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Barbara was a regular shopper at Egeeay Supermarket, which was part of a large nationwide supermarket chain. She was there at least once a week and sometimes more often if the specials were really good.
When Barbara was there this week, she slipped on some grapes in the pet-food section in aisle 3, slipping and falling, and breaking her ankle. The store manager was not sure how the grapes got there or how long they had been there, but store policy was to do checks every 15 minutes of the floor in the fruit section. The store manager indicated that there were a number of spillages every week in the green grocery section of the store
The storeowner wishes to know:
Egeeay supermarket is a large superstore chain, and Barbara was one of their regular customers. The incident that took place was of Barbara falling down and breaking her ankle. This event occurred because there was a spillage of grape fruit in pet food aisle. According to the store policy the regular 15-minute checkups was to be done to ensure that no spillages are there in fruit and green grocery sections. This is because; it is the daily food necessities that is required to be kept and preserved in a correct way for its sales process.
Duty of care refers to the responsibility that Egeeay Supermarket has to uphold while conducting business or interacting with its customers. In the Australian legal system, under tort law of negligence, duty of care is defined as the responsibility of a business or a person to act in a reasonable manner in particular situations1. Whenever a business or any person acts in a reckless manner, their behavior is considered to be negligent towards providing duty of care, hence any harm that occurs to anyone in that scenario is the liability of the former. Therefore, Egeeay supermarket is liable to provide everyone duty of care who steps into its store as a property owner and as a large business as well.
The Act that is recognized as Law of Negligence and limitation liability Act 2008. The purpose of this act is to reform the law of negligence in a broad manner. Negligence can be applied to a particular scenario if, certain standard of behaviour is not met and the result of it has caused
exposure to risk for someone. The law of negligence have 4 elements that needs to be satisfied by the plaintiff to display the defendant as guilty 2. First is Duty, the Egeeay Supermarket owes duty to Barbara as she has been a regular customer to their business. She suffered from harm that occurred through spillage of grapes in pet food section. Therefore, the company was not aware of that fact, and it has a possibility that the spillage was done by someone else.
Therefore, breach of duty did not occur, as the store policy is to check the green grocery section in every 15 minutes. The harm that occurred to Barbara was not due to the negligence of the store operations. Barbara cannot prove that ‘cause in fact’ happened due to the store’s action as the grapes that were spilled in the pet food section was not deliberately done by any of the employees. It might have fallen out of any customer’s cart, which is very common and can happen to anybody. The damage in the form of ‘harm’, which refers to physical injury that happened to Barbara as she broke her ankle, can lead her to plead compensation from the court, as a part of negotiation with the Egeeay Superstore.
If Barbara had slipped in the aisle of green grocery section or one can say particularly in the fruits section then it would have been breach of duty by the Egeeay Super market store. This is because their store policy states that the mentioned section shall be checked for every 15 minutes. This policy was developed, because spillages were quite often in that section. If Barabara would have slipped and broken her ankle in that section, then law of negligence will be applicable on Egeeay store. This is because all 4 elements of the tort all would be satisfied.
Therefore, the elements - duty, breach of duty, causation and damage would be in favour of Barbara, as it is the duty of Egeeay store to look after its customers and they should not face any issues due to the negligence in carrying out their job roles and duties.
Brown purchased a pair of woolen underpants from Underwear Galore in Adelaide. As a result of wearing the underpants without first washing them, he contracted dermatitis as the underpants contained bisulphite of soda, which it was found had been left in the underpants during the manufacturing process. The underpants had been packaged in a clear cellophane wrap, but the bisulphite of soda couldn’t be seen on a reasonable inspection by either the retailer or the buyer.
Explain what Brown has to establish in order to succeed in an action and whether, in your opinion, he would be successful.
According to the given case scenario, Brown purchased a pair of woollen underpants from the company of Underwear Galore that is situated in Adelaide. When Brown wore those pants, he suffered from dermatitis, as he did not wash them before wearing it, which is advised by the company to its customers. The woollen underpants contained the bisulphite of soda, which was left over from the manufacturing process. The pants were packed in a cellophane wrapper, hence the inspection carried out by retailer or the buyer could not detect the chemical’s presence in the product beforehand. Therefore, the contract is applied, as there is direct contact in between both the parties - Brown and Underwear Galore.
Here the individual that is Mr Brown received bisulphate of soda within the cellophane wrapped packet of woollen underpants, which he accidently wore without washing it first causing damage to himself. This displays disobedience of standard of care by the owner of the Underwear Galore. Mr Brown wants to receive compensation or remedies, as this is a clear case of negligence in provision of duty by the company. The manufacturer did not comply with the duty of care, as the commodity packet was not free of contaminants like bisulphite of soda.
The Australian legal system has formed a consumer law, which applies on all levels of territory, federal and state provinces. The Australian Consumer Law (ACL) provides a national product safety legislative that incorporates rules for penalties and enforcement of powers. This particular law provides four categories for product safety, which are - mandatory consumer standards, product information, notification of voluntary recalls and the power to order mandatory recalls3. In this case the first category can be applied by Mr Brown under consumer law. Therefore, remedies is available for Brown to plead in front of court.
When two parties enter into a contract and one of them breaches it, then the question of remedy comes in light 4. In this scenario, the two parties are Brown and Underwear Galore. The latter does the breach of contract and the nature of the damage caused is incidental. It comes under the section of special damages along with consequential ones. Brown suffered the expenses of an incidental causation of damage like dermatitis, which can also be listed under general damages. He suffered the expense in order to avoid the consequential losses of breach. Here the manufacturer, retailer and supplier were supposed to ensure the product safety in order to maintain the brand’s image and duty promised to the customer. This is the reason why Brown is entitled to incidental expenses by Underwear Galore. He can state that in front of court, that duty of care was neglected by the company, as it is their job to packet each product by prioritising the product safety. The lawsuit of Donoghue v Stevenson5 is relevant in this scenario, as negligence of manufacturers is exhibited that caused harm to its consumers. Therefore, Brown is eligible to appeal for compensation or remedies as the elements of negligence is found in the given case scenario.
The economy is rapidly changing, one of the best way to sustain oneself or an easy way to set up a business is to buying a franchisee as this allows the individual to scratch their head and labour from the very beginning. The activity of becoming a franchisee is an appealing option as it has many advantages to it. However, it has certain limitations to it as well which are mentioned further.
An individual does not have to go through coming up with a new idea by themselves, which saves a lot of time and other things as marketing is more focused upon.
The products that one will sell in the market, has already established a brand name 6 for itself, which is a benefit as it already identifies the target market to you
An individual will use established trademark, to generate income, which saves cost of advertising and marketing as the product has established demand in the market.
The franchisor of an individual provides management support to the franchisee along with financial assistance. For example, Banks will be willing to loan to the franchisee without complications.
The franchise has to hold an agreement with franchisor that restricts one’s flexibility of conducting operational activities.
This leads to gradual development of intrusiveness of the franchisor, which might affect the relationship between a franchisee and the former.
There is always a possibility that due to certain actions of the franchisor, the product goes out of demand in the market7, and because of the franchisee goes out business as well.
Therefore, a person should become a franchisee, after researching about its franchisor, forecasting about it product demand aligning it to current market trends and popular habits. Franchisee as a profession is a field where an individual can earn huge success or can never gain any returns on investment. For example, franchisee of brands like McDonald’s, Uber, and Google Adwords and many more in the same category of vastness are suitable for being a franchisee off.
Salomon was a shoemaker in Britain and he then transferred his business to his two sons, holding the majority of the shares in the business. Salomon’s wife and his five children went on to become subscribers. He transformed his sole proprietorship into a limited company, which incorporated his family as its members. Salomon received the price of such transfer in the mode of debentures and shares as to have some security against the debt 8. Gradually, the business collapsed and liquidation procedure initiated, Salomon was held liable for the loss as he held most of the assets under his name. The liquidator favoured the unsecured creditors to avoid an unjust exclusion for receiving their share of assets.
The case was concerned about the fact if the company of Salomon Ltd was a fraudulent as the majority of shares were in the name of Salomon. The company might change its identity but was it really changed in its nature? Therefore is it possible to hold a major shareholder liable even if the identity of the business is kept in mind because the capital contribution is larger hence that directly affects the personal liability.
The Court issues ruling in favour of the unsecured creditors as the company was proved to be a myth. This was because it violated the purpose of Companies Act 1862 and the former has just acted as an agent of Salomon. Therefore, Salomon shall be held responsible for the debts incurred. However House of Lords when appealed, reversed the held ruling and stated the the motives of those who acted as the promoter of business shall not be taken into consideration about discussing the rights and liabilities of Salomon.
Hence, this case was the one, which created the legal fiction of Corporate Veil 9that is often in between the company and its owners. Following this case, this ruling has been applied in many cases like Macaura v Northern Assurance Co., Lee v Lee’s Air Framing Limited and the case of Farrar as well.
This concept states that a company’s identity differs from than that of its shareholders. It enables the share holders to be liable to the amount invested by them and nothing that company holds liable independently.
Tristan is considering buying shares in a company. Tristan asks you to explain to him what is meant by the terms ‘member’ and ‘shareholder’, and the different ways in which a person may become a member. He also asks you to explain who may be eligible to become a member, and how many members a company is permitted to have.
A person becomes a member of the company if his or her name is registered in the member list of that company. The register contains all personal details of that member along with other things as well. Members liability is exceed to a limited amount of shares held by them 10. According to section 41, the Companies act divides Members into three categories, which are as follows. This is majorly applicable to limited companies in the industry.
Any person who has taken a subscription of Memorandum
Every person who has settled an agreement on a written document with the company and their name is registered in the register of members.
Every person who is holding equity share capital of the company and whose name is recorded a beneficial owner in the records of depository is also a member.
When there is a case of public limited companies or unlimited companies then the person who is the owner of the shares is recognised as a shareholder 11. Whoever holds the large amount of shares is recognised as to an extent of an owner of the company due to the capital contributed. They have various rights to them, which are as follows.
Right to handover or sell their shares.
Right to get the payment.
Right to appear the general meeting and poll.
Right to take duplicates of Memorandum and Articles of Association.
Right to obtain the copy of the constitutional report
The company law is not biased towards the categories of consumers, as they not established any disqualification that would be unjust towards the community in any way. The judiciary has however laid down certain principles to acquire membership, which are as follows.
Minors - They are not considered competent for membership but can be shareholders of the company 12.
Lunatic and Insolvent - The former cannot be a member at all and the latter can become a member and allotted to pole at the meetings of the company.
Partnership Firm - They are entitled to hold shares in other company but cannot be issued in the name of collaboration, as it is not a legal human being in the eyes of law.
Company - As a company is a legal independent person is entitled to be a member under its own brand name. However, it can subscribe for being a shareholder if it is authorised by the Memorandum. For example, a subsidiary company cannot buy shares of its parent company.
A person ceases to be a member of a company in four ways, which are following.
Transfer - If the shares are sold by its owner to a third party, membership ends.
Death - It is given that membership will be ceased if the owner of it dies in any way.
Surrender - When the owner of shares gives away his or her shares to the parent company, membership’s ceases
Bankruptcy - A person memberships would end if he or she goes into total loss of money, which is bankruptcy 13.
A company can have unlimited members if it is a limited liability company. Therefore, a commonly selected manager can manage these members.
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"Donoghue V Stevenson  Doctrine Of Negligence", Lawteacher.Net (Webpage, 2020) <https://www.lawteacher.net/cases/donoghue-v-stevenson.php>
"How An Exit Survey Can Recharge Your Membership" (2017) 13(6)
"Implementation Of Limited Liability Principles And Doctrine Of Piercing The Corporate Veil In Management Of Local Liability Companies" (2017) 2(6)
"Law Of Negligence And Limitation Of Liability Act 2008 (NI)", Legislation.Gov.Au (Webpage, 2020) <https://www.legislation.gov.au/Details/C2016Q00058>
"Negligence", Lawhandbook.Sa.Gov.Au (Webpage, 2020) <https://lawhandbook.sa.gov.au/ch01s05.php>
"Salomon V Salomon – Case Summary", Lawteacher.Net (Webpage, 2020) <https://www.lawteacher.net/cases/salomon-v-salomon.php>
DINE, JANET, COMPANY LAW (RED GLOBE PR, 2020)
Framework, Business and Members Duties, "Members Of A Company | Meaning | Rights And Duties", Accountlearning.Com (Webpage, 2020) <https://accountlearning.com/members-of-a-company-meaning-rights-and-duties/>
Hg.Org (Webpage, 2020) <https://www.hg.org/legal-articles/remedies-for-a-breach-of-contract-20711>
S, Surbhi, "Difference Between Members And Shareholders (With Comparison Chart) - Key Differences", Key Differences (Webpage, 2020) <https://keydifferences.com/difference-between-members-and-shareholders.html>
이병관, Sang Deok Kim and Sejo Oh, "The Effects Of Goal Incongruity Between Franchisor And Franchisee On Regulatory Focus, Performance, And Opportunism Of Franchisee" (2014) 12(2) Journal of Distribution Science
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