2010 Business Law Revision Booklet The Business Law final exam is 3 hours with 10 minutes of reading time. HOW TO ANSWER CASE STUDY QUESTIONS When answering this question student’s need to follow the format of: (i) state the issue (ii) state the law-this includes relevant legislation and cases (iii) apply the law to the facts (iv) state the conclusion Key words used in questions: Explain – students need to provide a definition and give reasons in their answers. ie they must try to answer the question why something happens or give details of the cause of something. An example will demonstrate understanding. Describe - Students need to write detail about what they are being asked. This will usually include a definition and an outline of the details. 1
Transcript
2010 Business Law
Revision Booklet
The Business Law final exam is 3 hours with 10 minutes of reading time.
HOW TO ANSWER CASE STUDY QUESTIONS
When answering this question student’s need to follow the format of:
(i) state the issue(ii) state the law-this includes relevant legislation and cases (iii) apply the law to the facts(iv) state the conclusion
Key words used in questions:
Explain – students need to provide a definition and give reasons in their answers. ie they must try to answer the question why something happensor give details of the cause of something. An example will demonstrate understanding.
Describe- Students need to write detail about what they are being asked. This will usually include a definition and an outline of the details.
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Distinguish-Define and compare twothings showing that are not the same.
Advantage- Students write about thebenefits or the good things
Disadvantage-Students write about the costs or the bad things.
How-Write about the way somethinghappens.
Example-Students provide a case study or real life sample to help explain their answer.
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Major concepts and definitions to know and understand:
Write a short definition and include an example if possible to show understanding
Topics 1 - 4: Law Making
Main sources of law in Australia-common law and statute law……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Civil and criminal law……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Separation of powers……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Concurrent law making powers……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Exclusive law making powers…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Residual law making powers…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Section 109 of the Australian constitution………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Court hierarchy – state and federal court system…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Ratio decidendi……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Topic 5: Business Structures
Characteristics of a sole trader- advantages and disadvantages………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Elements of partnership……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Features of a partnership……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Features of a company- advantages……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Types of company……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Creation of Agency……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Authority of an Agent……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Duties of an Agent…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Topic 7: Tort Law
Definition and examples of Tort law……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Three requirements to prove negligence……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Defences to negligence……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Damages in negligence cases…………………………………………………………………………………………
6 elements of a simple contract…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Express and implied contracts……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Exclusion clauses in contracts……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Remedies for breach of contract…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Topic 12: Consumer Protection
The Trade Practices Act 1974…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Misleading and deceptive conduct: Section52…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
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Australian Competition and Consumer Commission (ACCC)……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Conditions implied into consumer contracts by the Act.……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
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Summary of Agency Law
o Definition and featureso Principalo Agento Third party
o Creation and authority of Agency o Actual - Agent appointed-verbal or writteno Apparent - Person gives the impression they are the agentCase: Tooth v Lawso Implied - Position or circumstances of the person indicate agencyo Ratification - Approval by the principal after the agent has performed
an acto Necessity
Person in control of another person property An emergency or commercial necessity Impossible to communicate with the owner of the property Agent must act in good faith and the interests of the owner
Case: Great Northern Railway v Swafieldo Duties of an agent
o Obey instructionso Act in persono Act in the principal’s best interesto Not make a secret profit or secret commissiono Take care of the property of the principalo Keep separate and proper accountso Use reasonable skill and diligence
o Agents rightso Remunerationo Reimbursemento Lieno Stoppage in transit
o Types of Agentso Specialo Generalo Universal
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Summary of Negligence Law
o Did the defendant owe the plaintiff a duty of care?o Foreseeability Test
Was it predictable that the defendant’s conduct could injure or cause harm to the plaintiff?
o Vulnerability and control test Was the defendant able to control the plaintiff and was the
defendant aware of this ability to control? Did the plaintiff rely on the defendant? Was the defendant under a legal obligation to protect the
interests of the plaintiff?o Did the defendant breach the duty of care?
o The risk of injury must be reasonably foreseeableo The defendant must fail to do what a reasonable person would have
taken preventative measures against risk of harm. Likelihood that harm would occur if care were not takenCase: Bolton v Stone Likely seriousness of the harm
Case: Paris v Stepney The burden of taking precautions to avoid the risk of harm The benefit of the activity that creates the risk of harm.
o Did the plaintiff suffer damage?o Plaintiff must prove that the breach of the duty was an effective cause
of the damage. – Did the defendant cause the harm? But for the defendant’s action would the plaintiff have suffered
damage?-Is it appropriate for the defendant to be made liable?o Remoteness
Is the damage caused too remote from the defendant’s act or omission to act?
o Defences to negligenceo Contributory negligenceo Voluntary assumption of risk
o Categories of negligence relevant to businesso Pure economic losso Liability for defective products.
Case: Donoghue v StevensonCase : Grant v Australian knitting Mills
o Negligent misstatementCase: Shaddock & Associates v Parramatta City Council
o Professional negligenceo Vicarious liability (for the conduct of others)o Occupier liability
Case: Australian Safeway Stores v ZaluznaCase: Hackshaw v Shaw
o Motor vehicle accidentso Damages
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o Special damageso General damageso Nominal damageso Punitive damages
Summary of Contract Law
o Formation of a contracto Express contracts-written, verbalo Implied contracts-by conduct
o Classification of contractso Valid-contains 6 elementso Void- no contracto Voidable-can be repudiated by one party
o Intention to create legal relationso Social and domestic agreements – no valid contract, can be rebutted
Case: Balfour v BalfourCase: Wakeling v Ripley
o Commercial and business agreementso Agreement
o Offer rules Made in writing verbal or implied Invitation to treat
Case: Boots Cash Chemists case Offer to the world at largeCase: Carlill v Carbolic Smoke Ball Co Terms must be communicated to the offeree Supply of information is not an offer Conditions in the offer must be followed
o Acceptance rules Acceptance must be certain Acceptance must be in reliance of the offerCase: R v Clarke Acceptance must correspond exactly with the offer Can be communicated in writing, verbally or implied by
conduct An offer can only be accepted by the person to whom the offer
was made Acceptance through the post given when the letter is posted
o Considerationo Exchange of mutual promiseso Must be of some value but it need not be adequateo Consideration can be present and future but not pastCase: Roscorla V Thomas
o Capacityo If there is no capacity then the contract is voidableo Minors
Contracts for necessaries Beneficial contracts of service
o People affected by alcohol or drugs Was the person capable of understanding?
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Was that person’s condition known by the other partyo Bankrupts
o Mistake Unilateral mistake Mutual mistake Common mistake
o Duresso Undue influenceo Unconscionable conduct of the other part
o Legalityo Crime or tort on a third party-no contracto Against public policy-no contract
o Terms and Representationso Representations – discussions before the contracto Terms – part of the contract
Express terms Conditions – essential term in the contract Warranties – minor importance to the contract
Implied terms By the courts By statute By usage or custom
o Exemption clauseso Limit or exclude the liability of a party for damage or loss to another
partyo Cannot be used if there is misrepresentationo Cannot limit liability for negligenceo Could breach section 52 of the Trade Practices Act
o Termination of the contracto Performanceo Agreement of the partieso Operation of the lawo Frustrationo Breach of the contract
Actual breach – obligations not performed Anticipatory breach – not going to perform in the future
o Remedies for breach of contracto Recission – cancel the contract if breachedo Damages
General damage – exact amount not certain
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Special damage – specified amountso Specific performance – court directs a party to perform obligationso Injunction – courts stop a person from breaching a contract or
committing a wrong act.
Summary of actual case studies
The facts of the case, the area of law and the decision are given. You must give reasons for a decision in the exam.These case names can be used where relevant in your exam to support your answers.The decisions represent a precedent which will be used in other cases where the legal principles (ratio decidendi) are the same but the facts may be different.
NEGLIGENCE Case law
Case: Great Northern Railway v Swafield
Facts: The plaintiff company agreed to transport the defendant’s horse to a particular railway station. On arrival there was no one to take possession of the horse. The plaintiff company sent the horse to a commercial stable to be cared for. The service required payment.Decision: The court held an agency of necessity had been created, and the owner of the horse had to pay. The 4 conditions of an agency of necessity had been met.
Case: Tooth V Laws
Facts: The defendant had been the licensee of a hotel. He allowed new owners to keep his name over the door even though he had sold the business. The new owners were supplied with beer by Tooth and Co. This company sued the defendant for the cost of the beer.Decision: This a case of apparentcreation of agency andapparent authority of agency.The court heldthat the defendant was liable and could not deny that the new owners were doing so as his agents because the sign on the door held that the defendant was the principal.
Case: Donoghue v Stevenson
Facts: A ginger beer manufacturer sold a bottle of ginger beer to a retailer. It was sold to a customer who gave it to a friend to drink. The drink contained a dead snail which had come from the manufacturer. The friend became ill and sued the manufacturer for negligence.Decision: The court held that the manufacturer owed her a duty of care to make sure there was nothing in the drink that would cause harm even though there was no contractual relationship with the manufacturer. The defendant was negligent and liable to pay compensation. The manufacturer is liable for defective products.The 3 conditions for negligence had been created by the court in this decision.
Case : Grant v Australian knitting Mills
Facts: The plaintiff had bought some underwear from a shop. It was contaminated with a chemical that caused him to develop a severe rash. The plaintiff sued the shop as well as the manufacturer.Decision: The court held that the manufacturer was liable for defective products and owed a duty of care which was breached. The 3 conditions for negligence were involved in this case.
Case: Bolton v Stone
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Facts:The plaintiff was struck by a cricket ball that was hit from a cricket ground while a cricket match was being played. The ball passed over a fence and struck him.Decision: The court held that the defendant liable for damages caused by a ball struck out of the groundover a high fence. There was only a slight possibility of harm. The ball going out of the ground was a very rare event. A reasonable person would ignore any risk of being hit.Duty of care was not breached.
Case: Paris v Stepney Borough Council
Facts:The plaintiff was employed by the defendant council. He had sight in only one eye. The employer knew this but failed to supply protective glasses for work the defendant was doing where there was a risk of injury. The plaintiff suffered an accident while working and lost the sight in his good eye.Decision: If an employer knows that the plaintiff is suffering from a disability that would increase the gravity of injury, should an injury occur, then precautions need to be taken to avoid injury. Duty of care was breached because precautions were not taken due to the gravity of the possible injury.
Case: Shaddock & Associates v Parramatta City Co
Facts: A solicitor, acting on behalf of Shaddock, contacted the Parramatta Council to ask if a property was affected by a road widening proposal. The council employees issued a form and made other statements that wrongly showed the property was not affected. Shaddock later purchased the property and suffered losses when road widening took place. He sued the council for negligent misstatement.Decision: Shaddock received compensation. The court held that the council gave information to a person whom they knew would rely upon it and they were under a duty of care to make sure the information was correct.
Case: Australian Safeway Stores v Zaluzna
Facts: The plaintiff, a shopper, slipped on the tiled floor of a Safeway supermarket on a wet morning.Decision: This is the standard of care owed by an occupier of premises to those entering the premises. The court said that the plaintiff was a lawful entrant to the shop and that the defendant owed a duty of care to avoid the risk of injury to all persons entering the premises. The duty was breached.
Case: Hackshaw v Shaw
Facts: A farmer shot at a car which was on his property. A person in the car was stealing petrol and the reason for the shooting was to stop the car. It was dark and the thief was standing next to the car. A passenger in the car was hit by a bullet and injured.Decision: This is about occupier liability and their duty of care. The farmer was held to be liable for negligence to the passenger. Shooting at the car created a danger of injuring a person in the vehicle, which would have been reasonably foreseen by the farmer.
CONTRACT Case Law
Case: Balfour v Balfour
Facts: The defendant was a civil servant working in Ceylon (Sri Lanka). When he was home on leave in England, it was agreed his wife would remain in England while he would return to Ceylon and he promised to pay her money each month for living expenses. The defendant breached this agreement and his wife sued him, alleging breach of contract.Decision: The court held that there was no intention to create legal relations due it being a domestic agreement. There was no contract.
Case: Wakeling v Ripley
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Facts: Ripley was a bachelor who lived in Sydney. The plaintiffs were Ripley’s sister and her husband, who was a university lecturer in England. Ripley tried to convince his sister to move to Australia. He promised to give a home and living if they moved to Australia. And that he would leave all property to his sister on his death. The sister and her husband agreed. They sold their house and the husband resigned from his job.After being in Australia for a year, the parties had a serious fight and Ripley sold his house and cut the sister out of his will. The plaintiffs sued for breach of contract.Decision: The court held there was intention to create legal relations despite the fact it was made between family members. The plaintiffs had sacrificed a lot by leaving a job and moving to Australia. Therefore they could sue for a breach of contract.
Case: Boots Cash Chemists case
Facts:Boots chemists opened up a self service chemist shop. Customers could choose medicines and take them to the cash register. Previously medicines were always kept behind the counter. The pharmaceutical society argued that the display of medicines was an offer that was accepted when the customer selected one of them. This was before they could be checked by the pharmacist. They argued that this breached regulations saying that medicines need to be checked by the pharmacist. Decision: Goods on display were an invitation to treat. An offer is made when the customer takes the goods to the pharmacist for checking and then to the register for payment.
Case: Carlill v Carbolic Smoke Ball Co
Facts: An advertisement was placed in several magazines offering a sum of money to any reader who contracted a cold or flu from using the company’s carbolic smoke ball three times a day for two weeks.The offer was made to anyone reading the advertisement.Decision: The court held this was an offer to the world at large and that the plaintiff had a right to claim the money as she had accepted the offer.
Case: R v Clarke
Facts: A reward was offered for information leading to the arrest and conviction of persons responsible for the murder of two policemen. On June 6 two persons X and Y were arrested and charged with murder of the policemen. On June 10 Y gave evidence leading to the conviction of X and another person Z. for the murders. Y was released and claimed the reward.Decision: The court found that Y had only produced information to the police in order to escape the murder charge. Y did not accept in reliance of the offer when he gave information so there was no acceptance of the offer of a reward. He could not claim the reward.
Case: Roscorla V Thomas
Facts:Roscorla purchased a horse from Thomas. After the contract was completed, Roscorla demanded a promise from Thomas that the horse was healthy. The promise was given and later it was found that the horse was sick. Roscorla sued for breach of contract.Decision: There was no consideration because the contract had already been completed before the promise was made. Therefore it was past consideration. There was no breach of contract because the promise was not a valid consideration
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Sample Revision Questions
Section A
This section consists of 20 multiple choice questions.
Advice
In the 10 minutes reading time, students can decide most answers and answer questions quickly when the writing begins.Students choose the best answer. If they don’t know an answer they should eliminate stupid answers that are definitely wrong and by a process of elimination they will be left with the correct answer.If students can’t do a question they should leave it and come back to it before completing the exam.
Multiple Choice questions
. 1. A key feature of a partnership is:
(a) mutual agency
(b) limited liability
(c) separate legal entity
(d) all of the above
2. Negligence is :
(a) a criminal wrong
(b) an offence punishable by imprisonment and/or a fine
(c) an offence punishable by imprisonment
(d) a civil wrong
3. Exemption clauses are used in contracts to:
(a) limit liability
(b) exclude liability
(c) increase liability
(d) limit or exclude liability
4. In an agency there are:
(a) two main parties
(b) four main parties
(c) three main parties
(d) five main parties
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5.. A business established to carry out a single once-only project is likely to be a:
(a) partnership
(b) joint venture
(c) sole trader
(d) company
Section B
This section has 10 short answer questions, each worth 2 marks for a total of 20 marks.
Advice
To distinguish between two things means to find the differences between them. A good word to use when distinguishing concepts is ‘whereas’. This allows you to connect the two concepts in one sentence and show the difference between the two.eg. Question: Distinguish between a lease of land and a licence to use land.Answer: A lease gives someone exclusive possession and use of the land whereas a licence does not allow exclusive possession of the land.In some cases the differences are obvious from providing the basic definitions but try to show any differences between the concepts in your answers.
1. Distinguish between common law and statute law…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
2. Distinguish between a binding precedent and a persuasive precedent.…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
3. Distinguish between actual authority and apparent authority.…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
4. Explain the difference between vicarious liability and occupier’s liability.…………………………………………………………………………………………
5. Distinguish between innocent misrepresentation and negligent misrepresentation.…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Case Study Questions
Advice
Follow the formula when answering case study questions in Section C.1. State the issue2. State the law- include relevant case law.3. Apply the law to the facts4. State the conclusion
Sample Case study question and answer
Lizzie who is aged 16 years enters an apprenticeship agreement with Bob’s pies Pty Ltd. She is trainingto be a baker. The apprenticeship is to last one year. During that time she will learn all aspects of bread making. She is given an allowance of $30 per week, free accommodation and meals. She must work 10hours a day, 6 days a week and must get permission from her employer if she wishes to go out at night. She decides to leave the apprenticeship. The owners of Bob’s pies Pty Ltd are angry and want to sue Lizzie for breach of contract. Advise Bob’s pies Pty Ltd.
1. The issue here is whether there is a valid contract or not. It concerns thecapacity to contract and whether there is an enforceable contract between Lizzie and Bob’s pies Pty Ltd.2. The area of law is to do with contracts for minors that are beneficial contracts for Service. Minors can enter into contracts where there is some benefit for service. If there is a benefit the contract will be enforceable. Include a relevant case study by name. (inthis answer there isn’t one we use but in other case questions there is usually a case you can mention)3. There is a contract for service as this is an apprenticeship agreement. But is it a ‘beneficial’ agreement? The advantages are learning about bread making, freeaccommodation and meals. However the money is poor, hours of work are harshand the need for permission is harsh and unrelated to her duties. Disadvantages out weigh the advantages.4. This is not a beneficial contract of service. There is no breach of contract and she is free to leave.
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1. Sally while walking past K-Mart spotted a dress in the window priced at $9. Shewalked into the shop and intended to buy the dress. The shop assistant told her it was a mistake. The price should be $90. Advice Sally of her rights.
2. Aaron returns a lost cat to its owner. The cat was in his backyard and had atag showing its name and address. While walking home, Aaron sees areward for the cat on a power pole. Is Aaron entitled to the reward? Why or why not?
3. Angie was very drunk when she boarded a tram in Melbourne. Shedemanded a ticket to nowhere. The conductor reeled at the breath and soldher a monthly unlimited travel pass for $200. She got off the tram two stops
later. The following morning Angie found the pass and could remember the incident. She never uses trams normally and doesn’t want the ticket. What can Angie do?
4. Dunstan and Jenkin entered into a contract whereby Jenkin was to loadgrain in an Italian port. War was suddenly and unexpectedly declared between Australia and Italy prior to the performing of the contract, which meant that Jenkin would be involved in trading with an enemy nation. When he refused to do so, Dunstan sued for breach of contract. Would he be successful? Why/Why not?
