Business and Corporation Law - Week 6

Issue

  • Whether Egeeay owed a duty of care to Barbara?
  • If yes, has there been a breach of duty?
  • What the answer shall be Barbara fell in the fruit section?

Rule

  • Civil liability act
  • Negligence law
  • Precedents

Application

For the tort of negligence to be proved, three major elements are there to be proved. First, the defendant had a duty of standard of care against the plaintiff. Second, the defendant breached the same duty meaning he bungled in performing the said duty. Third, there exists a direct link between the breach of duty of the defendant with the loss or injury suffered by the plaintiff. The term 'negligence' gained its prominence in the 20th century. Before that, the English law or as a matter of fact, no country recognized this term (Kiefel, 2015). There was no compensation for the unintended injury earlier (Kiefel, 2015). In the 19th century, when the industrial revolution was as its peak, there could be seen a considerable increase in the law of negligence (Kiefel, 2015). In the 1930s, the modern law of negligence took place where the above three elements came into being for prosecuting any individual on the law of negligence (Kiefel, 2015).

For our first issue, Section 5 B of Civil Liability Act (CLA), 2002 states that a person against whom the allegations for inflicting the harm, is not responsible as long as the risk is foreseeable; or the risk is not much of importance; or a reasonable person under those scenarios would have taken precaution. For this, the Court has to check the likelihood of the harm, that could be caused if care was not taken; or the seriousness of the harm; or the precautionary measures to combat the harm; or the social utility of the activity.

As a store owner of a supermarket, he does owe a duty of care whosoever comes to his supermarket. He is obligated that the customers are well-tended and that they do not have to suffer because of any negligent act. However, what happened with Barbara does not count to as the duty of care. Reason being, the accident that happened with her was in the pet section and the guide of the store said that after every 15 minutes they are to clean the food section. There could be several reasons to why the grapes were there in the pet section like maybe a customer purchased the grapes from the food section and then went to the pet section where he mistakenly spilled some of it. Hence ignorant about that, the cleaners did not check that section as most of the spillages happens in the food section.

For our second issue, to whether there was any breach of duty form the owner’s side, so no there wasn’t. The store did not owe any duty to Barbara, hence there wasn’t any breach of the same. She was supposed to be more careful about her conduct as she an avid shopper of Egeeay. As discussed above, section 5B of CLA, a person cannot take the plea of harm caused by some other person because of his carelessness. Barbara wasn't a new customer who was visiting the store for the first time. She has been associated with it for a quiet time and used to visit it every week. Therefore, it is plausible that she is accustomed to the varied sections of the store and knows the dangers it carries. Therefore, she cannot put the onus on the store of not fulfilling their duty. In a recent case, Woolworths Ltd v Mcquillan[2017] NSWCA 202, where the plaintiff slipped on a grape in the fresh produce section of Woolworths supermarket, moments after it opened for the day. The NSW Court of Appeal said that the store had adopted the system of regular cleaning and no evidence could contradict that. Also, the court did not find it persuasive that missing a single grape on the floor by the cleaning staff could cause breaking of her ankle and what further could constitute an act of negligence of the store owner. Therefore, Mcquillan was ordered to pay Woolworths trial and appeal charges as the suit was not binding.

For our third issue, if Barbara would have fallen in the fruit section, so yes that would have constituted an act of negligence from the store owner’s side. An English case, Donoghue v Stevenson [1932] UKHL 100, laid the foundation of the modern law of negligence and gave principles on the duty of care. The question before the House of Lords was whether Stevenson owed a duty of care against Donoghue in the absence of the contractual relations. It was held that there is no need to have a contractual relationship between the parties to held another party for his negligence. With this reference, it could be inferred that if Barbara had fallen in the fruit section, then yes the owner was liable to clean that section every 15 minutes as their policy said, he owed a duty of care, that he breached that duty by not cleaning, which resulted in damages to Barbara. In Margaret Hill v Coles Supermarkets Australia Pty Limited [2016] NSWDC 5, Phillip Mahony stated that the store owed a duty of care towards its customers and should be checked that the rubber mat was properly placed after the cleaning, in the absence of which Margaret fell and broke her ankle.

Conclusion

The store owner need not worry about the legal implications as there was no negligence on his part and that it was due to the mistake of Barbara that she suffered injuries.

Business and Corporation Law - Week 7

Issue

  • Any defence for Brown?
  • What should he establish as evidence to succeed in the suit?

Rule

Australian Consumer law

Application

Under the Australian Consumer law, defined under schedule 2 of the Consumer and Competition Law, 2010 gives a detailed view about who is a consumer and what kinds of exploitation could he be accustomed too and the remedies available for that. Under section 3 of the act which states the definition of consumer, it provides a varied ambit to it. like a consumer is one who acquires goods as a consumer; a person acquiring services as a consumer; a person who pays for the purchases; a person who pays for other acquisitions; a person who pays for having credit. On a safer side, anyone who takes the help of this act is taken to be a consumer, if proved otherwise. The term defective goods action means any action under section 138, 139, 140 or 141 because of section 138(3) or 145. Under section 7, a manufacturer is a person who grows, extracts, produces or assembles goods; who term himself as a manufacturer; etc. under the said act, Part 3-5, division 1 section 138 states that the manufacturers owe a liability to compensate the injured individual if the safety measurements of the products are compromised. In lieu of this, an individual can bring a suit against the manufacturer and he has to pay for the damages.

Part 4-3, section 194-196 also states that a person is said to commit a crime under this act who supplies consumer goods or product-related services which do not fall under the required safety standards. Chapter 5, division 2, section 236 and division 4, sub-division A section 237 and 238 gives the remedies to the injured parties. Due to the conduct of the other party, if one party suffers loss or any kind of damages and that if the offence comes under Chapter 2 or 3 of the act, then the other person has to pay the damages, as per section 236. As per section 237 and 238, the court if it deems fit, may order to reimburse the injured party for the loss and damages he suffered.

Therefore, if we were to compile all the above provisions, so we can infer that Underwear Galore, being the retailer, had not been negligent in trading. The reason being since the pants were covered in cellophane sheets therefore he or Mr Brown couldn't have known about the bisulphate of soda. Otherwise, that could have constituted a case of caveat emptor meaning the buyer should himself be aware while purchasing. However, since this is not the case, so under ACL, which inflicts strict liability for injuries caused by manufacturers and suppliers, the Underwear Galore, being a retailer had constituted the infringement. Under the above-mentioned parts and sections, being a retailer which comes under the definition of manufacturer, he had not met the required safety standards as per the act and this is what should Mr Brown focus on. Even though he wasn't a manufacturer but he was the seller and being one he was obligated to know about his products and the safety standards. Therefore, not fulfilling that, he is liable to pay damages to Brown for his act.

A very well-known case Grant v Australian Knitting Mills [(1935) 54 CLR 49], which is quite similar to the gives facts, held that the existence of chemicals was sufficient to prove that there was carelessness on part of the manufacturer and was held to be liable for negligence (Littlejohn & Black, 2016).

Conclusion

Mr Brown is entitled to damages under the ACL act as the Underwear Galore did not fulfil his duty as a seller. He should have exercised all safety mechanisms before selling his products to the ultimate consumers, failing which, he was liable to pay damages.

Business and Corporation Law - Week 8

Introduction

Franchising has been providing business for over 150 years. It was in the mid-1800s when this concept of franchising came into play (Salar & Salar, 2014). At that time the trendsetter was Singer Sewing Machine in the USA in 1851. The next ones were Coca-Cola who started in 1899 and that was when this trend started spreading in oil industries, automobile industries (Salar & Salar, 2014). The famous franchising till now is said to be that of McDonald's in 1955 (Salar & Salar, 2014). As per the International Franchise Association (IFA), franchisee constitutes amongst 4% of the small-scale markets and nearly 40% of retail (Bohi, 2010).

The advantages for a franchisee is-

  • Skipping the Start-Up Stage-

The most difficult phase of any business is setting out a business plan, conducting research of the market, creation of the products, testing it, and then making it sellable. All the stages are mitigated if one becomes a franchisee of an already well-known brand.

  • Instant Name Recognition-

The major benefit of this that already there is a trust and brand name of the product of whom one decides to be a franchisee off. With so many substitutes available in the market, it is difficult nowadays to convince consumers about your products. Brands like Nike, Adidas, Puma etc have no such worry as their name compliments their quality and have gained those years of trust and confidence of the consumers that they can buy them with their eyes-folded.

Disadvantages-

  • Abiding by Franchise’s Rules-

Having one's own business rules is what makes the business interesting. This, however, is not the case with franchisees. This type of business is wholly dependant on the rules and procedures set by the parent company.

  • Ongoing Royalty Payments-

If one is operating on behalf of the franchise's name, for that he has to pay the royalty. Along with that, a major chunk of it has to be paid for marketing and advertising as per the parent company wish.

For new entrants, the franchisee could be a good option to learn how that particular business or industry works. After gaining a good share of experience, then he might go for starting up his own business someday.

Business and Corporation Law - Week 9

Saloman v A Saloman Co Ltd [(1897) AC 22] was a game-changer case that led to giving companies a different identity in the business world. This case leads companies having a separate legal identity in the eyes of law. the facts of the case were that Saloman changed the nature of his business from sole proprietorship to a company ltd, the members being him and his family. He had allotted himself the shares and debentures. When the company went into liquidation, so the major issue was whether Saloman could be a secured creditor over the unsecured ones. Hence the House of Lords held that the company was a separate one from that of Saloman and therefore he shall be liable to pay his creditors first (Herzberg, 2017). In Australia, this is recognized under section 124(1) of the Corporations Act, 2001. 

This judgement has seen many contradictions and always a matter of discussion in all jurisdictions (Radin, 1932). However, it has been taken as a precedent in many of the cases like Macaura v Northern Assurance Co [(1925) AC 619]; Lee v Lee’s Air Farming Limited [(1961) AC 12] and Farrar v Farrar Ltd [(1888) 40 ChD 395].  This fiction of corporate veil has served as precedent in stating that a company has a legal personality separate from that of its stakeholders (Pickering, 1968). A shareholder is responsible for the rights and liabilities of the company to the extent of what he is a shareholder off. This means a property could be owned in the name of a company, contracts can be signed and investment could be made (Lowry and Reisberg, 2012).

However in Atlas Maritime Co SA v Avalon Maritime Ltd (The Coral Rose) (No 1) CA 1991, the court stated that in judging a separate legal identity of the company, the court has to lift the corporate veil and look inside of it into its members. Under Cth act, this veil is uplifted when, there is an agency or any fraud or any façade or sham or a group enterprise or any injustice or unfairness on part of the companies (Ramsay and Noakes, 2001).

Business and Corporation Law - Week 10

As per section 9, Corporations Act 2001, member means two things. First, concerning the managed investment scheme, a member is a person who has an interest in this scheme and for a company point of view, it means a person who is a member under section 231. Section 231 says how a person can be a member of a company. First, when at the time of registration he is a member of that company; second, agrees to become one after the registration and his name is entered in the register of members and third, becomes a member under section 167 (when a company changes its company from one limited by guarantee to one limited by shares).

There is no definition of shareholders as per the Australian acts. In general, it means a person, company or any organization that has shares or stocks of a company (Corporate Finance Institute, 2020). To be a shareholder he must have at least one share of the company. They receive dividends if the company does well (Corporate Finance Institute, 2020). There are two types to that- one is common shareholders or equity shareholders and the other is preferred shareholders. Equity ones are those who have the right to vote, have control over the affairs of the company and can file suit against the company (Corporate Finance Institute, 2020). Preferred ones own company's preferred stock and do not have any rights to vote. They are to receive a fixed amount of dividend before the equity shareholders even though the company is at losses (Corporate Finance Institute, 2020).

For being a member of a company, a written consent of the applicant is necessary to have. The names and address of the members should be mentioned in the application and all other credentials of section 231 have to be abided by.

There are four ways for the cessation of members. First, transfer of shares of a member to any other person or death of a member; or surrender of shares by the member himself or bankruptcy of the company (Brainly, 2020).

References for Business and Corporation Law

Corporate Finance Institute. (2020). What is a Shareholder? Retrieved from https://corporatefinanceinstitute.com/resources/knowledge/finance/shareholder/

Bohi, H. (2010). Time To Buy A Franchise. Alaska Business Monthly

Brainly, 2020. Four ways for the cessation of membership of the company. 

Donoghue v Stevenson [1932] UKHL 100

Herzberg, D. 2017. Salomon V Salomon: Have the Liquidator ’ s Arguments Been Buried with Time? Corporate Governance EJournal, 1-13.

Kiefel, S. (2015). Developments in the law relating to medical negligence in the last 30 years. Retrieved from https://www.cla.asn.au/News/be-warned-medical-negligence/#gsc.tab=0

Littlejohn, M & Black, J. 2016. Loss & injury caused by defective products. Retrieved from http://ntlawhandbook.org/foswiki/NTLawHbk/LossInjuryCausedByDefectiveProducts

Lowry, J. & Reisberg, A. 2012. Pettet’s Company Law: Company Law and Corporate Finance. Pearson, 2012.

Margaret Hill v Coles Supermarkets Australia Pty Limited [2016] NSWDC 5

Pickering, M. A. (1968). The company as a separate legal entity. The Modern Law Review, 31(5), 481-511

Radin, M. 1932. The Endless Problem of Corporate Personality. Columbia Law Review.

Ramsay, I.M. & Noakes, D.B. 2001. Piercing the Corporate Veil in Australia. Company and Securities Law Journal, 250-271.

Salar, M & Salar, O. 2014. Determining the pros and cons of franchising by using swot analysis. Procedia - Social and Behavioral Sciences, 122, 515 – 519

Woolworths Ltd v Mcquillan[2017] NSWCA 202

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Business Law Assignment Help

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