Fundamentals of Business Law, 7th edition

M.L Barron

Model Answers

Chapter 1

‘Agreement settles Wik native title claim’ (page 15)

  1. The determinations recognise the Wik and Wik Way peoples’ native title rights and interests over
    530 sq km on the west coast of Cape York Peninsula.
  2. The legal question that was raised was whether native title could exist over land the subject of a pastoral lease.
  3. The 1996 decision of the High Court in the Wikcase was significant because it found that native title rights may coexist with some pastoral leases.
  4. Consent was reached through negotiations between the Wik and Wik Way peoples and other groups with interests in the area including Commonwealth, state and local governments, pastoralists, indigenous groups, fishers and infrastructure groups.

Chapter 2

‘The Federal Magistrates Court of Australia celebrates 10 years’ (page 39)

  1. It was the first lower-level federal court since the passage of the Judiciary Act in 1903.
  2. Avoiding undue delay for litigants.
  3. The jurisdiction of the court has broadened in the areas of general federal law to include bankruptcy, human rights, copyright, migration, industrial law, trade practices, privacy, administrative and admiralty law.

Chapter 3

‘Right winger is a “racist”’ (page 106)

  1. The action for defamation was dismissed on the grounds that the article that was at the centre of the allegation was regarded as fair comment.
  2. The magistrate said the plaintiff was not entitled to damages for being described as a racist because he was a racist. The magistrate regarded the other remarks made about Mr Brander as ‘reasonable satirical attacks in the context of robust political debate’.
  3. The defamation action was brought by Mr Brander against Mr Ryan of Message Press. In 1995, Ryan wrote a column claiming Mr Brander suffered from constipation, had a mental disorder, was a brat, behaved in a childlike manner and gained office by winning a urinating contest.
  4. The defences that were relied upon were the defences of qualified privilege and fair comment.

Chapter 4

‘Fincorp director guilty on criminal charges’ (page 129)

  1. Dishonestly using the position of director of a company with the intention of directly or indirectly gaining an advantage for yourself.
  2. ASIC (Australian Securities and Investments Commission).
  3. The Commonwealth Director of Public Prosecutions prosecuted the charges.

Chapter 5

‘Notes deliver more than promised’ (page 153)

  1. John Pettit auctioned his collection because the auction catalogue would be a permanent record of the holding. It would also ensure the lots were distributed fairly among his clients and the dispersal would be relatively swift compared with the piecemeal sell-off a dealer sale would imply.
  2. By selling through an auction house that offered goods GST-inclusive, and absorbing any sales implications himself, he would encourage private buyers. Those buying for their superannuation funds would immediately be able to imput the sales tax credit they inherited. It would also establish a market for promissory notes.
  3. The sale grossed $400 000.

Chapter 6

‘AUSTRAC accepts enforceable undertakings from providers of gambling services’ (page 182)

  1. It required them to appoint an external auditor to assess their compliance with the AML/CTF Act.
  2. The undertakings were a means of ensuring the Group rectified the deficiencies identified in the external auditor’s report, in a timely manner.
  3. Under the AML/CTF Act, the AUSTRAC Chief Executive is empowered to accept enforceable undertakings as a means to ensure compliance with the AML/CTF Act, including as an alternative to taking criminal or civil enforcement action.

Chapter 7

CONSOLIDATION QUESTIONS

  1. The six elements required to form a contract are:
  2. intention to create legal relations
  3. offer and acceptance
  4. form and/or consideration
  5. capacity of parties
  6. reality of consent
  7. legality of object.
  8. An intention to create legal relations is not presumed in social agreements. If it were, the courts would be flooded with litigants every time a social agreement was breached. The parties to such an agreement usually never intend their agreement to be legally binding.

Chapter 8

CONSOLIDATION QUESTIONS

  1. A voidable contract is a contract that one of the parties will be entitled to rescind. This right will usually be given to the injured party.

An illegal contract is a contract where the purpose or object of the contract is illegal, pursuant to either common law or statute.

An unenforceable contract is a contract where all the essential elements are present, but a technicality may make it impossible for the contract to be enforced. For example, a contract may be required to be in writing but it is not.

  1. Persons of unsound mind have limited contractual capacity. Persons of unsound mind will be bound by the contracts they make unless they can prove two matters: first, that they did not understand what they were doing because of their condition; and, second, that the persons with whom they were contracting knew of their impaired condition. If these matters are proved, a contract is voidable at the option of the person of unsound mind.

Chapter 9

‘Farnham–Dame Kiri shows “a sure sell-out”’ (page 294)

1.They were suing for breach of contract, breach of contractual warranty equities and misleading conduct over the cancellation of the scheduled 2005 concerts.

2.The legal issue was whether any agreement had been made in relation the concerts.

3.Leading Edge did not have signed contracts with Farnham or Dame Kiri, but the company claimed verbal agreements had been reached with both entertainers.

Chapter 10

‘Ending tenancy agreement after Cyclone Yasi’ (page 328)

  1. Parties must give a formal notice to end a tenancy agreement for properties that are unlivable after Tropical Cyclone Yasi.
  2. The notice must be given within one month of the natural disaster occurring.
  3. The Residential Tenancy Authority’s free dispute resolution service may assist to resolve the dispute.

Chapter 11

‘Insurance council rejects flood cover criticism’ (page 378)

  1. He states there are grey areas and this is why reform is necessary. Policies are complicated in terms of whether flood cover is for river flood, flash flood or a problem with storm water.

Chapter 12

CONSOLIDATION QUESTIONS

  1. A contract for the sale of goods is a contract whereby the seller transfers the property in goods to the buyer for a money consideration called the ‘price’. The three requirements that must be present before a contract will be regarded as a contract for the sale of goods are:
  • the subject matter of the contract must be goods
  • a transfer of property (ownership) is required
  • there must be a money consideration.
  • ‘Property in goods’ relates to the ownership of, or title to, goods. ‘Possession of goods’ refers to the custody or control of goods. One person may have possession of goods while another may have property in, or ownership of, the goods.

Chapter 13

‘New legal protections for Australian consumers have begun’ (page 423)

  1. The ACL covers:
  • national consumer protection for unsafe products
  • national protection for unfair selling practices
  • guarantees when consumers acquire goods and services
  • unfair contract provisions.
  1. When consumers buy products or acquire services the consumer guarantees will apply. It gives consumers remedies if there is a problem with the goods or service. For example, if the goods are not of acceptable quality, do not correspond with their description or are not fit for a disclosed purpose.
  2. The ACCC (Australian Competition and Consumer Commission) will enforce the ACL.

Chapter 14

‘Consumers reminded of new National Consumer Credit regime’ (page 475)

  1. The new regime commenced operation on 1 July 2010.
  2. ASIC (Australian Securities and Investment Commission) will regulate the new system.
  3. The states and territories referred their law-making power with respect to consumer credit to the commonwealth. Each state and territory passed a similar piece of legislation to achieve this.

Chapter 15

‘ACCC welcomes record penalties against Visy: calls for stronger cartel law’ (page 497)

1.Visy had engaged in price fixing and market sharing.

2.A penalty of $36 million was ordered against Visy Board Pty Ltd and its director and owner, Richard Pratt. A penalty of $1.5 million was imposed on CEO, Harry Debney, and $500 000 on former general manager, Rod Carroll.

3.Because it was the most serious cartel case the court had seen in the thirty years since price fixing had been prohibited by statute. The conduct was a premeditated fraud on Australian consumers. The conduct was deliberate and had a huge impact on Australian consumers.

4.It replaced the ACCC leniency policy and it encouraged Amcor and its executives to come forward and provide information and evidence against Visy with the incentive of complete immunity from prosecution.

Chapter 16

‘ASIC and ACCC promote access to guidance on fair debt collection practices’ (page 522)

1.The booklet is designed to assist consumers who experience problems dealing with debt and debt collectors. The ACCC produced the booklet because they receive complaints about debt collection activity.

2.The booklet contains practical advice and information about what to do in potentially stressful situations that can arise when handling debts. It also provides useful guidance and tips on how to manage debts and where to go for help in a debt crisis. The booklet provides guidance regarding what is unacceptable conduct by debt collectors.

Chapter 17

‘Copyright plea tries to join dots to traditional owners’

(page 536)

  1. This material would be categorised as ‘artistic work’.
  2. Section 31 of the Copyright Act provides protection.
  3. Section 31 prevents another person from doing any of the following in relation to the work:
  4. reproducing it in a material form
  5. publishing the work
  6. including it in a television broadcast.
  1. The practices described in the article would be covered under the prohibition on ‘reproducing’ the work.

Chapter 18

‘Sex, lies and real estate’ (page 591)

  1. The Conveyancing Act, which covers transactions, and the Trade Practices Act (renamed the Australian Competition and Consumer Act 2010), which governs the behaviour of the parties to a transaction, are the main Acts governing the conduct of agents in relation to property transactions.
  2. Customers can sue for damages.
  3. Courts are generally unsympathetic because buyers know that agents who are selling houses are acting for the vendor. They have a duty to get the best possible price for their client. There should be an onus on buyers to do their own checks regarding the property. There is plenty of time to do these checks between exchange of contracts and settlement.
  4. Case 1 involved a misstatement of council rates of more than half by an agent. The plaintiff was successful in showing there had been a false and misleading misrepresentation regarding the cost of the rates. However, they were unable to show that the property’s value was less than the market value as a result of the misrepresentations and therefore their claim failed.

Case 2 involved misleading and deceptive conduct by an agent regarding whether a unit it was selling could be lived in. On appeal the case was successful by the owners who bought it on the basis that it could be lived in. It could not be lived in because of the zoning requirements of the council.

Chapter 19

‘Law firm’s brawl over $1m bonus’ (page 608)

  1. He claimed his final payout should have been $1.7 million rather than $400 000. Mulaney alleges that a $1 million bonus was paid to Mr Gordon when that amount had been earmarked by the firm as ‘post-settlement expenses’. He claims he would never have accepted the $400000 amount if he had known the true state of the profits from the two breast implant cases.
  2. Mrs Balaam received $18 000. She found it hard to believe the amount could be so small and that the amount would cover less than a third of her medical costs. She questions whether the firm was acting in her best interests.

Chapter 20

‘Gold Coast bankrupt jailed for 9 months for not disclosing bankrupt status’ (page 640)

  1. The court needed to send a clear statement to bankrupts and without that there would great detriment to both debtors and creditors.
  2. To provide a personal insolvency system that minimises the impact of financial failure on the community, produces equitable outcomes for debtors and creditors and enjoys public confidence through the application of bankruptcy laws, regulation and trustee services.

Chapter 21

‘Government seeks additional $70 million for redundant workers’ (page 691)

  1. GEERS is a payment scheme established to assist employees who have lost their employment due to liquidation or bankruptcy of their employer and who are owed basic employee entitlements.
  2. The number of liquidations, the number of claimants, the extent of their outstanding entitlements and the industrial instruments which determine their entitlements.
  3. The government announced a $300 million measure to ensure redundant workers get assistance and support immediately rather than having to wait for three months. Twenty thousand training places have also been made available for people who have been made redundant. Certain redundant workers enrolling in training courses will receive a Learning and Training Bonus. $155 million has been targeted to encourage employers, group training organisations and training providers to take an out-of-trade apprentices and trainees.

Chapter 22

‘Fair Work Australia summit’ (page 724)

1.They protect conditions like hours of work, public holidays and redundancy entitlements, as well as annual leave, personal and parental and long-service leave

2.Because the emphasis is on enterprise bargaining and reforms did not want a return to any form of centralised wage fixation.

Employees and employers will go to the one place to obtain information, advice and assistance regarding workplace issues and to ensure compliance with workplace laws

Chapter 23

‘New national OHS laws ready for release’ (page 752)

  1. An exposure draft of the model OHS Act, discussion paper, key administrative regulations and the consultation regulation impact statement (RIS).
  2. It will benefit workers across all industries by better protecting the lives and health of Australians. The same law will apply to employers throughout Australia.

Chapter 24

‘A kiss is just a kiss’ (page 779)

  1. A TV advertisement for Sony Handycam that showed a young woman transforming into an older woman as she held a kiss with a young man.
  2. People complained about the Sony ad because they believed the image of an older woman and a young man in an embrace sent the wrong message—some suggested even paedophilic references. The Bonds ads were complained about because it was alleged they were inappropriately suggestive.
  3. They said neither complaint should be upheld. There was nothing illegal in the ads.

Chapter 25

‘ACMA launches first Do Not Call Register investigation (page 815)

1.It was investigated following numerous complaints from people listed on the Do Not Call Register who continued to receive calls from the company.

2.More than 1.6 million registrations have been received.

Chapter 26

‘Almost 90 per cent of Australian internet users now making online transactions’ (page 828)

  1. 82%
  2. Travel goods and services; event, concert or movie tickets; household goods such as furniture, electrical appliances and computer equipment.
  3. Convenience and lower cost were the most common reasons for purchasing online.