Enterprise Law 700254 Assignment: Contract, Business Entities Analysis

This assignment solution addresses key aspects of Enterprise Law, focusing on contract law and business entities. Question one examines a contract law scenario involving a shoe repair business, consumer rights, and the implications of negligence, referencing the Consumer Guarantees Act and F...Read More

Running head: CORPORATION & ENTERPRISE LAW
Corporation & Enterprise Law

CORPORATION & ENTERPRISE LAW
Table of Contents
Question One (Contract law).....................................................................................................3
Issue........................................................................................................................................3
Rule........................................................................................................................................3
Application.............................................................................................................................4
Conclusion..............................................................................................................................4
Question Two (Business Entities)..............................................................................................5
(a) First Event.........................................................................................................................5
Issue....................................................................................................................................5
Rule....................................................................................................................................5
Application.........................................................................................................................5
Conclusion..........................................................................................................................6
(b) Second Event....................................................................................................................6
Issue....................................................................................................................................6
Rule....................................................................................................................................6
Application.........................................................................................................................6
Conclusion..........................................................................................................................7
(c) Third Event.......................................................................................................................7
Issue....................................................................................................................................7
Rule....................................................................................................................................7
Application.........................................................................................................................7
Conclusion..........................................................................................................................8
Question Three: Contracts short answer Questions...................................................................9
(i) First Case Scenario............................................................................................................9
(ii) Second Case Scenario......................................................................................................9
(iii) Third Case Scenario......................................................................................................10
(iv) Fourth Case Scenario.....................................................................................................11
References................................................................................................................................12
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Question One (Contract law)
Issue
In the given case, the main issue that could act as a barrier for Kelly to recover his damages
caused by Grace is his negligence while signing the receipt without even reading the terms
and conditions. However, Grace refusing to reimburse Kelly for causing severe damage to his
shoes while repairing could be legally referred to as obligations of the contract law as per the
Fair Trading Act.
Rule
As per the Consumer Guarantees Act (CGA), every consumer in Australia has a right to
claim refund or reimbursement from the business owners in case the product or service
purchased by the consumer is damaged or defected. However, business owners must ensure
that financial transaction made by the consumer during the purchase of a product or service
must be displayed in the receipt. Declining to pay or reimburse the consumer when calming is
also considered as an obligation of the Fair Trading Act as well as the Consumer Guarantees
Act Rights. As per these legal regulations, business owners must ensure that they inform
about the decisions as well as the terms and conditions mentioned in a receipt at the time of
product repair. Thus, every consumer has the right to claim the reimbursement on the
damaged products due to the negligence of the business owner. However, on claiming, the
consumer must provide the proof of receipt for claiming reimbursement as per the Australian
Consumer Law. If the business owners fail to negotiate or reimburse the consumer, the
consumer has right to make a formal dispute resolution or take legal action upon the business
owner (NSW Government, 2011; NSW Government, 2018).
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Application
As per the legal rules and policies of Australian Consumer Law, Consumer Guarantees Act
Rights, Consumer Guarantees Act (CGA), and Fair Trading Act, Kelly can claim
reimbursement for the losses faced in the negotiation with Grace. This is because as a
consumer, Kelly has the right to claim funds for the negligence of Grace. Even though Grace
provided a receipt to Kelly for its signing, it was her legal responsibility to inform him about
the different terms and conditions. Grace also did not provide any guarantee for the product
since it is essential as per the statutory rights. Corresponding to the estimation of the loss
faced due to damages on his shoes, Kelly can further claim funds.
Conclusion
Kelly can claim refunds for damages on his shoes caused by the negligence of the shoe
repairer, Grace. However, Kelly must bring receipt provided to him at the time of giving a
pair of shoes for being repaired. If Grace does not agree to negotiate, Kelly possesses a legal
right to make a formal dispute resolution. From this, it is understood that Kelly could
approach several legal measures for claiming reimbursement for the shoe damage caused by
Grace. Kelly also enjoys a legal right of giving a certain time limit to Grace for reimbursing
him.
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Question Two (Business Entities)
(a) First Event
Issue
Joel and Rebecca agreed to share equal profits earned from product sales. However, they
failed to deliver the increasing demand for the products. Joel decided on purchasing
expensive Orchid from the 'Ooh Orchids' as he knew that selling it could have generated
higher profits. Since Joel did not inform Rebecca about his decision, Ooh Orchids demand
has an outstanding invoice payment of $1,500 from Rebecca.
Rule
As per Section 1 of the Partnership Act 1892 NSW, business partners entering into a contract
agreement must be responsible for any sort of business activities or liabilities. Even in case of
any debts to be incurred for any activity i.e. purchase, credit or sale associated with the
business, business partners have to be equally held liable. Personal interests do not matter in
terms of fulfilling their legal duties. They must fulfil their duties of prohibiting any sort of
conflicts or disputes arising between them as well as, they must make sure that they do not
seek any personal benefit from the business activities (NSW Legislation, 2012).
Application
Joel and Rebecca are the business partners, thus they hold equal rights of attaining business
profits or any form of business loss. As Ooh Orchids has demanded a payment of $1,500
from Rebecca, Joel will have to pay this debt as well. This means that Rebecca is legally
liable to pay half of the debt amount i.e. $750, as according to Section 1 of the Partnership
Act 1892 NSW, the other half debt amount should be paid by Joel (NSW Legislation, 2012).
This can also be supported by the verdict in the case of Khan v Miah [2000] 1 WLR 2123, as
both of them were partners of a joint venture business (Egert, 2007).
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Conclusion
Rebecca did not make any capital investment during the start-up phase of the partnership
business with Joel due to lack of capital savings, thus she cannot pay the debt amount that has
been claimed for Ooh Orchids. Thus, potential liabilities of Rebecca include the start-up costs
and half of the debt amount to be paid. The total liable sum to be incurred by Rebecca equals
to $50,000 and additional debt amount of $750.
(b) Second Event
Issue
As Rebecca and Joel agreed to hire Mathews for taking care of product delivery duties,
Matthew crashed with another car as Rebecca pressurized him. Although the flower van has
been protected, the damage has been caused to the other car. Damage expenses have been
identified to be $5,000.
Rule
In this event, Section 1 of the Partnership Act 1892 NSW is applicable. It highlights that in
the partnership business, the partners hold equal rights on claiming business profits as well as
any form of loss faced during the course of the partnership business.
Application
Rebecca and Joel had agreed on hiring Matthews and placing the duty of delivering products
(flowers) to their customers. Thus, Rebecca and Joel will be legally held liable to pay the
damage fees of total $5,000 to the other car owner due to negligence of Matthews. This is
because Rebecca and Joel are partners but in case if Rebecca does not put Mathews on
pressure, car damage would not have taken place. Same situation and legal decisions have
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been presented in the legal case of Khan v Miah [2000] 1 WLR 2123, where they were
agreed on the partner of the new joint venture business with mutual interest (Egert, 2007).
Conclusion
The potential liabilities of Rebecca for the damages caused to the other car include a payment
of $2,500. This is because Joel will pay the other half amount, as he is a business partner of
Rebecca.
(c) Third Event
Issue
Rebecca started a separate business of selling flowers especially for wedding purpose, but
without any consent to his partner. However, Fusion Flowers has stopped supplying flowers
presently because of the increasing cost of insurance to be paid by both of them.
Nevertheless, Rebecca and Joel had discussed earlier on the interest and benefit of supplying
flowers for wedding purposes.
Rule
As Rebecca and Joel hold a partnership business, Section 1 of the Partnership Act 1892 NSW
is applicable. It indicates that any form of business activities that are performed separately by
any of the party for their interest or benefit must be avoided. In case such a situation occurs,
the business partners must be aware of such business activity.
Application
Rebecca started the new business separately without involving any association of Fusion
Flowers. Thus, she possessed a legal right to sell flowers to her customers for making profits
on her own. However, new partnering business with Joel of selling flowers holds an
increasing potential liability for Rebecca, as she stated that she did not have any savings. This
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could probably result in increased liability if Rebecca fails to incur the increasing cost for her
partnership business with Joel. Besides, Joel being a business partner of Rebecca is not
legally bound to take certain legal actions upon her for starting a new business without any
consent from the former or without even paying her liability that is due on Fusion Flower
business.
Conclusion
The potential liability associated with the partnership business of Fusion Flowers includes the
existing liable amount i.e. $50,000 for the start-up capital investment that she has not yet
made. Moreover, it also involves the additional $750 and $2,500 for paying debt claimed by
the Ooh Orchids and the damages caused to the other car due to crash.
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Question Three: Contracts short answer Questions
(i) First Case Scenario
As Jeremiah is the property (tree) owner, the agreement has reached for being an enforceable
contract with Abdul as he agreed to pay a price of $450. However, some certain legal
regulations and policies must be followed and considered by Jeremiah before making a deal
with Abdul. Thus, compliance of the Personal Property Securities Act 2009 (Cth) (PPSA)
could favour Jeremiah for being secured on receiving the full amount with a specified date.
When developing a contract agreement with Abdul, Jeremiah must ensure that the agreement
between them is in a written format because oral or verbal agreements lack proof on
justifying ownership and enjoying legal rights, especially in future. Compliance of Australian
Consumer Law (ACL) under the written agreement with Abdul can favour Jeremiah to
exercise legal rights to claim funds or ownership if the former fails to provide a total amount
of $450 within the specified time after the purchase of tree (ACCC, n.d.). As the first case
scenario comprised of certain legal laws and regulations, Jeremiah could consider it to be
enforceable agreement and proceed accordingly with the contract agreement by demanding a
deposit of $350 in the first place before the transfer of tree (Utz, 2015).
(ii) Second Case Scenario
Bianca has made a call to Jeremiah for informing him that she is interested to purchase the
tree, thus she has been given with a chance by the seller (Jeremiah) to inspect the tree and its
quality before deciding on purchasing. Bianca further decided to purchase after inspecting the
tree for a while. From this case scenario, only a verbal agreement on purchasing the tree has
been made between the seller and the buyer. Thus, referring a verbal contract agreement as an
enforceable contract, there are certain legal requirements highlighted under the Australian
Contract Law that must be met within such form of contract. These legal requirements could
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be portrayed as offer and acceptance, considerations between the buyer and a seller,
intentions of the party to establish a legal relation, certainty on purchasing and selling, and
the capacity of the buyer i.e. good mental and physical health of the purchaser. By following
these legal requirements, offer and acceptance regarding selling the tree and purchasing have
been made between Jeremiah and Bianca. The terms of the product (tree) quality and price
have been achieved to avoid future risks or return. However, the verbal agreement between
the two parties lacks, as none of them agreed to enter into a legal relation because it was
made within the social context (Butlers, 2020).
There is also a lack in the legal requirement of certainty, as Bianca being a purchaser did not
highlight certain legal rights that could be claimed by her as a consumer. Lack of capacity of
the purchaser (Bianca) is unidentified, as she does not show any concern regarding the legal
terms and conditions about the verbal agreement. Thus, Jeremiah must not confide the second
case to be an enforceable contract agreement (Butlers, 2020).
(iii) Third Case Scenario
A contract agreement between the two parties can only be considered as an enforceable
agreement if it comprises or follows the legal rules. Negotiation on the agreement between
the two parties can be made verbally or through written emails. There are four legal
requirements, which agree to e-mail as an enforceable contract. These requirements involve
formal contract document sent through one or more e-mail that must comprise of same
decisions made by the seller and the purchaser. Another requirement is the signature of both
the parties in the legal document sent through e-mail. Both the parties must sign terms and
conditions in the legal document. Besides, another requirement is that the legal document
sent by a party through e-mail must acquire the consent of the other party before a final
decision is made (Arts Law Centre of Australia, 2020). Emphasizing on the third case
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scenario, the first legal document sent by Mason comprised of a final agreement deal, but the
second e-mail sent by Mason comprised of a decline in the agreement on purchasing the tree
owned by Jeremiah. The agreement made between Mason and Jeremiah does not fulfil the
stated legal requirements, thus this case can be further considered as an unenforceable
contract agreement.
(iv) Fourth Case Scenario
Stephanie as a purchaser made a verbal agreement with Jeremiah to purchase the tree without
receiving any consent or confirmation from the seller (Jeremiah). For a verbal agreement,
certain legal requirements need to be achieved for referring to it as an enforceable contract
agreement. These legal requirements include offer and acceptance, consent on purchase and
sale by both the parties, a formation of the legal relationship between them, and the capacity
to negotiate and establish an agreement at the same time. As per this requirement, the fourth
case scenario lacks the majority of these legal requirements. Offer has been made by
Stephanie but Jeremiah has not yet accepted. Legal consideration on selling the tree to
Stephanie has not yet been confirmed. Moreover, due to miscommunication between
Stephanie and Jeremiah, the legal relationship between them has not yet formed. Jeremiah
has not been certain that he will sell his tree to Stephanie. It is also observed that Stephanie
cannot form an agreement with Jeremiah. For instance, the case highlighted that Stephanie in
curiosity decided on purchasing the tree without any concern regarding the possibility of
agreement decline by Jeremiah. Thus, Jeremiah could refer to the fourth case scenario as
unenforceable contract agreement (Butlers, 2020).
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References
ACCC, No Date, Advertising and selling guide, Commonwealth of Australia, viewed 20
April 2020, <https://www.accc.gov.au/accc-book/printer-friendly/29527>.
Arts Law Centre of Australia, 2020, Contracts: Getting it right, The National Community
Legal Centre for the Arts, viewed 20 April 2020, <https://www.artslaw.com.au/information-
sheet/contracts-an-introduction/>.
Butlers, 2020, Business contracts and agreements, News, viewed 20 April 2020,
<https://butlers.net.au/verbal-agreements/>.
Egert, Geoffrey, 2007, 'Defining a Partnership: The Traditional Approach Versus An
Innovative Departure - Do Queensland Appeal Court Decisions Point to the Need for a
Review of the Traditional Approach to Interpretation Adopted by Australian Courts?', Bond
Law Review, vol. 19, no.1, pp. 1-43.
NSW Government, 2011, ‘Repairs, Replacements and Refunds’, Fair Trading, pp. 1-6.
NSW Government, 2018, ‘Receipts’, Fair Trading, pp. 1-2.
NSW Legislation, 2012, ‘Partnership Act 1892 No 12’, New South Wales, pp. 1-75.
Utz, Carlton, 2015, Australian contract law, Association of Corporate Counsel, viewed 20
April 2020, <https://www.acc.com/resource-library/australian-contract-law#>.
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