Business Law Assignment ExaminingThe Foundations Of Australian Company Law
The questions to be answered through the business law assignment are:
Barbara was a regular shopper at Egeeay
Supermarket, which was part of a large nationwide supermarket chain. She was there at least once a week and sometimes more often if the specials were really good.
When Barbara was there this week, she slipped on some grapes in the pet-food section in aisle 3, slipping and falling, and breaking her ankle. The store manager was not sure how the grapes got there or how long they had been there, but store policy was to do checks every 15 minutes of the floor in the fruit section. The store manager indicated that there were a number of spillages every week in the green grocery section of the store. The store owner wishes to know:
a) Whether Egeeay Supermarket owes a duty of care to Barbara?
b) If they do, has it breached that duty of care?
c) Whether your answer would be different if Barbara had slipped on some grapes in the fruit section of the store.
Brown purchased a pair of woolen underpants from Underwear Galore in Adelaide. As a result of wearing the underpants without first washing them, he contracted dermatitis as the underpants contained bisulphite of soda, which it was found had been left in the underpants during the manufacturing process. The underpants had been packaged in a clear cellophane wrap, but the bisulphite of soda couldn’t be seen on a reasonable inspection by either the retailer or the buyer.
Has Brown any remedy or remedies available to him against the retailer, Underwear Galore, under the Australian Consumer Law? Explain what Brown has to establish in order to succeed in an action and whether, in your opinion, he would be successful.
What are the advantages and disadvantages of becoming a franchisee? Should a person considering going into business the first time consider a franchise? Discuss.
What is the significance of Salomon v A Salomon & Co Ltd  AC 22? What is the ‘corporate veil’ and when is it permitted to be lifted under the Corporations Act?
Tristan is considering buying shares in a company. Tristan asks you to explain to him what is meant by the terms ‘member’ and ‘shareholder’, and the different ways in which a person may become a member. He also asks you to explain who may be eligible to become a member, and how many members a company is permitted to have. Finally, Tristan asks: how does a person cease to be a member of a company?
Answer a) The readings used to prepare this business law assignmentsignifies that breaching the duty of care occurs when one fails or neglects to fulfill his or her duty of care and hence does not act reasonably in some aspects of the other. According to Australian Law breach of duty happens if the person(s) (manager/ Director/Company) fails to comply with their obligations and also when the director or the owner breaks or breaches his given duty in a professional capacity (Blaga 2011).
In the given scenario Egeeay Supermarket does not owe a duty of care to Barbara as she slipped and broke her ankle in the pet-food section and the store policy was to keep check every 15 minutes of the floor in the fruits section but not the entire store or the pet-food section where the incident took place. Though the manager indicated spillage incidents in the greengrocery section but nowhere he mention that incidents regularly took in the pet-food section of the store.Therefore, the duty was to keep check of the floor in the fruits section after every 15 minutes and not of the entire store. It can be concluded that the store management did not breach or deferred from their duty and hence, Egeeay Supermarket is not liable.
Answer b) The Egeeay Supermarket did not commit any breach of duty of care as it is clearly stated in the store policy that they do not have any duty to keep a regular check of the floor in the pet-food section and therefore Egeeay Supermarket is not liable for the breach of duty of care. The element of duty is not deferred away with, by the staff of the said store.But it can be inferred that the staff must keep check every 15 minutes on the fruits section of the store and further it cannot be foreseen by any staff member in any way that such an incident can take place in the pet-food section of the said store. Therefore, it can be stated that the store was liable for breaching the duty of care only when the incident took place in the fruits section of the store. c) Egeeay Supermarket would be fully liable for breaching the duty of care and therefore Barbara had the right to sue the said supermarket store and claim for the damages and injury procured by her due to the slippage. The said store will be liable for heavy compensation as per law, toward Barbara as the staff of the abovementioned store failed to comply with the duty as mentioned in the store policy and therefore, failing to fulfill the obligation and further committing a breach of duty as well as breaching the duty of care.By not keeping a check of the floor of the fruit section of the said after every 15 minutes by the staff of the store, amounts to negligence and breach of duty and this further provides legal leverage to Barbara for claiming compensation instead of the injury procured due to the slippage.
According to the Australian Consumer Law, a consumer is a person, who acquires goods and further, it is the duty and liability of the manufacturer to provide information regarding the goods they are putting in the market for sale. Consumer rights mean safeguarding the buyer of goods and services and provide them with information regarding the goods bought (Keay&Loughrey 2019).
In the given case Mr. Brown bought underpants from Underwear Galore, as a result of wearing it for the first time, he experienced dermatitis due to bisulphite of soda. It was nowhere mentioned on the cellophane wrap that the underpants contain bisulphate of soda, neither it was acknowledged to Mr. Brown, by the retailer about the same. Further, the said package does not contain any information regarding the washing of the underpants before using it for the first time. Mr. Brown thus in all the reasonability cannot inspect the presence of bisulphite of soda. On the other hand, as per the Law, the retailer must know all information from the manufacturer, regarding the products/goods he is selling.
In order to establish successful legal action against the retailer and appropriate the compensation for damages inflicted, Mr. Brown has to prove that by using the said good (underpants), he was financially, mentally, as well as physically harmed and injured. Further, he did not know the chemical bisulphite of soda as it was not told by the retailer and there were no instructions on the package as well.Mr. Brown has to show that it was a bonafide purchase and has to furnish the bill or the receipt of the purchase of the said underpants from the retailer. Further, he can state that the retailer has deceived him by concealing information regarding the product in question, therefore failing to fulfill his obligation. The present Scenario also attracts the consumer product safety law which applies nationally.
Australian Consumer Law prescribes that the information should provide to the consumer of the goods, by the supplier. Mr. Brown's case directly comes under the ambits of the statutory rules, which deals with liability claims for damages and injuries, loss, caused by supplying goods, which contains safety issues and defects. Thus, Mr. Brown can claim compensation as no information was provided to his by the retailer, and further he suffered due to the non-availability of information regarding the said well in question. Further Mr. Brown can seek a refund from the retailer for the damages inflicted by using the underpants.
To conclude, it can be stated that Mr. Brown can claim for the damage and further can ask for a refund accompanied by compensation for the pecuniary as well as physical damages and injuries inflicted by using the said good in question, following the Australian Consumer Law. Hence, Mr. Brown has to establish that the retailer did not provide any information regarding the underpants and use of bisulphate of soda. Therefore Brown has remedies available to claim for compensation from the retailer.
The operation of the business under the established brand of another business is known as a franchise. A franchisee is given rights by the franchiser to market the products and services, by using the trademark or the brand name of the franchiser (Goldberg 2019).
There are certain advantages and disadvantages to having a franchise.
• Franchises offer independence, security, benefits, and support to small business ownerships by the extensive business network.
• No requirement of experience because the Franchisors train through programs, needed to run their business model.
• The success rate is high in comparison with that of start-ups.
• Investment is lesser in buying franchise than what it takes to start a new business venture (Goldberg 2019).
• Mostly the franchises have an established image, reputation, management, work ethics, advertising access, which provide a slighter risk of failure.
• Buying a franchise bound the buyer with a formal agreement.
• There is no room for creativity as the agreement with the franchisor states, how to carry on the business.
• There are restrictions in supply, sail, and operations in the franchise business as the franchisee runs by rules of the franchiser.
• Reputation is directly connected with the performance of other franchisees (Goldberg 2019).
• The sharing of profits is one of the main disadvantages.
• There is no security after the expiry of the agreement as it is in the hand of the franchisor to renew it or not.
Although getting a franchise provides security, less risk, slighter investment also a standard way to get into the business world, yet it comes with a cost to comprise one’s creativity, encountering the business world through his/her vision. Therefore, establishing a new business venture through authentic business ideas and playing by owns rules is much more lucrative and effective in the long run than buying a franchise.
In Salmon V A Salomon & Co Ltd. is a Landmark Judgment in which the House of Lord upload the doctrine of corporate personality, so that creditor of the insolvent company could not sue shareholder to pay for the debts (Cameron 2012). Thus corporation is a Legal entity separate from the Shareholder. This case thus represents the view of separate legal personality in many Judgments the rule led down, in this case, is of supreme importance. The principle led down in this case not is disregarded. Therefore, it was due to this case that the Companies whether parent or subsidiary are treated as separate legal entities and thus have the rights and liabilities, that of separate legal entities.A corporate veil can be defined as a legal concept that segregates company’s action and the shareholder. It secures the shareholders from the actions of the company yet it does not mean that protection is permanent; it is upon the court to decide whether the shareholder is responsible for the company’s actions or not (Chen, Ramsay & Welsh 2016).Lifting of corporate veil is removing the facade of corporate personality, to identify or unmask the person behind the fraud, improper or illegal acts done by the company, as it is not feasible to an artificial person, this process is known as Lifting of the corporate veil (Cheng 2011). The veil is invoked when the shareholder is liable for corporation debt despite being a separate personality and having limited liability.
According to the Australian Law a member can be among the following that is a person, body corporate, or a body politic. It is important to note that legal proceedings can be done against a member and can be sued however, the business name cannot be deemed as a member. The trustee or executor can be nominated on behalf of trusts and estates. Trusts and estate cannot hold shares in their own right.Company members are often shareholders (Edwards 2019). A shareholder can be defined as a person or any institution that holds more at least a single share of the company also referred as equity. To become a member it is important to be registered as the time of company’s registration. Written consent should be further furnished before the application of the registration (Edwards 2019). To become a member of an already registered company the person should provide written consent and the company is responsible to notify the change regarding the registered member, the authorities.A Company can have at least one member and no barrier exists for the members in Public Company but in Proprietary Company the number should not exceed fifty. A company can make its criteria regarding the minimum age of a member (Middlemiss 2011). Ceasing to be a member of a Company can be initiated by deregistering the company voluntarily and all the members of the company agree for deregistration, further the member can also resign or retire and also be replaced.
Blaga, S. 2011, ‘Australian corporate governance and distribution of power’, Review of Economic Studies and Research Virgil Madgearu, vol. 4, no. 1, pp. 5-27.
Cameron, C. 2012, ‘Corporate villains: taking the bore out of law’, Accounting Research Journal, vol. 25, no. 1, pp. 56-66.
Chen, V, Ramsay, I, & Welsh, M 2016, ‘Corporate law reform in Australia: An analysis of the influence of ownership structures and corporate failure’ Australian Business Law Review vol. 44, no.1, pp. 18
Cheng, T.K. 2011, ‘The corporate veil doctrine revisited: a comparative study of the english and the U.S. corporate veil doctrines’, business law assignmentBoston College International and Comparative Law Review, vol. 34, no. 2, pp. 329-412.
Edwards, L 2019, ‘Corporate power in Australian policy making: The case of unfair contract laws’, Australian Journal of Public Administration, vol 78, no. 4, pp. 516-529.
Goldberg, E 2019, The Benefits of the Franchise Model, viewed 18 June 2020 https://www.franchising.com/guides/benefits_of_the_franchise_model.html Keay, A and Loughrey, J 2019 ‘The concept of business judgment’, Legal Studies, vol. 39, no. 1 pp. 36-55
Middlemiss, S 2011, ‘The psychological contract and implied contractual terms: Synchronous or asynchronous models?’ International Journal of Law and Management, vol. 53, no.1, pp. 32-50