Corporate Law Case Study: SOO Burgers and Sparkling

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Business and Corporate Law
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Table of Contents
Introduction...................................................................................................................... 3
Part A: Contracts Law...................................................................................................... 4
Option 1........................................................................................................................ 4
References.......................................................................................................................6
Part B: Corporations Law questions.................................................................................7
Option 1........................................................................................................................ 7
Conclusion....................................................................................................................... 9
References.....................................................................................................................10
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Introduction
The Australian Competition and Consumer Act (2010) deals with all the matters related
to the protection of the consumers in Australia and all the other states and territories
which comes under its jurisdiction. This Act mainly covers the provisions related to the
consumer protection and includes matters related to the unfair market practices, safety
of the product, checking of the pricing, etc. The main strategies of Australian
Competition and Consumer act are to maintain and promote the competition, protect the
interest and safety of the buyers, promote operations which are economically efficient
and to stop the activities which are harmful for the buyers.
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Part A: Contracts Law
Option 1
Issue: Mickey and Brett brought the SOO Burgers in order to get the prices which were
announced in its promotion. Mickey had suffered some health issues due to the
consumption of the SOO Burgers and Brett collected the tokens from the packets
thrown by the consumers in the dustbin. Brett collected about 100 of such tokens in
order to collect two scratch cards to win the Prize. Mickey ate about 50 burgers to get
the scratch card and this is how he got exhaustion. When both of them tried to collect
their prizes then the company made an announcement that due to the printing mistakes
on the scratch cards the company won’t be able to fulfill its commitments relating to the
prizes. The management of the company is apologizing for this mistake. Mickey and
Brett are seeking the advices in this context.
Rule: The business under the Australian Consumer Law does not have the right to
mislead the buyers by providing false advertisements. The buyers also have a right to
receive the goods and services as are promised during the advertisements. Some laws
are made to protect buyers from getting mislead about the products they are buying.
The businesses cannot make false impressions of the products to sell their products.
The businesses provide some cash back offers in order increase their sale but all these
cash backs are provided with some terms and conditions which the buyers need to be
aware of while purchasing the product. The discount vouchers are also provided subject
to some conditions and these are valid for some time only. On the part of the
businesses also, it is necessary to clearly state the conditions and restrictions relating to
discounting of the vouchers (ACCC, 2019).
The Gift cards or vouchers are provided to the buyer on purchase of some goods or
services. The gift card may include some monetary gifts or some valuables also and it
can be replaced for goods or services of the amount or value mentioned in it. The gift
card may be in electronic or physical form. It can be given as a voucher or scratch card
or a code (as provided on the shopping sites or through mails also). The business must
state all the conditions and restriction in relation to the gift cards. It is valid for some time
only and it should be replaced with the goods and services within that period only
otherwise it will get expired and the business will not accept them after that. The
consumer protection act also states that its terms will prevail in those conditions only
where the buyer have not taken any wrong means for taking the products or services
(ACCC, 2019).
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The contract once formed must be binding on all the parties to the contract. The parties
sign the contract by their mutual consent and after accepting the offer placed before
them. Hence, before accepting the offer the party to the contract must see that the
terms of the contract are not against them and can be fulfilled with an ease.
Applications of the Law: The gift cards purchased by the Mickey and Brett were
subject to some terms and conditions. The contract law states that the company has
made an open invitation to purchase the Burger. The buyers accepted that invitation
and now are liable to fulfill all the responsibilities relating to the terms of the invitation.
The tokens must be collected by the purchase of the products by the consumer for
himself only on payment of some consideration. The scratch cards collected by any
wrong means shall not be taken into account for the distribution of the prize. Also the
tokens must be redeemed for the golden scratch tickets within the reasonable time only
and no gifts shall be distributed after the expiry of that period. Mickey here scratched
the card when he was discharged from the hospital till that time the deal was expired or
rescind by the company.
Conclusion: In the above discussed case it is seen that the company SOO Burgers
have made the open invitation to purchase about 50 burgers and get a token with each
burger and redeem them with the golden scratch card which contain some prize in it.
The deal was for a limited time only and those who claimed the gifts within that
particular time got the prizes mentioned in the scratch card.
(a) Mickey: In his case it is seen that he claimed for the gift after the expiry of the
offer. When he went to claim the gift the company had already rescind the offer.
Hence he is not in a position to claim for any gifts now. The company will not be
held liable for any kind of breach in his case as it already promoted through the
various promotional channels that the offer has been rescind and now more
active deals with it.
(b) Brett: In his case it is seen that he has collected all the tokens through some
unfair means which were not to be acceptable under this offer. The company
asked to collect the tokens by purchasing their own burgers rather than by
collecting the tokens from the dustbins from the wrappers thrown by the others.
Hence Brett will be held responsible for the illegal conduct of his in collecting the
tokens. In this situation Company is not liable to pay any prize to him.
Case Law: F.Y.D. Investments Pty Ltd v Promptair Pty Ltd (No 2) [2019] FCA 419
Justice White (26 March 2019).In this case the breach of Contract Law was Held.
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References
Australian Competition & Consumer Commission, 2019. Misleading claims &
advertising. [Online]. ACCC. Available at:
https://www.accc.gov.au/consumers/misleading-claims-advertising. [Accessed on
19 September 2019].
Australian Competition & Consumer Commission, 2019. Gift cards & discount vouchers.
[Online]. ACCC. Available at: https://www.accc.gov.au/consumers/misleading-
claims-advertising/gift-cards-discount-vouchers. [Accessed on 19 September
2019].
Case Laws:
F.Y.D. Investments Pty Ltd v Promptair Pty Ltd (No 2) [2019] FCA 419
Justice White (26 March 2019)
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Part B: Corporations Law questions
Option 1
Issue: The situation which arises in this case is that the Sarah is a director who has not
been reappointed as a Managing Director after the end of her service period. The terms
of contract of appointment of Sarah included some restrictions which stated that the
Sarah cannot make any borrowing of amount more than $20000. If done, prior approval
should be taken by the board of the directors of the company. Sarah entered into a
contract and for that she borrows $30000 from the bank on behalf of the Sparkling. The
board was not aware of this transaction. The bank was not aware of the terms of
Sarah’s appointment and also the return lodged by Sparkling. After sometime the board
came to know about the loan and stopped all the repayments. The bank wants to sue
the Sparkling for the payment of all the outstanding interest. The outcomes of this case
need to be explained.
Rule: The corporate law is not a criminal; it is a civil law. When there are any disputes
the right place to approach by the company’s officials for the resolution to the dispute is
the civil court. The corporation law deals with the rights and obligations of all the
operations relating to the business formations, expansion, owning a business etc. The
main characteristics of corporate law are:
 The company is a separate legal entity.
 The company liability is limited.
 The shares of the company are transferrable.
The company’s are responsible for the act of its employees if those acts are done within
the limits of the company and also if the employer of the company is aware of that act. If
the acts are done for the benefit of the company or on the behalf of the company then
also the company only will be held responsible (LegalCareerPath, 2019).
While providing the loan to the company the bank keeps some security which could be
taken away by bank in case of fault committed by the company in payment of the loan
installments. The breach of the contract occurs when one of the parties to the contract
refuses to fulfill the terms of the contract. The directors of the company will be held
responsible to pay off the debts of the company in the cases where the company is not
able to pay the debts. When the debts incurred by the director’s of the company are in
the favor of the company then the company will be only held for that debt. The directors
of the company should exercise their powers for some productive purpose only (Baker
McKenzie, 2017).
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Application of the Law: In the above mentioned case it is seen that the company
should have either reappointed the Managing Director or have asked her to leave the
office. The company must inform ASIC about the removal or the resignation of the
director within 28 days of such removal or resignation, so that the name of such director
can be removed from the registers. The Managing director of the company must have
informed the company about the contract which he entered for the productive purpose.
The bank should also do some enquiries in order to know the company’s relation with
employees who is entering into a contract that whether he is in a capacity to enter into a
contract on behalf of the company and also whether the Board of Director is aware of
such transaction or not. If the Director of the company enter into a contract allegedly
then the director himself will be responsible for such contract (LegalVision, 2019).
Conclusion: It is seen in the case discussed above that Sarah was a managing director
of the company and she entered into the contract which was allegedly entered.
(a) The outcome of this case will be that, being the Managing Director of the company,
Sarah herself will be held liable for the contract entered by her. The contract was
entered allegedly by her and she was not authorized to enter into such contract as
her terms of employment did not satisfy the terms of entering into a contract.
(b) The outcome of this case should have been that, if the Contract entered by the
Managing Director of the company for some productive purpose or in good faith of
the company then the company would be held liable for the repayment of the loan
not the employee.
(c) Yes the outcome of the company would be different if :
i. The contract would have entered for the refurbishment of two of Sparkling’
clothing shops as in this situation the contract would be made for the benefit of the
company and according to the law the contracts which are entered for the benefit of
the company, then the company is responsible for such acts of its employees.
ii. The officer of the bank loan knew Sarah had fallen out of favour with the Board
and was negotiating a new job. In this case, may be the bank loan officer would
have investigated the company’s relationship with Sarah and also would have not
given the loan to Sarah.
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Conclusion
According to the corporation Act, the company is responsible for only those acts of its
employees which are done for the benefit of the company or on behalf of the company
in good faith. The contracts which are entered by the director’s of the company for some
productive purposes, such contracts bound the company to fulfill all the obligation of the
contract. Corporate Laws make it easy for the employees or employers to work in the
company freely as all the disputes relating to the contracts or formation are dealt in
accordance with the corporate law only. The company must make all the contracts
carefully.
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References
LegalCareerPath, 2019. What is Corporate Law?. [Online]. LegalCareerPath. Available
at: https://legalcareerpath.com/what-is-corporate-law/. [Accessed on 19
September 2019].
Baker McKenzie, 2017. Duties and liabilities of directors of Australian companies.
Position as a director.
LegalVision, 2019. Consequences for Breaching Directors Duties. [Online]. LegalVision.
Available at: https://legalvision.com.au/consequences-for-breaching-directors-
duties/. [Accessed on 19 September 2019].
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