Fluent Essays

BE VERY KEEN ON INSTRUCTIONS BEFORE YOU START HANDLING THE PAPER and REVIEW VERY KEENLY Prepared by: H Thong © 2016 UNSW Foundation Studies, UNSW Global Pty Ltd. Sydney 2052 Australia. The original material prepared is copyright protected. Apart from fair dealing for the purposes of private study, research, criticism or review, as permitted under the Copyright Act 1968 (Cth), no part may be reproduced by any process without written permission. UNSW Foundation Studies 2016 B/B+ Semester 2 Unit 6: Contract Law (continued) Lecturer: Hui Thong Business Law Unit 6: Contract Law (continued) Overview Terms Express/Implied Conditions/Warranties Breach Remedies Rescission Damages Injunction Specific performance 2016 B/B+ 2 Terms 2016 B/B+ 3 Terms Form part of the contract Have contractual force Promissory in nature Party has obligation to comply with (perform, carry out) terms of the contract 2016 B/B+ 4 Terms Terms Expressed Implied 2016 B/B+ 5 Express v Implied Terms Express terms Terms actually agreed to by both contracting parties 2016 B/B+ 6 Express v Implied Terms Implied terms Terms inserted in a contract as a matter of law and irrespective of parties’ intention Terms may be implied into a contract through: Common law (ie. through courts) Custom or trade usage Statute (See Unit 10) 2016 B/B+ 7 Express v Implied Terms Implied terms – Common law A term can be implied by the common law on the basis of business efficacy. 2016 B/B+ 8 Express v Implied Terms Implied terms – Custom or trade usage A term can be implied on the basis of a well-known custom or usage Implied term must be consistent with the express terms 2016 B/B+ 9 Express v Implied Terms Implied terms – Statute A term can be implied by a piece of legislation For example: Australian Consumer Law (ACL) guarantees such as fitness for purpose, acceptable quality (See Unit 10) 2016 B/B+ 10 Terms Terms Conditions Warranties 2016 B/B+ 11 Conditions v Warranties Conditions Terms which form an essential part of the contract If breached: Innocent party may sue for damages and/or rescind (avoid) the contract 2016 B/B+ 12 Conditions v Warranties Warranties Terms which are not essential to the contract If breached: Innocent party may only sue for damages only 2016 B/B+ 13 Breach 2016 B/B+ 14 Breach 2016 B/B+ 15 Occurs when a party refuses/fails to comply with (perform, carry out) the terms of the contract Breach of a term might give rise to remedies Breach Complete failure to perform Party made no effort at all to perform terms Party’s performance is completely different to what was required Party clearly indicate that they will not be performing terms prior to the time for performance 2016 B/B+ 16 Breach Partial performance Party complies with some of the terms of the contract but breach one/more of other terms 2016 B/B+ 17 Remedies 2016 B/B+ 18 Remedies 2016 B/B+ 19 A breach of contract will result in remedies awarded to the innocent party. Remedies Rescission Right to rescind (avoid) the contract 2016 B/B+ 20 Remedies Damages Right to a sum of money awarded to compensate for loss resulting from the breach 2016 B/B+ 21 Remedies Equitable remedies Awarded if damages are considered to be inadequate/unavailable 2016 B/B+ 22 Remedies Equitable remedies – Specific performance A court order directing a party to specifically carry out terms under the contract Usually awarded where the subject matter of the contract is unique. Examples: A contract for sale of land A rare vintage car 2016 B/B+ 23 Remedies Equitable remedies – Injunction A court order to stop a party from performing or repeating a wrongful act 2016 B/B+ 24 End of Lecture Students must: Read prescribed reading for Unit 6 (Contract Law (continued)) Attempt Tutorial Exercises BEFORE going to Tutorial in Week 7 2016 B/B+ 25 Written Assignment (15\%) Written Assignment question and instructions now released Students must read and follow given instructions carefully Assignments must be typed into the given template on Moodle Use the IPAC method Individual/Independent work Submission to Turnitin for plagiarism check on Moodle Due date: Friday 23rd September (Week 8), 5pm 2016 B/B+ 26 Prepared by: H Thong © 2016 UNSW Foundation Studies, UNSW Global Pty Ltd. Sydney 2052 Australia. The original material prepared is copyright protected. Apart from fair dealing for the purposes of private study, research, criticism or review, as permitted under the Copyright Act 1968 (Cth), no part may be reproduced by any process without written permission. UNSW Foundation Studies 2016 B/B+ Semester 2 Unit 3: Choice of Business Structure Lecturer: Hui Thong Business Law Unit 3: Choice of Business Structure Overview Unincorporated business organisations Sole trader Partnership Incorporated business structures Company Concept of separate legal entity Concept of corporate veil Lifting of the corporate veil 2016 B/B+ 2 Introduction 2016 B/B+ Starting a business Consider a variety of questions Main question: Which business structure to adopt? 3 Choice of Business Structures 2016 B/B+ Numerous forms of structures available, including: Sole Trader Partnership Company 4 Choice of Business Structures Unincorporated Sole trader Partnership Incorporated Limited company Private (Pty Ltd) Public (Ltd) Unlimited company No liability company 2016 B/B+ 5 Choice of Business Structures 2016 B/B+ Main grounds relevant to selecting the most appropriate choice of business structure: Purpose, nature and objectives Formalities and cost Finance Management and control Taxation advantages Extent of liability Privacy and confidentiality 6 Sole Trader7 2016 B/B+ Sole Trader A person carrying on a business as an independent individual Easy to establish and run Owns and has full control of the business No disclosure requirements Access to limited resources/finance Risk of personal liability Liable for payment of tax 2016 B/B+ 8 Partnership9 2016 B/B+ Partnership 2016 B/B+ Exists between persons carrying on a business in common with a view to profit. Governed by Partnership Act Maximum of 20 partners Easy to establish Partners may provide an ongoing source of funds Control is divided between partners Not a separate legal entity (See Slide 14) Risk of personal/joint liability Income splitting No disclosure requirements 10 Company11 2016 B/B+ Company 2016 B/B+ An association of persons who satisfy Corporations Act 2001 (Cth) for registration Formalities: Created through the process of registration (incorporation) Separate legal entity (See Slide 14) Members of a limited company have limited liability Management is separated from ownership Taxed at a flat rate 12 Proprietary and Public Companies Maximum 50 shareholders Most suitable for use by a small business Restricted fundraising ability Less regulatory burdens than public companies Financial secrecy for small proprietary companies May be listed on ASX Raise funds from the public Subject to financial disclosure and more regulation 2016 B/B+ Proprietary company Public company 13 Legal Effects of Incorporation Upon the incorporation of a company, it becomes a separate legal entity, separate from its members and controllers 2016 B/B+ 14 Company as a Separate Legal Entity 2016 B/B+ Salomon v Salomon & Co Ltd [1897] AC 22 Facts Mr Salomon: major shareholder, director and secured creditor borrowed money from Mr Broderip, lent it to the company Company’s business failed; value of assets were insufficient to pay both Mr Salomon and company’s other creditors 15 Company as a Separate Legal Entity 2016 B/B+ Salomon v Salomon & Co Ltd [1897] AC 22 Issue Was Mr Salomon personally liable for debt owed to Broderip? Held No. Upon the incorporation of a company, it becomes a separate legal entity from its founders, directors, members and controllers 16 Corporation Veil The artificial screen that separates legal identity of company from its members/directors 2016 B/B+ 17 Lifting the Corporate Veil Courts are prepared to lift/pierce (disregard) the corporate veil in special and limited circumstances Courts may look behind the corporate veil to determine why the company was formed 2016 B/B+ 18 Lifting the Corporate Veil Avoidance of legal obligation Attempts by the owner to deliberately use the company to avoid legal/contractual obligations undertaken by them Corporate veil lifted to enforce legal/contractual obligations 2016 B/B+ 19 Lifting the Corporate Veil 2016 B/B+ 20 Gilford Motor Co Ltd v Horne [1933] 1 Ch 935 Facts Horne signed an employment contract with GMC promising not to take its customers when he leaves GMC Horne resigned and set up a company which targeted GMC’s customers Lifting the Corporate Veil 2016 B/B+ 21 Gilford Motor Co Ltd v Horne [1933] 1 Ch 935 Held Horne misused the corporate personality to avoid obligations under his employment contract when he left GMC Corporate veil lifted Lifting the Corporate Veil Effects of lifting the corporate veil No distinction between identity of company and identities of owners/directors Forces personal liability for debts of company onto owners/directors 2016 B/B+ 22 End of Lecture Students must: Read prescribed reading for Unit 3 (Choice of Business Structure) Attempt Tutorial Exercises BEFORE going to Tutorial in Week 4 2016 B/B+ 23 Prepared by: H Thong © 2016 UNSW Foundation Studies, UNSW Global Pty Ltd. Sydney 2052 Australia. The original material prepared is copyright protected. Apart from fair dealing for the purposes of private study, research, criticism or review, as permitted under the Copyright Act 1968 (Cth), no part may be reproduced by any process without written permission. UNSW Foundation Studies 2016 B/B+ Semester 2 Unit 4: Contract Law Lecturer: Hui Thong Business Law Unit 4: Contract Law Overview Introduction to contract law Definition of a contract Formation of a contract Offer Acceptance 2016 B/B+ 2 Introduction A contract is an agreement made between two or more parties with an intention of certain legal rights and obligations which the law will enforce. 2016 B/B+ 3 Formation of Contract Valid/binding from its specified form Must be a deed or under seal Written and signed by parties (witnessed) May be enforceable without consideration (See Unit 5) Examples: Gratuitous promises/gift Power of Attorney No particular form Can be written, oral, implied Must be supported by consideration (See Unit 5) Examples: Bus rides Purchase of clothes Formal contract Simple contract 2016 B/B+ 4 Formation of Contract 2016 B/B+ Bilateral v Unilateral Contracts Bilateral Contract Involves a promise in return for a promise Consideration is executory (See Unit 5) Unilateral Contract Involves a promise which is accepted by doing something Consideration is executed (See Unit 5) 5 Formation of Contract Essential elements of a valid contract Agreement = Offer + Acceptance Consideration (See Unit 5) Intention to create legal relations (See Unit 5) Agreement Consideration Intention Contract 2016 B/B+ 6 Formation of Contract Other things to consider Capacity of parties Genuine consent Legality of object/Purpose of contract 2016 B/B+ 7 Agreement Offer Acceptance Agreement 2016 B/B+ 8 Offer Promise (offer) made by the offeror Capable of acceptance by the offeree Offeror – Person making the offer Offeree – Person receiving the offer 2016 B/B+ 9 Offer Mere supply of information is not an offer Harvey v Facey [1893] AC 552 Facts H F: Will you sell us Bumper Hall Pen? Telegraph lowest cash price. F H: Lowest price for Bumper Hall Pen £900. H F: We agree to buy Bumper Hall Pen for the sum of £900 asked by you. 2016 B/B+ 10 Offer Harvey v Facey [1893] AC 552 Issue Was there an offer from Facey to sell the land for $900 to Harvey? Held No offer was made by Facey Facey was merely supplying information as requested 2016 B/B+ 11 Offer Offer must be distinguished from invitation to treat The general rule: Advertisements, brochures, catalogues and price lists amount to invitations to treat 2016 B/B+ 12 Offer 2016 B/B+ Partridge v Crittenden [1968] 1 WLR 1204 Facts Partridge advertised rare wild birds for sale It was an offence to offer for sale this rare species of wild birds Advertisements 13 Offer 2016 B/B+ Partridge v Crittenden [1968] 1 WLR 1204 Issue Was the advertisement an offer? Decision The advertisement was not an offer but an invitation to treat Advertisements 14 Offer 2016 B/B+ The same principle was applied for catalogues in Grainger and Sons v Gough [1896] AC 325 15 Offer Shop displays www.thamesweb.co.uk Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 Facts Drugs on display Customer select and took to the cashier which was supervised by a pharmacist 2016 B/B+ 16 Offer Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 Issue Were the goods displayed offers to sell by the shop owner? Decision The display of goods was an invitation to treat The customer made the offer to buy www.thamesweb.co.uk 2016 B/B+ Invitation to treat Offer popcorndisplays.com.au www.heraldsun.com.au H Thong Catalogues are invitations to treat even when the word “offer” or “offers” is used in the advertisement coles.com.au myer.com.au 17 Offer The general rule: Advertisements, brochures, catalogues and price lists amount to invitations to treat The exception: Advertisements which comes under the category of unilateral contracts are considered offers and not invitations to treat 2016 B/B+ 18 Offer Facts “£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied with each ball. £1,000 is deposited with the Alliance Bank, Regent Street, showing our sincerity in the matter”. laws.londoninternational.ac.uklaws.londo Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 2016 B/B+ 19 Offer Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 Issue Was the defendant’s to pay £100 contained in the advertisement a binding offer or an invitation to treat? 2016 B/B+ 20 Offer Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 Carbolic Smoke Ball Company’s arguments The advertisement was an invitation to treat No specific offer was made to any one person The advertisement, therefore, cannot be accepted Carbolic Smoke Ball Company had no intention to create legal relations 2016 B/B+ 21 Offer The advertisement is not an invitation to treat. It is an offer. The advertisement’s wording, together with actions of company, amounted to a clear promise to pay £100 to anyone who used its product according to the specified directions but contracted influenza Offer was made to “world at large” Mrs C accepted the offer by doing what is requested in the reward advertisement (unilateral contract) Offer Acceptance Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 Decision 2016 B/B+ 22 Offer Action of the company in placing £1,000 in bank account showed that the company was prepared to be bound by its promise (See Unit 5) Consideration in a unilateral contract is executed (See Unit 5) Intention to create legal relations Consideration Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 Decision 2016 B/B+ 23 Offer Section 18 of the Competition and Consumer Act 2010 (Cth) prohibits misleading or deceptive conduct (See Unit 10) Would CCA have assisted Mrs Carlill in her case against the Carbolic Smoke Ball Company? 2016 B/B+ 24 Offer Offer may be made to a specific person or persons, or to a class of persons, or to the whole world Offer must be clear, certain and final Offer must be communicated to offeree All terms must be brought to notice of offeree Offer may be revoked prior to acceptance Offer may lapse 2016 B/B+ 25 Offer Responses to an offer Accept the offer Reject the offer Make a counter-offer (See Slide 28) Take no action 2016 B/B+ 26 Acceptance Acceptance must be absolute/unqualified/unconditional 2016 B/B+ 27 Acceptance Counter-offer Hyde v Wrench (1840) Beav 334 Facts Wrench offered to sell land to Hyde for $1,000. Hyde responded by offering to buy the land for $950. Wrench refused to sell at that price and Hyde said he would pay $1,000. Wrench refused to sell. 2016 B/B+ 28 Acceptance Hyde v Wrench (1840) Beav 334 Issue Was there a contract? Decision No. Hyde’s offer to buy for $950 was a counter-offer A rejection of the original offer A new offer was made An offer once rejected cannot be revived by subsequent acceptance 2016 B/B+ 29 Acceptance Acceptance must be made in reliance on the offer R v Clarke (1927) 40 CLR 227 Facts Reward of £1,000 (Offer) – provide information to police Clarke had not seen the offer of a reward, gave information Clarke later tried to claim the reward 2016 B/B+ 30 Acceptance R v Clarke (1927) 40 CLR 227 Issue Was there acceptance by Clarke? Decision Clarke had acted in ignorance of the offer No valid acceptance 2016 B/B+ 31 Acceptance Acceptance must be communicated to offeror Acceptance must be communicated in the method prescribed 2016 B/B+ 32 Acceptance Acceptance can only be made by party/parties to whom offer was made Acceptance cannot be revoked without consent of offeror Acceptance must be made within time prescribed 2016 B/B+ 33 End of Lecture Students must: Read prescribed reading for Unit 4 (Contract Law) Attempt Tutorial Exercises BEFORE going to Tutorial in Week 5 2016 B/B+ 34