Develop and update legal knowledge for business compliance
TAFE ID E2022 SITXGLC001A
Chapter: 1
Our Legal System
§ Objectives
After reading this chapter, you should be able to:
– Identify the main sources of law
– Describe the federal and state court systems
– Outline the legal dispute process
§ Defining Law
§ Law is a body of rules to be obeyed by every person in society
§ Common Law – 1
1st main source of the law,
§ also called judge-made law or case law
§ Common Law is the body of common legal principles (rules) developed by judges over time
– Derived from common law of early England
– Established & accepted legal rules made by the judges of the highest court in our legal system
– Commonly followed by all judges within the system to decide legal disputes in their courts
– Contracts & Negligence rules are largely based on common law
§ Common Law – 2
§ Another separate body of Judge-made law is known as Equity:
– based on fairness
– Same courts apply common law and equity rules
§ Common law is maintained because of
precedent:
– Precedent is a legal convention followed by all judges in our legal system
– The same legal rule to be applied to similar fact situations in subsequent cases in same court hierarchy
– Precedent ensures uniformity, certainty and consistency in the application of common law rules by judges
§ Legislation
2nd main source of law
§ Legislation is a law passed by parliament
§ Also referred to as statute, enactment or Act of parliament
§ Statute contains numbered sections, called statutory provisions
§ Parliament - 1
§ Is an arm of government
§ Is an assembly of elected members
§ Makes legislation
§ Each parliament is given power under its respective constitution
§ Australia has:
• The Commonwealth Parliament (federal) which makes legislation for the whole of Australia, e.g.
– Income Tax Assessment Act 1997 (Cwlth)
• State Parliaments which pass legislations for the states, e.g.
– The Fair Trading Act 1987 (NSW) – applies only to NSW
§ Parliament - 2
§ Can make new laws (ie legislation)
§ Can amend or cancel existing laws (ie legislation)
§ Parliament-made laws are supreme over common law
§ Delegates specific legislative powers to other bodies, e.g.:
– Regulations:
• Made by the Australian governor-general or State governors
• Made by government ministers or departments
– By-laws and ordinances:
• Made by local councils
– Mandatory industry codes of conduct:
• Made by statutory authorities
– Industrial awards:
• Made by industrial relations commissions
§ Areas of law based on legislation include:
– Property law
– Consumer protection law
– Taxation law
§ The Australian Constitution - 1
A written constitution is a document that creates and defines powers for government
§ In Australia we have:
– A national constitution
– State constitutions for each state
§ A British Act established the Australian Constitution, which Applied from 1 January 1901
§ The Australian Constitution - 2
§ The Australian Constitution created a federal system of government for Australia
§ The national government is also called:
– The Commonwealth
– The federal or Australian government
§ The federal system comprises:
– A central national government
– Six state governments
– Territories (NT & ACT) are controlled by the national government
§ The Australian Constitution - 3
§ Gives limited legislative powers to the federal parliament
§ This allows the federal parliament to pass Commonwealth legislation (statutes)
§ Each state constitution allows the state parliament to pass state legislation
§ Under the national constitution, federal parliament is given exclusive powers to legislate in matters such as defence & customs
§ In taxation and industrial relations both the Commonwealth and the states have powers to pass laws
§ Any matters not mentioned in the Australian Constitution are left to the states to pass their own laws on
§ The Australian Constitution - 4
§ Section 109 of the Australian Constitution deals with any conflicts between valid federal legislation and valid state legislation:
– Federal law always prevails over an inconsistent state law
§ Section 128 provides that the Constitution can be changed only by holding a nationwide referendum
– Any constitutional change approved by parliament must be supported by a national majority of voters, as well as a majority of voters in at least four states
§ The Australian constitution also created the High Court of Australia
– The ultimate court in the Australian court system
– The court of final appeals for legal disputes
– Has the sole power to decide legal disputes between governments in our federal system
– It is the only court allowed to interpret the meaning of the Australian Constitution
§ The System of Courts
§ Courts are formal venues where judges (or magistrates) decide legal disputes between contesting parties
§ In Australia there are hierarchies of commonwealth courts and the state courts
§ Courts in each hierarchy are given powers to hear specified legal matters
§ Commonwealth Courts
Commonwealth courts deal with legal disputes involving commonwealth laws
§ The High Court
The highest court in Australian legal system
Its role includes:
– Dealing with disputes between states
– Dealing with disputes between states and Commonwealth
– Hearing appeals from other Commonwealth courts and state courts
§ The Federal Court
The main court dealing with matters of Commonwealth law
It hears disputes involving:
– Bankruptcy
– Immigration
– Social services
– Intellectual property – e.g. copyright
– Trade practice legislation
– Income tax
– Federal industrial law
§ The Family Court
Deals with family law matters such as:
– Divorce
– Children's arrangements after separation and divorce (contact & residence)
– Maintenance
– Property settlements
§ Federal Magistrate Courts
Lower-level federal magistrate courts also deal with family law and other federal laws
– Provide a simpler, cheaper & more accessible alternative for legal disputes
– Appeals go to Federal Court or Family Court, as appropriate
§ State Courts - 1
Deal primarily with matters involving state laws
Each court had defined power to hear civil claims or criminal prosecutions:
– Civil claims - people suing each other for compensation
– Criminal prosecutions - state officials prosecuting accused people for offences
§ State Courts - 2
The 3 levels of State Courts
§ The Supreme Court
Each state and territory has its own Supreme Court which is the highest court in the state system
§ Supreme Court can hear:
– Civil claims for any amount (large & complex claims)
– Prosecutions for the most serious offences; e.g. murder
– Appeals from lower courts
§ Appeal can be made from Supreme Court to the High Court of Australia – if High Court gives permission
§ District /county courts
§ Local / Magistrates Courts - 1
§ Local / Magistrates Courts - 2
Have small claims division for hearing minor claims
They decide:
– Prosecutions for minor criminal offences - not requiring a jury – e.g.
• motor traffic infringement
• petty theft
• vandalism
– Committal proceedings: preliminary hearing for prosecutions of serious criminal offences:
• Murder
• Armed robbery
§ Specialist State Courts
In states specialist courts exist: e.g.
– Land and environmental court (NSW)
– Coroner’s court
– Industrial courts
– Children's courts
§ Any appeals from decisions of specialist courts usually goes to Supreme Court of the state
§ Specialist Tribunals - 1
§ Operates at both federal and state levels
§ Tribunals are non-court bodies established to resolve disputes in specialist matters
§ Usually cheaper, less formal, simpler, quicker than going to court
§ Decisions are legally enforceable
§ Specialist Tribunals - 2
§ Main tribunals include:
– Administrative Appeal Tribunal (AAT) www.aat.gov.au reviews decisions of federal government departments e.g. reviews social security and income tax assessments
– Consumer Claims/Fair Trading Tribunal resolves consumers complaints against businesses within states
– Anti-discrimination Tribunal these resolve discrimination disputes within relevant states
– Industrial Relations Commissions federal and state commissions resolve workplace disputes involving respective federal or state awards
§ The Legal Dispute Process - 1
§ The Legal Dispute Process - 2
§ Parties to an action:
– The plaintiff vs. the defendant (Civil)
– The prosecutor vs. the defendant / accused (criminal)
– Lawyers representing the parties (in most cases)
– When appealing a court decision:
• The appellant vs. the respondent
§ Requirements for proof:
– Always up to person initiating the legal action to prove their case
– In Civil:
• plaintiff must prove the facts asserted are more likely than not to be true
– In Criminal:
• Prosecutor must prove beyond a reasonable doubt alleged facts did occur
§ The Legal Dispute Process - 3
§ Judge and jury:
– Role of judge / magistrate is to control court proceedings:
• Determines relevance of evidence & what law applies
• Civil (without Jury): determines liability of defendant & amount of damages
• Criminal (without jury): decide whether defendant guilty & relevant punishment
– Jury is a panel of ordinary citizens:
• Role is to decide factual issues
• Restricted nowadays to intermediate / state Supreme Courts for hearing serious criminal offences
• Delivers a verdict after hearing evidence
• Decide whether accused is guilty or not, based on facts
§ The Legal Dispute Process - 4
§ The trial process:
§ Alternative Dispute Resolution
§ Use is growing
§ Simpler, quicker, cheaper & less intimidating than formal adversarial court proceedings
§ Includes:
– Arbitration: independent person (arbitrator)
– Mediation: independent person (Mediator)
– Ombudsman: independent officer who investigates & reports on conduct of specified organisations towards individuals
• Commonwealth ombudsman - www.comb.gov.au
• State government ombudsman
• Banking & financial services ombudsman – www.bfso.gov.au
• Telecommunications industry ombudsman – www.tio.gov.au
• Insurance ombudsman – www.insuranceombudsman.com.au
– Lawyers
§ Either solicitors or barristers
– No distinction in most states, but for NSW & QLD, where lawyers are either one or the other
§ Solicitors perform wide range of legal work
– Daily legal matters with clients
– Roles:
• Representing clients in legal disputes
• Representing clients in complex negotiations
• Preparing legal documents (contracts, wills) for clients
• Providing legal advice for clients
§ Barristers are legal specialists who represent you in court / provide legal advice on legal matters
§ Solicitors can represent you in any court
§ Barristers often instructed for complex cases
§ More info through the state law society or on www.findlaw.com.au
§ Legal and Taxation Aspects
of your Small Business
Chapter: 2
Ownership Structures
§ Objectives
§ After reading this chapter, you should be able to:
– Describe the main ownership structures for operating a small business
– Explain the liability of business in each ownership structure
– Choose a suitable ownership structure for any small business
§ Type of Ownership Structure
§ Sole trader
§ General partnership
§ Joint venture
§ Private company
§ Trading cooperative
§ Trading trust
§ Non-Profit organisations:
• Unincorporated associations
• Corporated associations
§ Sole Trader
§ The simplest & cheapest ownership structure to establish & to operate under
§ No special legal requirements
§ Sole trader exclusively owns & controls the business
§ Profits & losses belong to the Sole Trader personally
§ Can have employees like any other ownership structure
§ Unlimited liability for the debts of the business
– If debts cannot be met by business assets, the Sole Trader is personally liable
§ General Partnership - 1
“the relationship which exists between persons carrying on a business in common with a view to profit”
(statutory definition)
§ Essentially an agreement between people to carry on a profit-making business together
§ Also called a ‘firm’
§ Partners share profits - & any losses – according to an agreed percentage
§ A partner can be active or silent in the business
§ Partnerships can have employees to a maximum of 20 – limits can be higher in professional partnerships
§ General Partnership - 2
§ Partnership can be formed verbally or in writing
§ Always preferable to have all partners sign a partnership agreement
§ Partners should be trustworthy
§ Under the Law, all partners are legally responsible for each partner’s actions during the partnership business.
§ A partner’s action is binding if:
– Carried out in the course of partnership business
– Carried out in the usual way
§ A partner’s action is not binding on the partnership if the partner acted without authority & the person they dealt with knew this
§ General Partnership 3 - Liability of Partners
§ Liability of partners for partnership debts & other liabilities is joint & several:
• Creditors can sue all partners jointly or each partner individually, for the amount owed
• If a partner is sued for all the partnership debts, the partner will have to sue the other partners for their respective contributions
§ Each partner has unlimited liability
§ General Partnership 4 - Partnership Agreement Contents
- Business name of the partnership
- Commencement date of the partnership
- Type of business of the partnership
- Business address of the partnership
- Name & address of each partner
- Partnership bank account details, including authorised account signatories
- Amount of capital contributed by each partner
- Amount and frequency of drawings by each partner
- Percentage share of profits (and losses) belonging to each partner
- Role of each partner in the business, including any limitations on authority
- Ways in which the partnership can be ended
- Process for settling disputes between the partners
- Partners’ signatures
§ General Partnership – 5
Other Duties of Partners