HI6027 Business & Corporations Law: Case Study on Contract and Law

This assignment delves into business and corporations law, addressing vicarious liability, contract privity, and employment obligations through a case study analysis involving Swimmingpool Co. It examines the liability of an employee, Martin, for providing incorrect advice and misappropriating funds, further discussing the implications of a post-employment restraint clause. The report also outlines different types of companies in Australia, recommending a proprietary company for a specific scenario and analyzing its classification as a small or large entity based on revenue and employee count. The assignment concludes by addressing the selection of a company name and the necessary approvals from ASIC. Desklib offers a wealth of similar solved assignments and past papers for students seeking further assistance.

Business and
Corporations
Law

Part A
 Martin was hired by Swimmingpool Co to find potential
clients and form contract with them to build swimming
pools.
 Martin bring 20 customers and work on some of their
projects started as well.
 Later the corporation found that the advice given by
Martin was wrong and many customers complaint that
their pools are sinking.
 Martin took the company’s money and did not
submitted the same to its bank account.
 He is also planning to start a new business in
competition to the company.

Part A
 Based on the element of vicarious liability, the
company is liable for actions of Martin.
 This principle was discussed in New South
Wales v Lepore (2003) HCA 4 case in which the
court imposed penalty on the employer for the
negligence of the employee (Chamallas, 2013).
 However, the company can still impose liability
on Martin and hold him liable for his negligence
as provided in the case of Lister v Romford Ice
& Cold Storage (1957) AC 555.

Part A
 The privity of contract principle protects
Martin from being liable towards the
customers of the company (Merkin, 2013).
 He was authorised to form the contract on
behalf of the company; thus, the liability of
breach of contract cannot be imposed on
him.
 This argument is supported by the
judgement of Tweddle v Atkinson (1861) 1
B&S 393 case.

Part A
 The terms of the employment relationship were
violated by Martin when he failed to deposit the
money which he collected from customers to the
bank account of the company (Riley, 2012).
 The corporation can hold him liable for violating
his employment obligations and claim damages
from him.
 Moreover, the post-employment restraint clause
prohibits Martin from establishing his business in
competition of the company.

Part A
 The judgement given in Smith v Nomad
Modular Building Pty Ltd (2007) WASCA
169 case is relevant in this context.
 Legitimate interest of the company will
be suffered because Martin will use
trade secrets to steal the customers of
the company.
 The company can restrict Martin from
starting his business.

Part B
 There are different types of companies in
Australia which include:
 Public
 Proprietary
 Public company limited by guarantee
 Public company limited by shares
 No liability company
 Unlimited proprietary company
 Unlimited public company

Part B
 In this scenario, selection of the proprietary
company is the most suitable option.
 The cost of incorporation will be less and the
legal regulations will be relatively less as
well.
 In public company, the cost is higher and it is
mandatory to comply with regulations such
as preparation and publishing of books of
accounts, mandatory director meetings and
others (Welsh, 2014).

Part B
 In the first year, the company will
remain in the category of a small
proprietary company.
 The comply will comply with all three
elements which are given in section 45A
(2) (Austlii, n.d.).
 Its employees are less than 50, grow
revenue below $25 million and less than
$12.5 million in gross assets.

Part B
 After fifth year, the company will come in the
category of a large proprietary company.
 The elements given under section 45A (3)
are fulfilled after five years (Legislation, n.d.).
 The gross revenue of the company will
exceed $12.5 million along with its gross
revenue which will exceed $25 million.
 The company will hire more than 50
employees as well.

Part B
 Selection of the name of the company
require prior permission of ASIC.
 The words ‘Anzac Coffee’ are showing in
amber colour on the website of ASIC
(ASIC, n.d.).
 It means that the parties will have to
take prior approval of ASIC while
selecting this name for the company.

References
 ASIC. (n.d.). Guidelines for ministerial consent-restricted words and expressions.
Retrieved from
https://asic.gov.au/for-business/registering-a-business-name/before-you-register-
a-business-name/business-name-availability/guidelines-for-ministerial-consent/
guidelines-for-ministerial-consent-restricted-words-and-expressions/
 Austlii. (n.d.). Corporations Act 2001. Retrieved from
http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/
 Chamallas, M. (2013). Vicarious liability in torts: The sex exception. Val. UL
Rev., 48, 133.
 Legislation. (n.d.). Corporations Act 2001. Retrieved from
https://www.legislation.gov.au/Details/C2018C00424
 Merkin, R. (Ed.). (2013). Privity of Contract: The Impact of the Contracts (Right of
Third Parties) Act 1999. Taylor & Francis.
 Riley, J. (2012). Sterilising talent: A critical assessment of injunctions enforcing
negative covenants. Sydney L. Rev., 34, 617.
 Welsh, M. (2014). Realising the public potential of corporate law: Twenty years of
civil penalty enforcement in Australia. Fed. L. Rev., 42, 217.