Business and Corporate Law - Question 1

Issue-

  1. How can a creditor initiate in the Bankruptcy Act?

Rule-

Bankruptcy act 1966 and Bankruptcy Rule 2016.

Application-

To make someone bankrupt, the proceeding has to start in the court of law by an application called the creditor's petition. Using form B6 of the bankruptcy rule, 2016. Under section 43(2) of the Act, there can be an application from the creditor's side for an estate of the debtor to be sequestrated, making him bankrupt, so in such a case the creditor becomes the 'applicant' and the debtor is 'respondent (FCA, 2020).’

Steps to be taken before filing the creditor’s petition-

  1. The application shall be only presented after the debtor has been bankrupt and not before that. For this, the creditor must conduct a search of the National Personal Insolvency Index (NPII) to ensure the debtor has not been already bankrupt. This record is maintained by the Official Receiver under the Act.
  2. Under section 40(1) of the Act gives different ‘acts of bankruptcy’ that a debtor might do.
  3. A creditor should issue this application before the court of law under if all the requirements under section 41 are met.
  4. Once the application notice is given by the creditor and issued by AFSA, the creditor must give a copy of the notice to the debtor. For this, the creditor has a period of 6 months to serve the notice.

Conclusion-

The above four points have to be met by the creditor in case of filing an application of the debtor to show that he is bankrupt. The onus to give away a copy of the notice is on the creditor and it is a decided law.

Business and Corporate Law - Question 2

Issue-

  1. is there a difference between intention to create enforceable obligations between social circumstances and commercial circumstances?

Rule-

Contract Law

Application-

The intention to create a legal relationship is one of the most important element to form a contract. The test to figure this element is quite objective. This means that if two-party are ready to enforce a contract, that does not mean they want to have any legal implications. They only need to prove that their intention was just to see whether the intention was express or implied.

In case of family, social or domestic agreements, there is a definitive presumption that there can be no legal relations for family or social or domestic agreement. for example, if a father promised to reward his daughter a certain allowance if she keeps her grade in-tact, it is not a contractual agreement. this is so because it is presumed that families do rely on mutual trust and affection and not on any contractual agreement. for example, the case of Jones v Padavatton (the UK,1969), held that an agreement between mother and daughter is not a contract.

In the case of business and commercial agreements, it is presumed that the parties want to have legal relations with the contracting party. It cannot be that the parties do not intend to do so in such cases. In Rose v Frank (the UK, KB, 1923), it was held that just by mentioning in a contract that parties do not want to have any legal relationship, do not exempt them from that.

Conclusion-

Hence, it is asserted that the intention to create a legal relationship between the two types of contract is different and undisputed in the court of law. 

Business and Corporate Law - Question 4

Issue-

  1. can peter prove that Rugby League was negligent
  2. defence for Rugby League

Rule-

Law of Torts

Application-

  1. 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. For our first issue, Section 5 B of Civil Liability Act 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.

Conclusion-

So as for Peter, he can avail damages against the league for not clearing out the rules of scrimmage before-hand. There was a duty on the league’s side to list out the rules of play, which they didn’t. this is how they breached their duty. Third, there is a direct link between the breaching of duty and the injury that Peter inflicted. A very famous case of Donoghue v Stevenson (1932) UKHL 100, had laid down these three principles to prove negligence.

  1. As for defences, the league can take a defence that the scrimmage rule of rugby are common and should be under the knowledge of any rugby player. Peter being himself one, should have known the rules of the game and they are consistent in every match. So there they had no liability to inform before-hand of the rules of scrummage and hence they didn't breach their duty.

Business and Corporate Law - Question 5

Issue

  1. Is there any duty of care from the league’s side?

Rule

Law of torts

Application

As for the duty of care for Johannes, the league did owe a duty of care to him. Johannes entered the office where the floor was wet. So the league was entitled to wither shut the door and place a sign of wet floor on the floor, so that not just Johannes, whosoever passed the office could have seen the sign. The office of the league did not do that and hence Johannes fractured his wrist. Therefore there was a duty on the league's side, which they breached and hence Johannes suffered an injury for the same. In case of Margaret Hill v Coles Supermarkets Australia Pty Limited [2016] NSWDC 5, the court held that the store owed a duty of care to its customers as they should have checked that the rubber mat was properly placed after every cleaning. In this misconduct, Margaret fell and broke her ankle.

Conclusion

The league had a duty of care to Johannes as they did not follow the basic requirements of cleaning the office. They were negligent on their part and hence Johannes is entitled to damages.

Business and Corporate Law - Question 3

issue-

  1. Circumstances under which director’s personal interest in material?
  2. How is it treated in public and proprietary companies?

Rule

Corporations act 2001

Application

  1. As per section 191 of the Act, a director of a company who has a material personal interest in the matter of the company which is related to affairs of the company must disseminate the notice of interest to the other directors. This notice of interest has certain exemptions
  2. If the interest is there because the person is the director of the company and is held in common with other members of the company.
  3. If the issue is there because of the remuneration of the director
  • Is related to the contract of the company if entered into should have consideration of the rest of the members and shall impose any obligation if opposed by anyone
  1. Arises because the director has the right of subrogation in relation to guaranteeing and indemnity, etc.
  2. This notice of material interest is not important if a company is a proprietary company and other directors are known about the nature and extent of the interest and affairs of the company as per section 191(1)(b). as per section 191(5), this section is not applicable to a proprietary company with one director. This is applicable to public companies.

Conclusion-

The given section 191 is not applicable to proprietary companies with one director but is applicable to public companies. So in general, if a director has any material interest in any of the affairs of the company, he should make it known to his fellow directors.

Business and Corporate Law - Question 6

Issue-

How to prevent Daniel from claiming the defence on changing the number of solicitors?

Rule

Corporations act 2001

Application

As per section 125 of the Act if the company exercises its power beyond the objects of the company, then it cannot be held merely invalid. Common changes that a company does is

  1. Implementing the new structure of the company
  2. Allowing a sole director
  3. New licence or funding arrangement
  4. Any changes to be done as per changes in the law

Conclusion

As per the act, the company if want to change the structure of the company can do that just by passing a special resolution under section 162 of the Act. This is how Daniel cannot claim any defence as the company wants to increase the number of solicitors in it.

Business and Corporate Law - Question 7

Issue

Can a company expand its business beyond what is mentioned in the objects clause

Rule

Corporations act 2001

Application

As per section 125 of the act, a company can make alterations beyond the objects clause. Though it needs to abide by that if anything done beyond the objects clause, is in better interest of the company and done in good faith by the directors, so that cannot be invalid. As per 181, if the director of a company is doing their duty in good faith but beyond what is authorised to them, so that is inconsistent.

Conclusion

It is held that Brass Creations Pty Ltd can alter their objects clause if the working of the company is to be in its self-interest. 

Business and Corporate Law - Question 8

Issue

How can Brass Ltd (B) contract with Speedsta ltd (S)?

Rule

Corporations act 2001

Application

As per section 165 of the Act, to change the type of the company, the companyhas to file an application to ASIC (Australian Securities Investment Commission). This application must be followed by a copy of special resolution that shows the consent of other directors of the company and any other special resolution that deems fit by the company.

Conclusion

Hence, B can contract with S only if it have the consent of other directors and is able to prove that it is in better interest of the company at large. In order to expand the business, they need to start manufacturing rim for S and supply them.

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

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