of 15%.
Issue
A major issue in case is to analyse Poolworth's legal position and also analysing contract
validity between Brendan and George.
Rules
Contract law – Australian contract law provides various regulations and rules which
should be followed by every person of country while entering into contract. This law provides
several terms which makes a valid contract. Also, as per the contract law of Australia failure in
contract will lead to a void contract which means it can't be sued in the court.
Terms for creating a valid contract are :
 Offer – It is a basic requirement of a contract which can be termed as investigation done
on other party for denying any specific performance or activity.
 Acceptance – According to the contract law, the person whom offer is made agree to
perform activities as per the contract terms is called acceptance (O’Leary, 2016).
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 Consideration – It is an important condition for contract formation. Every party in a
contract gets something in return for the performance of another party. Consideration is
always in monetary terms.
 Contract – An offer gets accepted by party whom offer is made. Also, with consideration
amount the agreement is made between parties is called as contract (Giancaspro, 2017).
Capacity to contract - This term is need to be fulfilled while contract development.
According to this contract law clause, every party in an contract must be in capacity to enter into
a contract (Kraal, 2019). The person who is not capable to enter into contract and has made a
contract than it will be termed as void contract which can not be a part of law suit. The criteria
which is provided by contract law for analysing capacity to contract are :
 No contract with a person who is minor (Benyam, Rolfe, and Kinnear, 2019).
 No party of contract should be facing mental disorder. Bankrupt are not allowed to enter into a contract.
Outcomes of void agreement – This kind of agreement can not be suit in court hence
there is no enforcement of law are done when contract becomes void. No party can sue to
another party with whom they came into contract. Also, no legal right would be exercised by
them on void contract.
In Hamilton v Lethbridge (1912) 14 CLR 236 case, Hamilton and lethbridge entered into
a contract but lathbridge was a minor. Lathbridge agrees to serve for five years as articled clerk
for the plaintiff who is a lawyer in Toowoomba (Hamilton v Lethbridge (1912) 14 CLR 236,
2018). After a year, Lathbridge start practicing as solicitor in Toowoomba claiming that he is a
minor and contract became void because of the capacity to excise legal rights.
Application
By analysing the above rules it has been analysed that George was authorised only to
give discount of 10% to customers. An agreement in which he entered into was for availing 15%
discount to Brendan and this was beyond the capacity of George. The rule of contract law
regarding to contract capacity can be applicable over current scenario of George. Also by
analysing the above case person's legal authority who entered into contract is not capable to enter
into contract. Therefore, this case is also applicable in present scenario case.
Conclusion
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By the application of rules on above case to present scenario's case, it has been analysed that
George is not incapable to contract. Therefore, the contract between Brendan and George
considered as Void. Also, by applying this case it could be concluded that person who is
incapable to enter in contract does not have legal authority for the person. In addition to this
statement, Brendan has entered into contract on behalf of Poolworths Ltd and the company will
be in same capacity as like Brendan. It is advised to Poolworths that Brendan entered in contract
with person who is not capable to enter in a contract as with not have legal authority against
GGT Ltd.
CONCLUSION
This report was all about business law in which this report was consist of two case
studies. The first case was about Michael and his son and this report was providing advice to
undertake for incorporation of a company. Another case was about Poolworths ltd where it was
concluded about capacity to contract and George incapability to make agreement because of
legal position.
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REFERENCES
Books and Journals
Ingram, P., 2015. Tax files: Tax reforms in the state budget. Bulletin (Law Society of South
Australia). 37(7). p.8.
Kraal, D., 2019. Petroleum industry tax incentives and energy policy implications: A comparison
between Australia, Malaysia, Indonesia and Papua New Guinea. Energy Policy. 126.
pp.212-222.
Clapham, P. J., 2015. Japan׳ s whaling following the International Court of Justice ruling: Brave
New World–Or business as usual?. Marine Policy. 51. pp.238-241.
Rowland, N., 2016. CEO's report: Tax and small business-there's work to be done. Taxation in
Australia. 51(5). p.235.
Rimmer, M., 2017. A Submission on Indigenous Intellectual Property to the House of
Representatives Standing Committee on Indigenous Affairs and the Museums Galleries
Australia-Indigenous Roadmap Project.
Bray, M. and Rasmussen, E., 2018. Developments in comparative employment relations in
Australia and New Zealand: reflections on ‘Accord and Discord’. Labour & Industry: a
journal of the social and economic relations of work. 28(1). pp.31-47.
Solaiman, S. M. and Ali, A. N. M. A., 2015. The most serious offenses and penalties concerning
unsafe foods under the Food Safety Laws in Bangladesh, India, and Australia: a critical
analysis. Food & Drug LJ, 70, p.409.
O’Leary, P., 2016. 17 Neoliberal policy and employer industrial relations strategies in the United
States and Australia. Reclaiming Pluralism in Economics, p.265.
Benyam, A., Rolfe, J. and Kinnear, S., 2019. Willingness to Pay for a Domestic Food Waste
Diversion Policy Option in Regional Queensland, Australia (No. 2186-2019-1405).
Giancaspro, M., 2017. Is a ‘smart contract’really a smart idea? Insights from a legal
perspective. Computer law & security review. 33(6). pp.825-835.
Online
Hamilton v Lethbridge (1912) 14 CLR 236. 2018. [Online]. Available through :
<https://www.studentlawnotes.com/hamilton-v-lethbridge-1912-14-clr-236>.
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