Australian Commercial Law - Assignment Example

Business Law Question Australian commercial law is principally concerned with protecting the interests of consumers of goods, services and land against unfair practices and providing sufficient remedies if the interests of the consumer are violated. The law provides the consumer with protection from five main factors: unfair traders’ practices, unconscionable conduct from the traders, misleading conduct, specific false representations and unfair practices. The protection from unconscionable conduct prohibits suppliers of products from engaging in unconscionable conduct when supplying their products to the consumer. From section 21 of the ACL, it is evident that this law is aimed at leveling the bargaining power difference between the buyer and seller. Accordingly, Section 22 of the law deals with commercial transactions in protecting consumers from unconscionable conduct. According to section 18, misleading or deceptive conduct is prohibited, where the section sets out the elements that must be settled if contravention is to be proved. These elements are the conduct by the corporation or person, the activity of trade or commerce and conduct that misleads, deceives, or purports to mislead or deceive. This section is not only restricted to consumers, since it can be enforced by suppliers and competitors against other suppliers and competitors. Question 2 A contract between two is generally dictated by two important factors, the offer of a contract and the subsequent acceptance of the contract by the other party. These two factors are important in contract law since they determine the time, place and contents o the agreement that make up the contract. An offer is determined by several factors, including the intention to be bound by a contract, a promise to adhere by the contract and communication of the offer to the other party. An offer must be distinguished from an invitation to treat, which is just an offer to consider the offer and cannot create a valid agreement. The distinction between an offer and an invitation to treat is done to set the intention of the offerer and offeree. The offer must also be communicated to the other party, in which case, the other party chooses to accept or decline the contract. The offeree to the contract has the option of accepting or declining the offer, and for an agreement to be reached, the offeree must indicate intention to accept the contract. For an acceptance to be in line with the law, the acceptance must strictly adhere to the original offer, and of the offeree includes some new conditions, and then it amounts to a counter offer and not acceptance. The acceptance must then be communicated to the offerer so that the contract or agreement is sealed. Question 3 In Australia, companies are regulated by the Corporations Act 2001, which defines a company as an entity incorporated with limited liability, has a perpetual existence, has a separate legal presence and has the right to own assets in the name of the company. The main distinction of a company from other forms of business ownership is in the separate legal entity, where the company has a right to pursue any legal action or suffer legal action on its own. The main advantage of the company over a partnership is that it is a separate legal entity from its owners, shareholders or management, which means that the owners do not suffer liability over a company’s actions. The other advantage is that of perpetual succession, where the company can go on indefinitely if the owners change, decease or are removed. The company can also sue or be sued separately from its owners; its shares can be freely transferred, and has tax benefits because of its ownership structure. However, the main disadvantages include high establishment and running fees, many reporting and administrative requirements, limited action in the running of the company by shareholders and more legal responsibility placed on management. Question 4 One of the main categories of negligence is a tort negligent misstatement, which refers to an inaccurate or misleading advice, opinion or fact that is made by a party in business to another to rely on. Tort negligent misstatement has seven main elements, including the duty of a party to avoid making careless statements in the course of business that may cause harm. In Hedley Byrne v Heller (1964), it was established that the law implies a duty of care when statements are being made with reference to the above element. It was also established in MLC v Evatt (1968) that the duty of care is not only fixed on professional advisers, it also covers any individual who provides information. In Shaddock v Parramatta (1981), this duty of care was also extended to cover advice that is provided in serious circumstances, and in San Sebastian v Minister Responsible for Administering Planning and Assessment Act (1986), it was established that the duty of care exists when the parties have a special relationship. Finally, it was established in Pyrenees Shire Council v Day (1998) that any inadequate response that is relied upon by one party can amount to negligent misrepresentation by the first party. Question 5 According to the law, negligence refers to the failure to exercise reasonable care and skill in action, or the failure to perform and action that a reasonable individual would do. In any negligent action, a remedy is provided to the plaintiff. The remedy in this case is usually compensation in form of damages or an injunction to the afflicted party. In this case, the party who suffered from the negligent action is compensated for his pain. However, before any negligent action is decided, the plaintiff must prove three important factors. First, the plaintiff must show that the defendant owed them a duty of care, where the defendant must take actions to ensure that their actions or omission would not hurt their neighbors. Second, the plaintiff must show that the defendant failed to observe the duty of care owed, and as a result of the omission to observe the duty of care, the plaintiff suffered injury or loss. Question 6 As already stated, an offer is made by one party to invite another party to a contract or agreement, and an acceptance is made by the other party to join the contract. The three main elements of an offer are the intention to be bound by a contract, a firm promise of the offer and communication of the offer. Offers must be distinguished from invitations to treat, which are invitations for the other party to make an offer instead. The offer must be communicated in a reasonable way to the offeree, and must be supported by consideration. The other element is that the withdrawal of an offer must also be communicated to the offeree before the offeree accepts the initial offer. The offer terminates when the offeree rejects it or when reasonable time elapses. In the case of acceptance, it must be communicated to the offerer in a reasonable manner within reasonable time and must be acceptance of strictly the term of the initial offer, and the offeree must intend to accept the offer. Question 7 Exemption clauses are usually meant to exclude or limit the liability of the person inserting them in the contract. Exemption clauses are also called exclusion clauses, and for a court to enforce an exemption clause, it must be proved that one party violated the terms of the contract or that the contract was fraudulent. The court has to first consider whether the writing constituted an actual contract or is just a receipt or other document that does not amount to a contract. After this is determined, the court then determines whether the acceptor of the contract signed the contract with the exemption clause in it. In this case, if the acceptor signed the document, the exemption clause is binding whether the acceptor read the contract or not, unless there is some form of fraud or misrepresentation in the contract. However, if the contract is not signed, the court will try to determine whether a reasonable person would have considered the writing as having contractual terms and whether these terms had a reasonable notice. The court will also consider if any unreasonable conditions were communicated to the acceptor, and whether any of these conditions were included after the completion of the contract. Question 8 In the case of a couple buying a small shop, it is evident that the best business structure that they would use is a sole proprietorship, where the couple would act as the proprietors of the business. The main advantage of this type of business ownership is that the get to keep all the profits and not share it with any partners. The other advantage is that the owner gets to have all ownership and control of the business, meaning that all decisions are made solely by the owners. Additionally, there are minimal formalities and legal requirements for the formation of a sole proprietorship, and the business entity is inexpensive to form. The business also remains private and can be changed at owner’s discretion. However, one disadvantage of this type of business ownership is that the owner has unlimited liability, and will suffer legal action or any other loss as a result of business failure. Since the business and the owner are one legal entity, the business failure affects the owner. The business would also find it hard to raise large amounts of capital since there is usually lack of professional management skills. Read More