Analysis of Contract and Corporation Laws: A Case Study Approach

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HA2022 Business Law
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Table of Contents
Introduction......................................................................................................................................3
Part A: Contract Law.......................................................................................................................4
Question.......................................................................................................................................4
Issue.............................................................................................................................................4
Rule..............................................................................................................................................4
Application..................................................................................................................................5
Conclusion...................................................................................................................................6
References:......................................................................................................................................6
Part B: Corporation Law..................................................................................................................7
Question.......................................................................................................................................7
Issue.............................................................................................................................................7
Rule..............................................................................................................................................7
Application..................................................................................................................................8
Conclusion...................................................................................................................................9
References:....................................................................................................................................10
Conclusion.....................................................................................................................................11
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Introduction
Business and Corporation Laws play a significant part in the safeguarding the legal rights of
employers, employees, customers and other persons associated with the businesses. The laws
also ensure that the employers act in the best interest of employees and customers and behave
ethically in the achievement of their objectives. The laws and regulations also help the business
organizations to accomplish the intended goals and maintain their goodwill in market and
industry. In this assignment, legal problems related to business have been resolved and
conclusions are drawn based on applicable rules to the given problem. The assignment consists
of two parts including contract laws and corporation laws. Separate case studies have been
provided for both the domains and legal advice is given based on the applicable laws and
decisions ofAustralian courts.
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Part A: Contract Law
Question
Whether there is an employment contract between David and Sam in order to claim workers
compensation?
Issue
In the given case scenario, the injury is sustained by David while working for Sam. However,
David was employed on a trial basis. There is a number of issues in the given case such as:
 Whether David will be considered as an employee.
 Whether David is eligible for the worker's compensation.
Rule
In accordance with the given case scenario, there are various laws which are applicable. These
laws include the Contract Law, Fair Work Act 2009 and Workers Compensation Act 1987.
Contract Law
The provisions of contract law are applicable in order to develop a legal relationship between the
parties. In employment, there is an agreement between the principal and the employees in order
to make sure that such a relationship is legally enforced. Such contract is termed as employment
contract which includes the terms and conditions on which the parties are accustomed to act
(Cartwright, 2016.). Non-compliance with such terms and conditions is considered as a breach of
contract which ultimately leads to facing the legal consequences or penalties under the law. It is
essential that the parties must act in accorded with such terms. Such terms also include the wages
to be paid and the time period for which an employee is employed.
Fair Work Act 2009
In Australia, employment of employees is governed by the Fair Work Act 2009 which focuses
on areas such as health and safety, work and non-discrimination. The employers are under an
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obligation to make compliance with the provisions of this act. Employees and employers are
defined under this act. Section 15 of the act provides a definition of employees and employers.
Section 15 (1) of the act states that an employee to be an individual who is an employee in
general sense and it does not include an individual on a vocational placement. Section 15 (2)
state that an employer is an individual who is an employer in general sense (Federal Register of
Legislation, 2019). According to the provisions of section 43 of the act, the development of the
terms and conditions of the employment contract i.e. the contract between the employers and the
employees must be made in accordance with the National Employment Standards, an agreement
of the enterprise, a modern award or determination of the workplace that is applicable on the
employee. In case, if the employee is suffering from any disability, then it is the responsibility of
the employers to make sure that proper arrangements are made for the employee suffering from
any disability so that safeguard against any injury or circumstance is provided. Failure to make
such arrangements attracts consequences under the law.
Workers Compensation Act 1987
This act provides an extensive overview of the circumstances in which claim can be made by the
employee or worker against the employers. This act also provides the responsibilities of the
employers which are to be performed in a true and fair manner. This act provides a definition of
“injury” under section 4 of the Workers Compensation Act 1987. Injury under this act means an
injury which is sustained by the employee during the course of employment or injury arising out
of the employment. It also includes “disease injury” which is sustained during the employment
and such employer was the main contributing factor of the injury. In accordance with section 9
of the act, an employer has liabilities towards the employees sustaining injuries during the course
of employment (New South Wales Consolidated Acts, 2019). Compensation is required to be
paid to the employees who have sustained injuries and determination for such payment will be
made by considering that whether or not such injury is sustained at work or away from the work.
Application
In the provided case, David was employed by Sam for painting his house on a trial basis on
making a payment of $25 per hour. However, it was stated that reforms in payment rates would
be made if David was able to work properly.
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As David was employed on a trial basis, the question arises is whether David is an employee of
the Sam or not. In accordance with the provisions of section 15(1) of Fair Work Act 2009, it can
be stated that the David is an employee of Sam as he is working for Sam by painting his house
and getting $25 per hour (Federal Register of Legislation, 2019).
Another issue in the case is whether compensation by David can be claimed against Sam or not.
As David got injured while climbing the ladder, it will be considered that injury is sustained
during the course of employment. In accordance with section 4 of Workers Compensation Act
1987, injury includes the personal injury sustained during employment. Furthermore, there is an
arrangement between David and Sam which includes the terms and conditions of the
employment (New South Wales Consolidated Acts, 2019). As David was suffering from various
disabilities, Sam must have made arrangements for David so that protection against the injury
can be provided.
Conclusion
By considering the facts of the case and by making application of the law, it is concluded that
David is considered as an employee of Sam and as David has sustained injuries during the course
of Sam’s employment, therefore compensation for sustaining injuries can be claimed against
David by Sam.
References:
 Cartwright, J., 2016. Contract law: An introduction to the English law of contract for the
civil lawyer. Bloomsbury Publishing.
 Federal Register of Legislation, 2019. Fair Work Act 2009. Available at:
https://www.legislation.gov.au/Details/C2018C00512/Html/Volume_2#_Toc533167263.
[Accessed on 28 January 2019].
 New South Wales Consolidated Acts, 2019. Workers Compensation Act 1987. Available
at: http://www6.austlii.edu.au/cgi-bin/viewdb/au/legis/nsw/consol_act/wca1987255/.
[Accessed on 28 January 2019].
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Part B: Corporation Law
Question
Whether or not, there is any legal action available with Owen.
Issue
The issue, in this case, is whether the Owen Rowland can take any legal actions against
Restaurant Equipment Pty Ltd for refusing to take the defective equipment back or not.
Rule
The consumers in Australia are protected under consumer laws and these laws provide for the
protection of consumers in case defective goods are sold to them through guarantees and
warranties. The basic difference between guarantee and warranty is that guarantee is implied,
and it acts as a promise made by the manufacturer to the customer in relation to the quality of
products sold. On the other hand, the warranty is a written assurance from the manufacturer in
relation to quality of product sold. The customer is required to pay for warranty for safeguarding
his interest but not for the guarantee (Meredith Cridland, 2019).
Under Australian Consumer Law, when a product is purchased, it comes with an automatic
guarantee. This guarantee assures the quality of product sold to customers. When the product
sold is not appropriate, the consumer may take legal actions against the seller or manufacturer for
breach of guarantee and consumer rights.
The goods provided to consumers by sell, lease or hire are covered under guarantee if they are
 Under $40 000
 Over $40 000 but bought for personal or household purpose.
The guarantee is provided by businesses regardless of any other warranty given or sold to
consumers (Australian Competition and Consumer Commission, 2019).
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When the seller or manufacturer fails to deliver the quality of goods sold, the customers have
rights for
 Repair, replacement, refund,
 Compensation for loss or damage
When a product is sold to customers, the manufacturers and importers undertake to guarantee
that the goods sold are
 Of acceptable quality
 Of accurate description
 Satisfy the warranty, if any, expressly provided
 Have a repair facility or spare parts available reasonably for a reasonable time period,
unless the consumer is other advised (NT.GOV.AU, 2015).
Under the right of guarantee, the consumer can claim various remedies and these remedies can
be claimed based on the problem. The problem with the product sold can be categorized into
minor or major. When the problem is major, the customer can seek a full refund or replacement
after rejecting the goods or keep the goods and seek compensation for the decreased value. On
the other hand, when the problem is minor, the customer can claim replacement, repair or refund
from the seller.
Application
In the given case, Owen Rowland wants to take legal actions against Restaurant Equipment Pty
Ltd as the ovens sold by them proved to be unsatisfactory due to unreliability. The company was
given the tender to supply and install three ovens for $15000 each. However, the company is not
ready to take the responsibility of unreliable ovens by claiming that there was no warranty on
ovens.
Under the Australian Consumer Laws, every product sold to customers may or may not be
warranted but they fall under automatic guarantee. The manufacturers and importers are
expected to sell the products to consumers which are of satisfactory quality and fit for the
purpose. If not, the customers are provided with remedies under Australian Consumer laws.
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In the given case, the oven purchased by Owen from the company does not have a warranty but
falls under the category of guarantee as per Australian Consumer Laws. Based on the laws, the
goods purchased for $40000 or less shall be deemed to be guaranteed by the manufacturer or
importer. Therefore, Owen has the right to claim remedies as provided to customers under
Australian Consumer Laws (Meredith Cridland, 2019).
In a decided case of LG vs Australian Competition and Consumer Commission (ACCC), the
court decided in favor of the company stating that the company shall not be held as misleading if
it does not tell the consumers of the rights available. In the given case, it was claimed that the
company failed to intimate the customers of the rights and remedies available to them in case of
faulty products. The court stated that making the customers aware of their rights were not the
responsibility of the company (Ben Grubb, 2018).
As in the given case, the company failed to intimate Owen that the products sold to him has no
warranty or that they carry guarantee under laws. Based on the decided case, Owen cannot claim
that the company is responsible for not intimating him that there exists no warranty clause.
However, he can claim for the guarantee, as it is a right available to him under Consumer Laws.
In another case, proceedings were commenced by ACCC against Hewlett-Packard Australia Pty
Ltd ("HP")in 2012 for making misleading and false representations to consumers in matters
relating to warranty and the rights available to them. The Commission held the company
responsibly and the directions were given to ensure they make correct representations relating to
express warranties and consumer guarantees (Dorota Bryks, 2013). Here, in a given case, Owen
can claim guarantee if no warranty was available.
In the given case scenario, there is another circumstance. The total value of the goods purchased
was $45000. In case, the claim is made for all the ovens, the total value shall exceed the value to
goods eligible for remedying i.e. $40000. In this case, Owen shall not be able to claim the
damages from a company or take any other legal action against the company.
Conclusion
It can be concluded that in the given situation, Owen can claim damages under Australian
Consumer Law. He is protected by the guarantee clause. He can claim that the goods may not be
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covered by warranty, but they were unreliable, and he realized it within a short period of time
from purchase. However, he shall not be able to initiate legal actions against the total value of
invoice as that will amount to $45000 which is more than goods eligible under guarantee.
References:
 Australian Competition and Consumer Commission, 2019.Consumer guarantees.
Available at: https://www.accc.gov.au/consumers/consumer-rights-guarantees/consumer-
guarantees#what-products-and-services-are-guaranteed- [Accessed on 28 January 2019].
 Ben Grubb, 2018. How LG avoided consumer guarantees and didn't break the law. The
Sydney Morning Herald. [Online]. Available at:
https://www.smh.com.au/technology/how-lg-avoided-consumer-guarantees-and-didn-t-
break-the-law-20180629-p4zofw.html [Accessed on 28 January 2019].
 Dorota Bryks, 2013. Australia: ACCC takes action for breach of Consumer Guarantees.
Mondaq. Available at:
http://www.mondaq.com/australia/x/236552/Consumer+Trading+Unfair+Trading/
ACCC+takes+action+for+breach+of+Consumer+Guarantees [Accessed on 28 January
2019].
 Meredith Cridland, 2019. Know your consumer rights. Choice. Available at:
https://www.choice.com.au/shopping/consumer-rights-and-advice/your-rights/buying-
guides/know-your-consumer-rights [Accessed on 28 January 2019].
 NT.GOV.AU, 2015. Consumer guarantees under Australian law. Available at:
https://nt.gov.au/law/rights/consumer-guarantees-under-australian-law [Accessed on 28
January 2019].
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Conclusion
From making a study of different laws, it can be concluded that establishment of laws is essential
for providing a safeguard against illegal or illicit practices. Application of different laws was
made in order to provide a conclusive outcome. In the given case of David and Sam, David can
claim compensation against Sam as injuries were sustained during the course of employment. In
the second case of Owen Rowland, the claim can be made by Owen under guarantee clause and
by stating that the goods were not reliable.
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