Enterprise law PDF

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Consumer law and tort law – main exam Negligence, misstatements, consumer law, consumer guarentees. Hyde vs wrench (1840) important. Lumley vs gye Hadley v baxendale (1854) Partnership act 1892 nsw s1 (1) A time frame or timeline cause may only ever be treated by a warrenty . so failure to perform in the specified time wont fail the contract unless a term states in all matters related in this agreement time is to be of the essence . If that term is in the contrct can be elevated meaning it will be a condition and the offer party can resend the contract Enterprise law Law – is a set of legally binding rules, regulating people’s interactions with one another, applicable to all members of the state and enforced by the state. Rules – not legally binding, apply to a sub-set of society, enforced by sub-set of society. The law is relevant to the following aspects of running an enterprise       

Business structure Registering a business name Leasing premises Obtaining appropriate licences Employment agreements Purchase/supply/sale agreement Liability for injuries to employee or customers.

Civil law system    

Originates from roman law and Napoleonic codes The civil law meaning depends on the context A reference to a legal system used in much of Europe, Latin America and parts of Asia A reference to an area of law within the common law system, governing relations between private individuals

Common law system     

Laws made by courts Australia inherited common law from England The meaning of the term common law depends on the way the context A reference to a legal system used in much of the commonwealth countries A reference to the law historically developed by the common law courts in England as opposed to equity, a body of law developed by the courts of chancery

Ratio decidendi > the reason for deciding based on the application of a rule of law to material facts before the case. Obiter dicta > an additional statement of opinion made by the judge that was not essential to the decision. It may be persuasive though. Nsw houses Legislative representatives Legislative council Australian houses House of representatives Senate Week 2 The legislative process  

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Proposal of new law Drafting of a bill > notice, presentation and first reading, second reading, debate, committee, third reading, transmission to the house of review (above steps repeated), presentation for royal assent. Bill is now an Act of Parliament (enacted law)

Conflict between federal and state power If there is a clash in laws with federal and state laws, federal law is above all. Exclusive powers – only by federal parliament Residual powers – only by state parliament Concurrent powers – both parliments Commonwealth can only make acts/laws in the 39 laws given in section 51 of the constitution. Civil law     

An action brought by one individual against another Emphasis is on remedies (payout) Onus of proof > placed on the plaintif Standard of proof > on the balance of probabilities Examples > contract law, tort law, consumer law

In civil law, a plaintiff sues a defendant in a civil hearing, where fault or liability must be established on the balance of probabilities. The court will then provide a remedy. Criminal law    

Actions are brought by the crown (state) against an accused individual Emphasis is on punishment/sanctions; deterrence, rehabilitation Onus of proof > placed on state Standard of proof > beyond reasonable doubt

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Examples > theft, negligent manslaughter, tax evasion

5 reasons for sanctions to be put in place     

deterrent Rehabilitation Restitution > community service, give back to society Incapacitate – jail/gaol

In criminal law, a prosecutor takes action against an accused in a criminal trial, where guilt must be proven beyond reasonable doubt. The court will impose a sanction on a convicted offender. How the legislative process is done for state         

Starts at any house, mainly the lower house/house of representatives Drafting of bill First reading Second reading Debate Committee Third reading Sent on to next house or governor general/governor to provide royal assent to the bill

The role of the courts 

To impose a legally binding decision on the parties to a civil dispute To hear appeals on civil and criminal matters (incl. sentencing) To create precedents for lower courts to follow To interpret state/federal legislation To interpret and apply the commonwealth constitution The courts have both criminal and civil jurisdiction Jurisdiction – power and authority conferred upon a court to hear and determine a matter.

Week 3 Business structures Choosing a business structure involves factors to consider such as -

Duration of business Cost and method of formation Tax burden or advantages of business Whether property is owned or rented by individual Access to future capital Requirements of lending (loans) Professional ethics or legal restrictions (licences needed) Level of financial risk involved in the enterprise

Sole trader  

- a sole trader is a single individual running his own company.

Advantage – all profits go to you, you are the boss, make your own calls. Easy to set up Disadvantage – all loss is yours, you do all the work, lower future financial funding, unlimited liability

Partnerships – dual owner ship commonly known in accountants, lawyers, real estates.      

Advantage – tax advantages, sharing of skills and contacts, easy to form. Disadvantage – unlimited liability, partners are joined and both liable for each other’s actions. Fiduciary duties – duty of trust Partners owe fiduciary duties to the partnership Within the scope of the business they must out the interest of the partnership ahead of their personal interest Two main duties – to avoid conflict of interest, to avoid using position to receive a personal benefit (unless specifically authorised)

Company – a company or corporations an association of persons who, having satisfied the requirements of the corporation’s act 2001 (Cth) for registration, are given the status of a separate legal entity  

Advantage – limited liability, separate legal entity from the shareholders or members, access to larger share capital, taxation benefits. Disadvantage – cost of the establishment and ongoing fees, onerous reporting required by law, limited management role for the shareholder, possible loss of company to shareholders.

Proprietary companies / private    

The vast majority of Australian businesses are proprietary Less regulations / reporting requirements under the corporation’s act 2001 Cannot raise capital from the general public. Can have a sole director and shareholder.

Public companies    

High degree of regulation and reporting requirements under the corporation’s act 2001 Minimum of 3 directors plus a company secretary Can raise capital from the general public May seek listings on a stock exchange such as ASX

Trusts    

A trust involves property being held by a trustee for the benefit of the beneficiary. Arises when the owner of an asset transfers the ownership of the property to a person to hold for the benefit of others. Settlor > the trustee > the benificiaries. Advantages – provides benefits to members of the family without losing control over the trusts assets, protects assets against creditors, provides a tax efective structure. Disadvantages - can be expensive to establish, can also have ongoing legal/ accounting costs to maintain trusts.

Franchises A franchise is a marketing concept for the distribution of goods and services, not a business entity. Advantages – instant reputation, ongoing support through training and financial, marketing and management support, business risk is reduced.

Business name –    

Registration of a business name is required in all jurisdictions by business name legislation where the owner/s do not use their own name or company name. Can check name availability and register with ASIC. Purpose of registrations include Virtual monopoly rights on registration (but no propriety rights) Avoiding confusion by preventing similar or identical names being registered.

Intellectual property Definition – a form of intangible property derived from original creative thought   

Protects the rights rather than a physical object or land. Managed by the Federal body IP Australia. Three types of IP – Trademark, Copyright, Patent. Other types include: designs, plant breeders’ rights and circuit layouts.

Trademarks     

E.g. covers branding, includes words, sound, smell, shape, logo etc Protected colours using trademarks Governed by Trade Marks Act 1995(Cth) Requires registration with IP Australia Period: 10 years, renewable indefinitely

Copyrights    

e.g. songs, literary works, films Governed by Copyright Act 1968 (Cth) Automatic protection upon creation Period: 70 years from death of the author/first publication (after death)

Patents      

E.g. inventions – appliances, mechanical devices, computer software, business methods Governed by Patents Act 1990 (Cth) Must be new and useful Requires registration with IP Australia Two types: standard (must show an inventive step) Innovative (show innovative step) Standard (20 years) Innovative (8 years) Pharmaceutical (25 years)

Contract law A contract can be defined as – 

“An agreement concerning promises made between two or more parties with the intention of creating certain legal rights and obligations upon the parties to that agreement which shall be enforceable in a court of law.”

Simple contract – can be made orally or in writing (not executed under seal). Require considerations three required elements for a valid ‘simple’ contract Formal contract – a contract executed using a deed. No requirement for considerations.

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Intention to create legal relations Agreement (offer plus agreement) Consideration

1. Intention to create legal relations – there must be clear intention by all parties that the agreement containing their promises is intended to be enforceable by law.  Express intention - consider terms that expressly and clearly state the parties’ intentions. Almost invariably expressed in the negative Masters v Cameron 1954  Implied intention - the courts have determine objectively whether the parties intended the agreement to be legally enforceable.  The court uses two ‘rebuttable presumptions’ a. Non commercial relationship (social, family, domestic) – presumed no intention. b. Commercial or business relationship – presumed intention to be bound. Non commercial agreements – social = ones made between friends, domestic = ones made between family and relatives cohen v cohen; balfour v balfour, voluntary = where parties may volunteer their services. Commercial agreements – business and commercial. Edwards v skywards ltd 1964;

2. Agreement – ofer plus acceptance (important in determining the time, place and contents of the agreement). Important in determining time, place, and contents of the agreement.  Intention or willingness to be bound  A firm promise  Communication of the offer (in writing, orally or by conduct)  Invitation to treat  Requests for information  Notice of the offer  Terms of the offer  Termination of offer o Revocation – withdrawal must be ofered before acceptance ( direct or indirect) dickison v dodds1876 o Rejection/counter offer – hyde v wrench 1840 o Failure of condition precedent – agreement does not become a contract until a specific event o Lapse of time/death – reasonable time, stipulated time, death Legal rules to acceptance i. ii.

Must be made in reliance of the offer rv Clarke 1927 Must be strictly in accordance with the terms of the offer gilbert j mccaul v pitt club 1954

iii. iv. v. vi. vii. viii.

Acceptance must be communicated felthouse v bindley 1862 Acceptance must be conveyed by someone with authority Cross-offers do not give rise to agreement Acceptance must be absolute and unconditional The postal acceptance rule adams v Lindsell 1818 (soon as it is posted) Instantaneous communications (fax) when received entores v miles far east corp

Considerations to determine the validity of a contract 1. 2. 3. 4.

Legality Consent Capacity Form

Statute of limitations Action of simple contract in NSW 6 years. For a contract under seal in NSW 12 years. (formal contract) Simple contracts – valuable consideration is required for the ‘agreement’ to become a contract. Formal contract - no need for consideration as the contract as it is executed under a deed. (signed, sealed and delivered) Definition – consideration is the ‘value’ each party promises to give in exchange for the promises received from other parties Consideration involves an exchange of promises. A promisor is the person making the promise. The promise is the person who is receiving the promise. Legal rules relating to consideration    

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Consideration may be – something the promise gives the promisor (carrying out of some act) Consideration must not be past - past consideration occurs where a promise is given after an act has been performed stilk v myrick 1809 Consideration must move from the promisee BUT it need not move to the promisor Dunlop pneumatic tyre v selfridge & co 1915 Consideration must have value to be ‘sufficient’ but it need not be equal in value – the real ‘value’ of the promise is something only the parties to the contract can decide. Chappel v nestle 1960 Moral obligations as well as natural love and affection are insufficient consideration. Eastwood v Kenyon 1840

Validity of a contract 1. 2. 3. 4.

Capacity Consent Legality Form

1. Capacity – only a sane sober adult person has full capacity to make a contract. The ability to understand fully what they are entering into. 2. Consent - a contract may still fail because there is no real consent to it by one or both parties. The basis of a contract is agreement or consensus ad idem (meeting of the minds). Mistake, misrepresentation, duress, undue influence, unconscionable conduct. 3. Legality – contracts illegal at common law include  Contracts to commit crime, tort or fraud  Contracts prejudicial to the administration of justice  Contracts that promote public corruption  Contracts to defraud the ATO  Contracts that involve a breach of duty Form – week 6 conditions and warranty / constitutions and exclusion laws Discharge by performance The most common way of discharging a contract – 

To discharge a contract by performance the parties must carry out as closely as practicable the terms of the contract – ( re moore & co v landauer)( Shipton, Anderson & co v weil brothers & co [1912] 1 kb 574.

A contract created by agreement can be undone by agreement   

Mutual discharge – where both parties abandon their original agreement while the contract is still executory Release/ unilateral discharge – where one party has performed their obligations and releases the other from completing performance of their obligation. Must have consideration or be in the form of a deed.

Waiver – one party leads the other party to reasonably belive that strict performance will not be insisted on 

Promissory estoppel

Substitution – where the parties wish to continue with a contractual relationship, 

But on terms difering from those in the original agreement

Accord and satisfaction –   

Where one party has performed their obligations And by agreement (accord) The defaulting party is relieved of their obligations by doing something diferent (satisfaction) to that which.

Discharge Frustration can only arise where 1. An unforeseen event outside the control of the contracting parties has significantly changed the obligations of the parties from their original intentions 2. Neither party caused the supervening event and 3. Neither contemplated the supervening event

4. The new circumstances would make it unjust to hold the original parties to the original contract. Cases involving this doctrine fall into five catergories: 1. Physical impossibility because of destruction of the subject matter (taylor v Caldwell (1863) 122 er 309) 2. Physical impossibility under a contract of personal services; 3. A change in the law rendering performance impossible (horlock v beal [1916]) 4. Impossibility due to the non – occurrence of an event basic to the contract (krell v henry [1903] 5. Where the particular state of afairs ceases to exist (codelfa construction pty ltd v state rail authority (NSW) [1982] Discharge by breach Actual breach : 

Where a party fails tp perform at the time required by the contract

Ancticapatory 

Where a party threatens not to perform prior to the time required by a contract foran v wright 1968

Termination –     

Does not require the intervention of the court Termination is only available for breach of a condition Not available for breach of warranty It releases both parties from future performance but rights and obligations arising prior to termination are enforceable. Innocent party may sue for damages

Damages – The main remedy under contract law    

Damages are a common law remedy and awarded as of right Purpose is to be compensated for loss rather than punish Placing the injured person in place they would have been if the contract had been performed as originally intended. Principles on which damages are based 1. Whether there was a breach 2. Causation 3. Remoteness of damages 4. Amount of damages 5. Mitigation of damages ◦

Causation – ◦ Is there a causal connection between the breach and the loss sufered? ◦ The plaintif must show that the breach of contract by the defendant was the cause of the loss.

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The plaintif may not be able to recover if an additional factor unconnected with the defendant’s breach breaks the causal chain between the defendant’s action and the plaintif’s loss or damage: Alexander v Cambridge Credit Corporation (in rec) (1987)

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Remoteness – The loss or injury must not be too remote. ◦ The court must consider whether the loss sufered by the injured party is a usual and reasonably direct consequence of the breach of contract, and this is a question of fact. Hadley v Baxendale (1854) indicates two types of loss are recoverable: ◦ loss arising from the breach in the usual or normal course of things; and ◦ loss arising from special or exceptional circumstances where it can be shown that the defendant had actual knowledge of the plaintif’s needs: Victoria Laundry Ltd v Newman Industries Ltd (1949) ◦

Amount of damages – the aim of damages is to put the injured party back as close to the position they would have been if the breach had not occurred. Reliance losses, loss of chance. Amann aviation pty 1991 Mitigation of damages – the plaintif must take reasonable steps to minimise or mitigate their loss. Mitigation is a question of fact and the onus of proof is on the defendant Failure to do so can result in reduction of damages burns v man automotive 1986

Types of damages 1. Nominal damages – legal rights have been infringed but they have sufered no actual loss, charter v Sullivan 1957 2. Ordinary damages - loss sufered by the plaintif as a result of the breach and can be either general or special damages. 3. Exemplary damages – punitive and may be awarded for non-economic loss; not normally available in contract 4. Liquidated damages –...