Australian Business Law - Assignment Example

Common Law Assignment Name Name of Institution Common Law Assignment Question One Ethics defines a collection of principles related to morals, the evaluation of moral problems, and acting in a morally correct and honourable way (Gibson & Fraser 2014, p. 133). Businesses are mandated to act in an ethical manner by legislation and market conditions that eventually punish unethical behaviour. The given scenario raises several ethical issues, with some of them being related to case law. First, there is the ethical issue of giving and receiving gifts. Business might offer different types of gifts with a view to winning contracts or getting favours. The scenario shows that the company gave each scientist a monetary gift of $500,000 to investigate the risks associated with the new drug. The size of the gift is bound to affect the capacity of the scientists to act in an honourable way. They might find it difficult to raise issues about the drug given the massive sum that they have been paid. This raises an additional issue of conflict of interest. According to Gibson & Fraser (2014, p. 143), conflict of interest defines scenarios where individuals cannot act in the interest of one party without impinging on the rights of another party for who the individual acts. It is obvious that scientists who are creating drugs have to balance between the interests of the pharmaceutical organisation and the patients who will benefit from the drug. In most cases, this balance can be achieved with ease. However, the gift of $500,000 compromises the ability of the scientist to work in the interest of patients. In Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, it was established that unconscionable conduct defines agreements that comply with all legal requirements but that are grossly unfair to an innocent party. This definition was confirmed in Australia Competition and Consumer Commission v Keshow [2005] FCA 558. It is evident from the scenario that the scientists had a weak bargaining position when it came to the signing of the confidentiality agreement. While the agreement was legal, the drug company was taking excessive advantage of scientists as their right to disclose potentially dangerous drugs to relevant authorities was eliminated. The $500,000 payment also weakened the bargaining position of the scientists. The scenario also raises the ethical issue of conflict between commercial interests and social utility. According to Gibson & Fraser (2014 p. 142), businesses need to create a balance between social utility and the need to further their business interests. A drug company serves a great community need as their actions can prolong lives. The firm described faces the dilemma of deciding whether to release a drug that might reduce the prevalence of rheumatism or to carry out further investigations and inform the public of a potentially dangerous side effect. It is clear that the release of the drug will lead to significant profits and several cases of the side effect. This depicts the conflict between social utility and commercial interests. Finally, the scenario denotes the ethical issue of institutionalised wrongdoing. This is due to the presence of social forces within the drug company that pressure the scientists to release potentially dangerous drugs to the public. It is evident that these social forces arise from profit motives. Question Two Part A Was there consideration to support Bill’s promise to pay Quentin’s university fees? Can Quentin enforce Bill’s promise if he takes a year off? Consideration is a vital component in simple contracts as it determines whether an agreement is a contract. According to Latimer (2012, p. 340), consideration defines some benefit accruing to one party while some forbearance or responsibility is undertaken by the other party. Consideration must originate from the promisor and must have some value (Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847). It must also surpass the requirements of an existing obligation and be possible to perform (Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270). An agreement becomes an enforceable contract if these conditions are met. An evaluation of the scenario shows that the consideration involve the future and that it moved from the promisee. Quentin agreed to work at the restaurant on every Sunday for the duration of his first year of study owing to the promise that Bill would pay his university fees. It is clear that Bill would accrue significant benefits as he would have an extra worker on Sundays, a day when his staff might want to take off to be with their families. It is also clear that there is forbearance on the part of Quentin, as he would have to lose the chance to improve on his tennis by working with a renowned coach. The other rule for consideration is that it must surpass existing obligations. There is no obligation for a 19-year-old son to work at his parent’s business. Therefore, the decision to work on Sundays amounts to consideration. The satisfaction of the conditions necessary for consideration to be present means that the agreement between Quentin and Bill is an enforceable contract. An appraisal of the scenario shows that Quentin fulfilled what was required in the agreement. Furthermore, the agreement did not have a condition that Quentin would have to complete his university education without any significant breaks. As such, Quentin’s decision to take a year off and undertake overseas travel has no bearing on the enforceability of the agreement. It is recommended that Quentin take action to enforce the simple contract. Part B Did Quentin have full contractual capacity? Having established the presence of an agreement, intention to create legal relations, and consideration, the next step involves establishing the validity of the simple contract. The alternate scenario shows that Quentin entered into a contract when he was 17 years of age, meaning that he was a minor. According to Gibson & Fraser (2014, p. 411), the general rule is that contracts with minors are not valid and enforceable. Hamilton v Lethbridge (1912) 14 CLR 236, created an exception to this rule by establishing that some contracts that are beneficial to an infant are enforceable. In this case, the court will look at the contract as a whole and determine whether it is a beneficial contract of service. The facts of the case show that the contract was related to Quentin’s education. Therefore, the contract is a beneficial contract of service, meaning that it is enforceable. Question Three Was the statement by Samantha as to the condition of the car a representation or a term in the contract? In Hopkins v Tanqueray (1854) 15 CB 130, it was established that one of the critical factors when determining whether a statement is a representation or a term is the time that elapses between a statement and the final agreement. This is one of the factors in an objective test that a court will undertake in determining whether a statement is a representation or a term. Additionally, the court will evaluate whether a statement is made with the intention of barring the other party from finding defects. In cases where a party places considerable importance to a statement, the court will be more likely to treat it as a term and not a representation (Gibson & Fraser 2014, p. 482). Oscar Chess v Williams [1957] 1 All ER 325 and Dick Bentley Productions Ltd v Harold Smith Ltd [1965] 1 WLR 623 raised the issue of the relative knowledge of the parties involved in a contract. An analysis of the case shows that Samantha made her statements with the intention to induce Terrence to purchase the Holden Monaro. Terrence stated that one of his friends had issues with the suspension of a similar car, indicating that the state of the suspension was very important to him. He made the decision to purchase the vehicle based on Samantha’s assurance that the suspension was in good condition. The application of the objective test shows that Samantha’s statements were not meant to prevent Terrence from finding defects in the vehicle. On the balance of probabilities, she was not aware that the Holden’s suspension was badly rusted. The scenario is similar to Von Den Esschert v Chappell [1960] WAR 114, where the plaintiff asked whether there were white ants in a house. The defendant stated that there were no ants, and the buyer immediately signed a contract. The discovery of widespread white ant activity resulted in legal proceedings against the seller. The court ruled that the oral statement could be relied upon, even if it was not part of the written contract. In conclusion, the application of the objective test shows that the court would be more willing to rule in favour of Terrence. This is because of the importance that Terrence attached to the state of the suspension and the short duration between Samantha’s statement and the final agreement. It is recommended that Terrence take action against Samantha. References Australia Competition and Consumer Commission v Keshow [2005] FCA 558 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Dick Bentley Productions Ltd v Harold Smith Ltd [1965] 1 WLR 623 Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 Gibson A, Fraser D, 2014, Business Law 2014, Pearson Australia. Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270 Hamilton v Lethbridge (1912) 14 CLR 236 Hopkins v Tanqueray (1854) 15 CB 130 Latimer, P, 2012, Australian Business Law 2012, CCH Australia Limited. Oscar Chess v Williams [1957] 1 All ER 325 Von Den Esschert v Chappell [1960] WAR 114 Read More