Foundations of Business Law - Assignment Example

FOUNDATIONS OF BUSINESS LAW QUESTION ONE Introduction Sam was newly appointed to the Global Banking Corporation in Southern Australia. He was allotted to the enquiry desk, where he advised an old man abut investment options in the bank. While doing so, he merely gave the brochure about a very attractive scheme, but deliberately did not give him the document that contained all the details and risks of that scheme. To assess the legal consequences of this situation, the following issues have been taken up for discussion. Issues The issues to be considered are whether, Sam’s omission to provide the detailed document to the customer amounts to deceit, as per the provisions of Australian Consumer Law. Whether the Global Banking Corporation is vicariously liable for the suppression or false information provided to the customer by its employee Sam. Rule of Law Section 18 of Schedule 2 of the Australian Consumer Law 2010, prohibits an individual, in trade or commerce, from indulging in behaviour that is deceptive or misleading. It is also prohibited to engage in conduct that is likely to mislead or deceive. Moreover, the Australian Consumer Law precludes the making of false representations, or declaring affiliations or associations that are untrue. Such conduct is also prohibited by state legislation.1   Behaviour is considered to be misleading or deceptive if it induces error, or is capable of inducing error, in a reasonable person. While determining whether conduct is misleading or deceptive, the following aspects assume significance. First, importance is given to the overall impression created by the conduct. Second, the dominant message is deemed to be significant and not the implications that are not presented in a striking manner.2 Conduct that is deceptive or misleading can be spoken; in the form of written material; or any other form, such as, body language, gestures, silence or unresponsiveness. Moreover, a company can indulge in deceptive or misleading conduct, on account of the actions of its agents, employees, or officers. 3 Liability arises, due to conduct, even if it has not misled anyone. It is sufficient, if the conduct has the possibility of deceiving or misleading. Liability also arises, even if the person making the representation has acted reasonably and honestly. However, the conduct should have actually deceived or mislead. Finally, conduct generates liability, if the affected individual had failed to make proper inquiries, or could have discerned that the conduct was deceptive or misleading, on investigating the matter. 4 Analysis A false statement made by an employee, in the course of employment, renders the employer vicariously liable for that statement. If a person acting on behalf of a professional makes an unauthorised false statement, and if that person believes in the veracity of that statement, then the professional become liable for deceit.5 If there is negligence in disclosing facts, such conduct is not deemed to be a deliberate suppression of facts. For instance, in Awaroa Holdings Ltg v Commercial Securities Finance Ltd,6 a brochure had been prepared by a vendor. The objective was to sell a shopping centre, and this brochure incorporated a statement regarding the rents being obtained. Although, the rental amounts had been shown correctly, it was not disclosed that the vendor had consented to receive half the rental amount from several shop owners. 7 In this case, the vendor was held liable for deceit. This was because of the false statement in the brochure, which was known to the vendor. The vendor’s agents had been authorised to convey this brochure to potential buyers. Although, the content of the brochure was theoretically true, the failure to clarify that the vendor had agreed to receive half the rental amount, was held to be an act of concealment.8 In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd,9 it was held that if the relevant information was not provided, then such conduct would be construed to be deceptive or misleading, or likely to be deceptive or misleading. 10 In Armstrong v Strain,11 a vendor did not authorise the real estate agent to convey certain details to prospective purchasers. The real estate agent believed these details to be true. In this case, liability for deceit was not ascribed to the real estate agent or the vendor. The reason behind this was that the vendor was unaware of the fact that the statement had been made. Furthermore, the real estate agent was unacquainted with the fact that the unauthorised statement made by him was not true. 12 In our problem, Sam had followed the instructions of his manager, who had specifically asked him not to display or give the white document to customers. Consequently, the manager and the company are liable for deceit under the provisions of the law. Failure to disclose the relevant facts to a customer could be deemed to be an infringement of the law by the company. Silence is considered to be deceptive or misleading, if one individual fails to inform another about facts that are known solely to that individual, and when such facts are relevant. In addition, silence can be misleading or deceptive if a change in the circumstances connotes that the information provided is wrong. As such, whether silence is deceptive or misleading, depends upon the circumstances of a specific case.13 Conclusion In our present problem, Sam gave a brochure to the customer, stating that the said investment option was the best suited to the latters’ requirement. However, he omitted to provide the customer with the white document that was to be given along with the brochure. He had been instructed by the manager, to abstain from giving the white document, as it was costlier to print, and as it contained details regarding risks and returns, which were determined by market fluctuations. This can be construed as deceitful conduct on the part of the manager, as well as the company, according to the above discussion. Moreover, the company is vicariously liable for the deeds of its employees, since it was done in the course of employment. Workplace Safety An aged person had sustained a fall on the floor of the company, due to the accumulation of rain water on the floor. This person shouted with the pain, such was the grievous nature of the injury. He also asserted that the personnel of the company had failed to fulfil their duty under the Workplace Safety Act 2000 (fictitious). Section 5 of this Act provides that an employer is liable for the safety of the workers in the workplace. Issues The issues to be considered are; Whether the company is responsible for the safety of the customer at the workplace. Whether the injured elderly person has any remedy for the injury and losses caused to him by the company. Rule of Law Section 5 of the Workplace Safety Act (fictitious) states that the employer is liable for the safety of the employees in the workplace. Analysis As per the provisions of section 5 of the Workplace Safety Act, the employer will be responsible for the safety of the employees at the workplace. However, this Act is silent regarding liability for losses suffered by third parties. Conclusion Consequently, the company cannot be held responsible for the safety of third parties who enter the premises of the company. QUESTION TWO Sam, being an employee of the company, has acted as per the instructions of his manager. This ensures that he cannot be held liable for any lapse, while dealing with customers. As such, Sam is not liable for any claim of deceitful conduct by the customers. It can be surmised that, although the conduct of Sam amounts to deceit under the provisions of the Australian consumer law, he was instructed by the manager to conceal the information of risks and returns from the customer. Therefore, the manager is liable for the deceit committed. Under the principle of vicarious liability, the company is also liable for the deceit, under the provisions of law. If the aged customer suffers a loss due to investments made on Sam’s advice, he can approach a court of law, for claiming damages for the fraud committed by the company under the provisions of consumer law. With respect to the aged person’s fall, in accordance with the provisions of the Workplace Safety Act 2000, the employer can raise a defence against the claim of the injured aged person. This defence will contend that the Act does not mandate any responsibility towards third parties. During the training session of the employees, it had been made clear that workplace safety was the responsibility of every member. However, the Act has failed to disclose the duties towards third parties. This enables the company to raise a defence against third party claims. Remedies In the above scenario, the availability of remedies, depends on establishing the following. First, that the deceptive or misleading conduct had taken place. Second, the aggrieved party had relied upon such conduct, or had been persuaded by this conduct to act, which had led to his suffering a loss. The potential remedies, in such cases, include injunctions and damages.   BIBLIOGRAPHY A Articles/Books/Reports Christensen, Sharon A, W D Duncan and Tamara Walsh, Professional Liability and Property Transactions (Federation Press, 2004) Goldring, John, Consumer Protection Law in Australia (Federation Press, 1998) B Cases Armstrong v Strain (1952) 1 KB 232 Awaroa Holdings Ltg v Commercial Securities Finance Ltd (1976) 1 NZLR 19 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 C Legislation Competition and Consumer Act 2010 (Cth) D Other Avoiding unfair business practices (2010) Commonwealth of Australia Read More