Law case study note - Summary Australian Commercial Law PDF

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FRUSTRATION CONTRACT WEEK 4. ISSUE: The issue is wheather the contract has been frustrated Rules Elements for frustration are: 1. Event occuring after contract made (but before completion) 2. Casuses fundametal change to the nature of the contract and obligations of parties 3. The event was not the fault of either party 4. The event was not foreseeable by either party (not provided in the contract) 5. It would be unfair to enforce the contract. Application 1,3,5 apply for plaintiff 2,4 apply for defendant Conclusion The contract is unlikely to be able to terminate the contract on the basic frustration

Termination Avoid Paying early termination fee by replying unfair contract terms (Imbalance in rights and obligation) ISSUE: The issue is whether Marco can avoid paying the early termination fee by replying on the unfair contract terms regime in the ACL Rules: S 23 ACL: A consumer contract may be void if a term is unfair and is in a standard form contract. A consumer contract is one for the supply of goods and services to an individual for personal, domestic or household use or consumption S 27 –Factors in deciding if a contract is a standard form contract include: - Imbalance of bargaining power - Contract prepared by on party - Ability to negotiate - Whether party required to accept or reject terms in the form they were presented S 24(1): A term is unfair if it would cause significant imbalance in rights and obligations; if not reasonably necessary to protect legitimate interest; and would cause detriment (su ton hai) if term applied

Apply

Conclusion Marco (consumer paying for gym fee) is unlikely to have to pay the termination fees because the term will probably be deemed unfair under the ACL

Partnership – A and B are partnership, whether A is jointly liable for B’s debt Issue: The issue is whether A is jointly liable for Mary’s debt Rules: Partners are liable jointly for the debts of the partnership –Partnership ACT 1958 (VIC) S 13. The transaction: - must be entered into by a partner, - must be within the scope of the kind of business carried out by the firm; - must be carried out in the usual way: Gol dber gvJ enk i ns( 189)15VLR36( whati s consi derasusual way ?–i nt er es tr at easnor mal 6>10per cent ,…)

Conclusion A will not be liable for the debt from B.

Corporation ACT, S 180 (1) –Defence agains breaches of S 180 Issue: The issue is whether there is a defence against breaches of s 180 and if so, what the defence is Rule The business judgment rule recognizes: - because a decision by a director turns out to be a decision that cause harm or financial loss to the company, - it is not necessary a breach of the director’s duty of care. - The business judgment in S 180 (2) of CA 2001 Provides directors with a presumption that they have met the requirements of care and diligence in making a business judgment if they: o Have acted in a good faith and for a proper purpose; and o Do not have a material personal interest in their decision; and o Take steps with they believe to be reasonably appropriate to inform themselves about the subject of the decisions; and

o Rationally believe that the decision is in the best interests of the corporation. Apply David should familiarise himself with the decisions of Daniels v Anderson (1995) 37 NSWLR 438 (Daniels) and ASIC v Adler [2002] NSWSC 171 (Adler). In Daniels, the Court of Appeal found that, to exercise the common law duties of care and skill, directors must: (a) be familiar with the fundamentals of the company’s business; (b) keep informed about its activities on a continuing basis; (c) monitor corporate affairs and policies; and (d) keep informed about its financial status by regularly reviewing its financial statements. In Adler, the court refused to allow Adler to rely on the defence due to his personal material interests and lack of good faith.

Conclusion So long as David is practices the above legal principles enunciated by the court, he will be protected from liability when exercising his duties as a director.

Vicarious liability Law of an employer ISSSUE: whether TPL is vicariously liable for Mark’s actions Rule: Anempl oy eri sv i car i ousl yl i abl ef ort heact soromi s si ons( sut hi eux ot )commi t t edbyt hei r empl oy ees,butnotf ort or t i ousact scommi t t edbyani ndependentcont r act or :Hol l i s vVabuPt yLt d( 2001)207CLR21;SweeneyvBoyl anNomi nees( 2006)226CLR161. Thevi car i ousl i abi l i t yofanempl oy eri sl i mi t edt oact soromi ssi onst hatar ecommi t t edi nt he cour seoft heempl oy ee’ sempl oyment :Cent ur yI nsur anceCoLt dvNor t her nI r el andRoad Tr anspor tBoar d[ 1942]AC509.

Apply: Undert hel awofvi c ar i ousl i abi l i t y ,TPLcanbehel dr esponsi bl ef orMar k’ sact i onev en t houghi tmaynothav ebeenper sonal l yatf aul t .Howev er ,f orTPLt obel i abl e,i thast obe est abl i shedt hatt het or tc ommi t t edbyMar kar oseoutoft hecour seofempl oyment .I tc anbe ass umedt hatar easonabl eper sonwhodr i v esat r ucki sacompet entdr i v erandt hata compet entdr i v erwhol osessi ghtoft heper sondi r ect i ngt hem whi l er ever si ngwoul dst op andc hec kt hei rwher eabout sbef or epr oceedi ngt obackt het r uck.Byf ai l i ngt ot aket hese pr ecaut i ons,i tcanbear guedt hatMar kwasnegl i gent ,i . e.hewasi nbr eac hofhi sdut yt o dr i v et het r uckcar ef ul l yandasar esul tofhi sf ai l ur et oexer ci s eduecar eands ki l lhecaused hi sempl oy ert os ufferdamage.Ashewasact i ngi nt hecour seofhi sempl oymentatt het i me, t heempl oyercoul dbef oundt obevi car i ousl yr esponsi bl e. Concl usi on Mar ki sanempl oy eeofTPLandhei nj ur edGr egwhi l eact i ngi nt hecour seofempl oyment . TPLi smostl i k el yt obevi car i ousl yl i abl ef orhi sact i ons....