Franchising Code of Conduct and Other Australian Law Problems - Math Problem Example

Running Head: Australian law problems. Name: Institution: Date: Question three: Franchising code of conduct Franchisors obligations The code conduct is set out in the trade practices regulations 1998. This code conduct generally applies to all franchise agreements entered into either renewed or an extension that occurs after 1st October 1998. The disclosure requirements are the main obligations of franchisors. Failure of a franchiser to comply with the code conduct has the following consequences: An action by the ACCC arising from a contravention of the trade practices Act is mandatory exposing the franchiser liable to pecuniary penalties. Claims for damages or in other cases declarations that provisions of the agreement are unenforceable. This agreement must comprise the following elements: There has to an agreement, whether written oral or implied. It also comprises the grant of rights to the franchisee to supply goods and services within the country under the current implemented marketing plan. Finally, this document includes the right a trademark for a business transaction and payment of royalties relevant to rights granted (Corporations Act 2001 s 9). Disclosure obligations Every franchisor is obligated to maintain a disclosure document for the franchise. This document is created by the franchisor and provided to the franchisee before engaging in the franchise agreement. This document could however also be presented in the process of renewing or extending the current franchise agreement. The content and form of this document generally depends on the annual turnover of the business to be franchised. In a case where the expected turnover is above $50,000 has to be in Annexure 1 of the Code Conduct format. Alternatively, if expected turnover is less than $50,000 it must be in the form of either Annexure 1 or 2. The franchisor is obliged to give formally current information to be documented. To validate this document, the acting director or executive officer of the franchisor is required to sign it (William David D, 2005). Obligations before commence of the franchise agreement. Before entering this agreement, a franchisor has to agree to the terms and conditions. He should have read and understood the disclosure document as well as the written statement or prospectus presented. For new franchise agreements, the prospective franchisee ought to be given advice about the concerned agreement. It however optional whether or not the franchisee has decides to take the independent agreement. Below are some conditions that they should consider when masking the agreement. Cooling off period: This refers to a 7 day cooling period which allows the franchisee to terminate this agreement within seven days after making the payment. If the agreement is terminated during this period, the franchisee has the right to claim refund of his funds to be paid within 14 days. Provision of copy of lease: In a case where premises are leased by a franchiser for purposes of business transaction, the franchisor has to give the franchisee within one month after occupation commences. Question Two Anybody above the age of 18 and not an undischarged bankrupt automatically qualifies to be a settlor. However anybody declared an undischarged bankrupt do not qualify to be a Settlor. It is possible and indeed very common for Settlors to also be Beneficiaries of the Trust. The Trustees on the other hand are a Corporation licensed to offer Trust and Fiduciary services. An individual has the power to influence what happens to the trust. This is because during establishment of the Trust, the Settlor usually indicates vividly the intention of establishing the Trust and also gives details on the intended Beneficiaries to the trustee. The Trustee records this information and will in future regard to it when administering the Trust. The Settlor is also obliged to submit a memorandum or letter of his wishes from varying time durations used to record the Settlor’s ongoing wishes for the Trust administration. Although this document is not a legally binding, the Trustee generally regards to it in consideration of the powers of the Trustee and in also in the discretion exercise under the terms of the Trust Deed. Trustees Trustees are the most influential and play the most significant roles in the running of the trust. These however do not own any of the assets placed in trust. These items and assets remain as trust’s property until after a transfer to the beneficiary takes place. The trustees are However obliged with the responsibility of ensuring these assets are properly managed to benefit the beneficiaries in the most optimal way. This is usually done through ensuring the safe keeping of these items or otherwise investing them. In some cases, e assets treatment by the trustees is determined by the settlor when composing the trust. In such instances, the trustees only act within set bounds and instructions that are implemented by the by the settlor. In the case of discretionary trusts however, the trustees possess absolute freedom to decide the manner in which the assets are managed (Denis S.K 2007). Beneficiaries Beneficiaries do not have many obligations as a result of their involvement with the trust. the beneficiary will In most cases be particularly defined in the trust instrument. The trust instrument refers to the document through which the trust is created. It occasionally happens that the settlor outlines a ‘class’ of beneficiary instead of using specific individuals. In such a case the trustee is responsible for deciding the beneficiaries of the trust. It is very important to note that it is not mandatory that the beneficiary be a person. Often, especially in testamentary trusts, the beneficiary appointed by the settlor is a charitable organization. Relationship with Settlor In the relationship with the settler, there is no legal necessity for the settlor, trustee and beneficiary to be different people or organizations. It is sometimes beneficial for an individual to establish a trust in which they are also the trustee and beneficiary. This is particularly convenient for tax purposes. A settlor can also become one of several trustees meaning his assignment along with others. This has a positive effect since it offers a peace of mind for all parties that are involved. It allows other individuals the opportunity to capably handle the affairs of the trust in an event such as the death of a settlor or in a case where he becomes incapacitated. By taking up this position, trustees take on several responsibilities. Furthermore, there are some prerequisites that must be met in order for an individual to be suitable for the position. Liability of a tenant According to Fiona M. Tolmie (2003) in her book “Corporate personal insolvency Law”, the lessee’s liability to pay rent depends mostly upon his being put in possession, or provision of the opportunity to take possession of the leased premises, and of being secured in his quiet possession against all persons. the lesser however is not understood to covenant that the premises are or shall continue to be during the term in any particular state or condition, or that they are fit for the purpose for which they are hired. And the lessee is bound to pay rent, although he have had no beneficial use or enjoyment of them, unless the lesser have been guilty of any fraudulent concealment or misrepresentation Where a tenant agrees expressly to pay rent for a certain time, without reservation on account of unavoidable accidents, he is bound to pay the rent for the whole term, notwithstanding the destruction of the premises by fire. If a lease provides "that if the premises shall be destroyed by fire, the payment of rent and the relation of landlord and tenant shall cease at the election of either party," this does not authorize the lessee to terminate the lease for a partial injury of a building by fire. And in a suit by the landlord to recover rent for premises destroyed by fire, evidence that the property was insured, and that the landlord had received the insurance money, or had received a sum of money remunerating him for the loss, out of a general relief-fund, is immaterial to the issue, and cannot be used as a defence by the tenant. But if the tenant do not agree to pay rent for a definite term, but only so long as he shall occupy the premises, and they be partly destroyed by fire, he may terminate the lease by a surrender of the residue of the premises demised. So long, however, as he remains in possession of any part, he is liable for a pro raid rent (Julie Cassidy 2006). Question Three: Advice on how Mary’s family can best structure its income from a tax planning point of view. Mary’s father died and left her some inheritance; in this case she is not obligated to pay any inheritance tax. The reason for this is that inheritance tax was generally paid out of the estate before she received her inheritance. However a situation may arise whereby she might be forced to pay tax. In accordance with the law, Mary will only owe Inheritance tax in one of the following instances: If the will stated that she pays inheritance tax and secondly in a situation where the deceased estate cannot pay it. There are three types of tax that are imposed in connection with an inheritance. One is income tax. This will be paid if at all the inheritance Mary received is generating income to her benefit. An example of such income imposed tax is rental income earned from renting out property, interest earned on money and dividends paid on shares. To avoid paying this tax, Mary should avoid saving funds from the inheritance that could earn her interest as and also avoid leasing out the property she received from her father. Mary will also risk the payment of capital gains tax if she decides to give away or exchange the assets she inherited if the property value has gone up since the date of death. Therefore if an inherited asset increases value between the date the deceased died and the date it is disposed of, this increase is referred to as a capital gain. Inheritance is a complex issue, it is therefore best that Mary be very cautious in her decisions. Seeking of legal advice from a solicitor or access to free independent advice from organizations such as the Citizens Advice Bureau could be appropriate. (Roman ,T & Stephen B 2002) Question four: Discussion on advertisement in terms of misleading or deceptive conduct under the Trade Practices Act Facts There is an alleged obvious representations made concerning the terms and conditions pertaining to the current employment opportunity. The advertisement clearly mocks the documentation and legal process by referring to it as dirty paper work. There is also the assurance for potential employee that there is a four months working period and guaranteed free time for the rest of the year. This advertisement indicates to provide franchisers with a secure and long term employment. There could be immense consequences if this company does not provide the documented information and the company allegedly happens to be sued. Decision at first instance if these representations are found sufficient to file a claim for breach, the finding would be essentially based on the following findings: QBTS has little or no regard as to whether or not the representation was true and there was indeed no reasonable ground for making this representation. Corporations engaging in ‘head hunting’ agencies should be very responsible for the representations they make for and on their behalf during the course of the recruitment process The conduct of qbts and its agents is such that there was a possibility of misleading or deceiving the applicants in relation to the easy procedures of getting employment in the company. Misrepresentations cause people to make poor decisions that leave them in a far much worse position than they were previously. Representations about job security, promotion prospects and other similar employment conditions should be avoided during the recruitment process unless the employer is actually prepared to include such terms in a written contract of employment. Question four: Explain who could be held liable for the final installment on the real estate purchase and the BSOO contract. In the case above, QBTS: the tenant had obviously agreed expressly to the payment of rent for an agreed period of time in installments, without reservation on account of unavoidable accidents. The company is therefore bound to pay rent for the whole term, notwithstanding the destruction of the premises by fire. This lessee is however not authorized to terminate the lease for a partial injury of a building by fire. QBTS is therefore liable for the payment of the final installments. Question Four: Swaggie’s advise and the Unit Holders Swaggie can sue the company for compensation of damaged of property. He should however gather relevant facts that will convince the jury. The current fact at hand is that the driver responsible for the truck was drunk and incapable of handling the vehicle. With the unit trust assets totaling to only $25,000 may result in Straw Nominee claiming insolvent and therefore the best option to seek compensation is through the confrontation of the whole three family company as a whole. Since Ringo, Paul and George are only shareholders and directors of the limited liability Straw Nominees Pty Ltd, their lack of substantial property in their name is not significant. An alternative to this is dependency of insurance which basically covers two things: any damage that may be done to your property, and secondly, damages you may cause others' property. Ringo Nominees Pty Ltd, Paul Nominees Pty Ltd and George Nominees Pty Ltd are the unit holders in the trust. Though trustees do not usually own the assets placed in the trust, they play the most significant role in the running of the trust. References: Roman ,T & Stephen B, “Corporations Law in Australia”, (2002) 2nd (ed) Federation Press Julie Cassidy, “Concise corporations Law” (2006) 5th (ed) Federation Press. Denis S.K, “Trusts law in Australia” (2007) 3rd (ed) Federation Press William David D, Joint ventures Law in Australia (2005) 2nd (ed) Federation Press. Helen Anderson & Directors personal “Liability for corporate Fault”, (2008) Kluwer Law International 340pgs Corporations Act 2001 s 57A. Fiona M. Tolmie, “Corporate personal insolvency Law” (2003) 2nd (ed) Routledge Cavendish 449pgs. Butterworths Encyclopaedic Australian Legal Dictionary Corporations Act 2001 s 9; Australian Securities and Investments Commission Act 2001 s 5(1). Read More