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Business Law Assignment Addressing Legal Issues in the Case Scenario


Task: Business Law Assignment Part 1: Project tasks
Anna and Cooper have decided to start their own marketing business and have come to you to seek advice on the common business structures in Australia. You are employed by Bluebottle Tax Agent and Business Advisers. Anna and Cooper are currently employed in the family business, a large marketing firm for around 10 years (Creativity). They want to leave the family business to start their own firm. They have some funds put aside to meet the set-up costs for the business. They expect their business will earn around $200,000 in the first year of operation as Cooper expects to rapidly expand his client base. Anna and Cooper both own their own homes and have other assets. They are concerned about their tax liability as the business earnings increase and they do not want their personal assets to be available to satisfy debts of the business. They want to minimise cost involved in setting up the new structure. Anna and Cooper have asked you to recommend a business structure that might best suit their needs. To complete this part of the assessment, you will be required to complete research to allow you to answer the short answer questions below:

Task 1 Research and analyse business structures-
Before advising Anna and Cooper you are required to research different business structures (Sole trader, Partnership and Trust) and legal entities (Company), interpret your research to analyse the impact of legal issues including the ease of establishment, size, risk and complexity in running.

(a) Research areas of risk and analyse how legal issues impact on different types of business structures used in Australia including a Sole Trader, Partnership, Company and Trust.

(b) Evaluate the relevance of your analysis to the client’s circumstances. Include your evaluation in Column 6 of the Table below.

(c) Based on your evaluation formulates the recommendation you will give to the clients based on their circumstances and the relevant law.

Task 2 Prepare a business report-
Based on your recommended business structure in Task 1 above, prepare a short business report to demonstrate the plan for the new marketing business strategies to Anna and Cooper (the clients). You will use the report to discuss your research and recommendation with your supervisor, to seek advice and guidance (Part 2 Task 3) and to have a discussion with your clients explaining your strategy (Part 2 Task 4).

Part 2: Research, recommend and update

Anna and Cooper have returned to see you again and have asked for your advice. You have asked them background information before you can provide any advice.

Anna and Cooper left their jobs at Creativity after a family argument and started their own firm on 5 January, 2019 following your previous advice to them. Anna had been working in the office of Creativity for last 10 years from the age of 14, where most recently she held a senior management position. Her brother Cooper had also been working with the business in the marketing division for 8 years since leaving school and was the head of the division. After your business structure recommendation, Anna and Cooper decided to incorporate a company to run their marketing business, Master Marketers Pty. Ltd. Anna and Cooper are directors and members of the newly formed company. They located suitable business premises and signed a lease agreement with Rain & Stars Pty Ltd, stating that lease would commence upon renovations that were expected to be completed by mid?February 2019. On 1 February 2019 Rain & Stars Pty Ltd advised Anna and Cooper in writing that they did not intend to complete the renovations as the economy was not what they had expected at this time. Anna and Cooper are very upset and distressed, as they will not be able to open their new business as expected.

Anna left her mobile phone in the local coffee shop later that afternoon. She immediately posted signs offering a reward of $250 for anyone who returned her phone undamaged. Cosmos, the local café cleaner found the phone later that night in the course of his employment. He had not seen the poster for the reward of the phone. Cosmos returned the phone to Anna and claimed the reward.

Finally finding new business premises to lease, Anna and Cooper opened their new business on 1 May 2019 (10 weeks later than expected) as Master Marketer Pty. Ltd. They immediately commenced an intensive marketing campaign to try and boost their client base as the unexpected delay in opening had really hurt them financially. As part of their marketing campaign they engaged in print media, radio, television, social media and letter writing campaigns, including writing to all businesses (including some of Creativity’s clients) in the area. As a result of the intensive marketing campaign the business client base grew rapidly including several of Creativity’s top clients. Their newspaper advertisements stated: “*FREE social media marketing for all new clients until 30 June, 2019. Conditions apply.” The conditions attached to the offer were not displayed on the same page as the advertisement and provided that a $300 design fee related to any social media marketing. When they started working in the family business, they both signed employment contracts which contained the following term:

“The employee agrees that upon ending their employment with Creativity, they shall not for a period of 5 years after his/her termination engage in any employment involved in any managerial or marketing capacity with any company, anywhere in Australia that may compete in the same industry as Creativity. The employee also agrees that upon termination of their employment they will not seek to solicit any of Creativity’s customers or other staff members”.

Anna and Cooper have also just received a letter of demand for rent from Rain & Stars, demanding payment of rent from 15 February 2019. You are to advise Anna and Cooper if they are required to continue with this lease, on account that the renovations were not completed and they were advised that Rain & Stars had no intention of completing them. Anna and Cooper have asked for your advice. You have explained to them that you need to research some areas to make sure there are no changes to existing law/new laws and you will provide them with up to date and accurate advice.

Complete the following four tasks, ensuring you research relevant laws with reference to cases where applicable.

This task requires you to review the client’s circumstances and the relevant consumer and contract law, apply the law to the client’s circumstances and advise the client.

Task 1-
(a) Identify information to guide research: Using the information in the scenario above, identify issues relevant to contract and consumer law, collate and process this new information to guide your research to gather further information to provide advice to the clients. (100 – 150 words)

(b) Collect and collate client’s available information for analysis. Collect any additional information you would need from your client to identify the client’s circumstances and to inform your research of their circumstances. Record that additional information here and combine it with relevant information extracted from the client scenario.

Task 2 Plan and manage tasks and conduct research and develop solutions-
(a) In Task 1(a) you identified legal issues relevant to contract and consumer law that related to your client’s circumstances. Task 2 requires you to develop a plan to manage your review of legal sources relevant to those issues and conduct that review. Create a plan itemising the tasks you will need to complete in order to manage your review. Include in your plan the legal sources you will access that relate to the issues you have identified and explain how this plan might contribute to achieving your broader goal of providing advice to your clients

(b) Research information and analyse relevant legal sources that relate to the client’s circumstances and detail the aspects of contract and consumer laws that relate to the client’s circumstances. (600- 800 words). In your answer include details of the legal sources you used to conduct the review and the date the sources were accessed. If an internet source is included, name of the source (e.g. website title) and the URL should be included.

Task 3 Develop solutions and recommend changes-
Based on your review in Task 2, what solutions would you recommend to your clients to address their legal issues? What recommendations would you make to your clients about the issues that have arisen relevant to contact and consumer law? Summarise the outcomes of the recommended changes. (600-700 words)

Task 4 Advise clients about risks and their management-
Write a letter to Anna and Cooper explaining the areas of risk to their organisation that arise from their circumstances and how these can be managed. (600 – 800 words) Required: Your advice must be based upon your review and consolidation of all relevant information and must apply relevant legal principles and legislation. In addition, your letter must: include the following:

  • a summary of client circumstances and the legal issues raised;
  • an analysis of each issue and the risk to business operations with reference to legal principles and relevant legislation;
  • presentation of advice to the client on solutions to the legal issues after a review of all research and relevant information; and
  • recommendations as to changes to business operations to address risks raised by the legal issues.


Business Law Assignment Part 1
Task 1

Business structure and its operation

Legal principles of establishment


Risk Implications

Complexity in operation and tax implication

Relevance to clients

Sole trader – individual or self-owned business (Australian Taxation Office, 2020)

No specific legislation but can be liable to legislations specific to the business

Small business

·         Liable for debts

·         Lack of continuity in business

·         Limited capital raising the scope

·         Pay tax at the individual rate of income.

·         Limited ability to claim a tax deduction

Not relevant due to Anna and Cooper not being willing to risk their assets

Partnership – profits divided between partners (Australian Taxation Office, 2020)

Partners are liable for all the obligations and debts (Clayton UTZ, 2014).

Small. Medium and large business

·         Risk of disagreements and friction.

·         Valuing all the partnership assets if a partner wants to leave.

·         Tax is being paid on individual shares.

·         No access to government grants.

Relevant due to two partners willing to start a business together

Trust – Puts an entity or a person in charge of holding assets for the benefit of another person (Australian Taxation Office, 2020)

A formal deed is required along with ABN, TFN and GST registered

Small and medium-sized business

·         Expensive to maintain and establish.

·         Restricted power of trustees.

Individual beneficiaries must file for tax returns.


Not relevant as they are not planning for any charity business or distribution of profits

Company – a legal entity with higher administration and set-up costs(Australian Taxation Office, 2020)

Must be GST registered and is entitled to ABN and TFN and the money earned cannot be taken out of the business

Medium to large business

The directors of the company are personally liable for the company’s debts if they fail to meet legal obligations (Tasmanian Government, 2020).

·         Profits of the shareholders are taxable

·         Limited tax concession.

Not relevant due to high set-up costs and directors being liable for debts

Recommendation and advice to the client

After analyzing the circumstances of Anna and Cooper along with analysis of the relevant business structures, a partnership business structure can be recommended. The partnership business structures satisfy the requirements of Anna and Cooper in terms of starting their own marketing business as this type of business structure does not require huge investments and their assets will also not be liable to satisfy the business debts. Overall, the partnership business structure will ensure that both Anna and Cooper pay individual taxes based on their respective profit. However, the only concern that they need to address is regarding the withdrawal of business interest from either partner as this can result in huge financial stress for the other partner who is willing to continue with the business.

Task 2
The purpose of engagement is to resolve the legal issues for the clients regarding contract and consumer law. Five key legal issues are identified from the circumstances of clients. Two issues are related to the lease contract with Rains & Stars, one is an issue is related to the previous employment contract of Anna and Cooper with Creativity, where they used to work previously, one issue is related to Anna about the reward money she promised to offer after getting her lost phone back, and one issue is related to the newspaper advertisement for the new business. The four business structures that are suggested for the new business of Anna and Cooper are relevant for small and medium-sized businesses and the risks and complexity related to each structure are discussed along with the circumstances of the clients. After analyzing the four structures, it is suggested that partnership is the most effective structure that Anna and Cooper should follow. The partnership structure is suitable for the new marketing business of Anna and Cooper as it does not require huge investment and there is no liability of personal assets. The individual taxes will be paid by the partners and it satisfies the requirement of both Anna and Cooper.

Part 2
Task 1

(a) There are several issues identified after the discussion with Anna and Cooper and some of the issues are relevant o contract law and some of them are related to consumer law. The contract with Rain & Stars Pty Ltd, the reward for lost mobile phone Anna, the employment contract of Anna and Cooper with creativity, and the rent issue with Rain & Stars Pty Ltd needs to be resolved with contract law and the newspaper advertisement issue should be resolved with consumer law. (b) The additional information required for further research are employment contract details of creativity, contact terms with Rains & Stars Pty Ltd. The employment contract with Creativity reveals new information that is Anna and Cooper were not bounded to not opening their own business in the same field as per the contract terms, but they were only bounded to involve in any company in managerial or marketing activity. Other information that comes up from reviewing the contract terms with Rains & Stars Pty Ltd is Anna and Cooper will only pay for the renovation if Rains & Stars Pty Ltd completes its work within a specific time and as per contract terms.

Task 2
(a) The table below indicates how the legal issues will be reviewed with the help of adequate legal sources:

Legal Issue

Legal Source

Non-fulfilling of contract terms issue with Rains & Stars Pty Ltd.

Association of Corporate Council, Australian contract law

Employment contract terms issue with Creativity

Australia contract law.

Reward for lost mobile phone

Australian contract law

Rent issue with Rain & Stars Pty Ltd

Association of Corporate Council, Australian contract law,

Newspaper advertisement issue

Australian competition & Consumer commission,,,

(b) The legal sources that are relevant to the legal issues identified in the table are discussed in this section. The most important legal sources that are crucial for the clients’ issues are Australian contract law, Australian competition & Consumer commission, Association of Corporate Council (ACCC, 2010). The Australian contract law source reflects the terms of the contract that is related to the contract termination issue with Rains, employment contract term with Creativity, and rent issue with rain. The terms of the contract reflect that there are two types of terms- express and implied terms (Australian Contract Law, 2020). The express contracts are bound to be followed by both parties if the contract terms are accepted by the parties and both the parties signed a written document (Australian Contract Law, 2020). The agreement of lease was signed by Anna and Cooper and Rains on specific terms, so the legal source is relevant to support the specific issue. The Australian Competition and Consumer Commission is the legal source that is relevant to the newspaper advertisement issue. The sources discuss the advertising-related rules under Australian Consumer Law. The legal source of the Australian Competition and Consumer Commission also reflects the offers, gifts, and rebates expressed by any business via advertisement or any other form. The information is relevant to the issue of newspaper advertisement (ACCC, 2010). is a legal source that is related to one of the issues that are Rent issues with Rain & Stars Pty Ltd, and the source specifically reflects on termination of a contract due to breach. The information from the source is applicable for the specific legal issue. The source of Australian Contract Law is helpful to support the facts in the issues with Rains as the sources contain information about breach of contract and the terms based on which the termination of contract can be conducted (, 2021). The Australian contract law is a relevant source that supports case laws to review the issue and to support the client based on relevant case law. The source includes many case laws that are related to breach and contract terms, so they are also useful to support the contract law-related issues for the clients. is another source that is useful for the advertisement issue and it contains detailed information about the specific rules of advertisement and relevant case examples that will help to support Anne and Cooper related to their newspaper advertisement issue. (, 2020)

Task 3
For the first issue, it is clear that the lease contract between Rains and the clients is signed based on the key term that the lease contract is commencing on the renovation of the premise that needs to be complete within mid-Feb 2019. After signing the contract, Rains denied doing so and the breach of contract term by Rains delayed the business of the clients, which led them to open their business 10 weeks later than the expected date. In this case, a breach of contract was conducted by the breaching party Rains, which affected the non-breaching party Anna and Cooper and they faced a loss in business due to delay in opening. Under the breach of contract provision of Australian contract law, the non-breaching party has the right to terminate the contract as the other party in the contract repudiated the contract terms, which caused a financial loss to the non-breaching party (Julie Clarke, 2020). It is recommended to the client that the contract with Rains should be terminated based on the breach of contract terms. The case of Sanpine Pty Ltd v Koompahtoo Local Authority Land Council (2007) supports the fact that indicates the repudiation and seriousness of a breach is supportive to terminate a contract (Australian Contract Law, 2012).

For the second issue, the review of the information provided by the client as well as additional information indicates that the employment contract of clients with Creativity includes that they cannot be involved in any employment related to marketing capacity and managerial activities with any company. The express terms under Australian Contract Law are applicable in the issue as the express terms are applicable in four situations and the effect of signing a written document is a part of it. Based on this provision, parties are bound to follow the contract terms contained in the document (Australian Contract Law, 2020). The issue is mainly raised as the clients are currently carrying out marketing activities but in their own company. As in the employment contract term, it was not mentioned that the company on which they are going to work should be another company or their own, so based on this fact, it is recommended to the clients that the clarity of express term can be used to support their side. A term in the employment contract that explains the employees will not solicit any of Creativity's staff members or customers, but this term is breached by Anna and Cooper as they used the contracts of some of Creativity's clients for their business (Julie Clarke, 2020). To resolve this issue, it is recommended to the clients that they should settle the matter with Creativity with mutual concern.

For the third issue, an open offer was provided by Anna to provide a reward of $250 to anyone who will return her phone undamaged. It is recommended to Anna that she cannot deny the reward money she offered for returning her phone to Cosmos based on the Acceptance provision under Australian contract law. The case of Carlill v Carbolic Smoke Ball Co (1893) supports the fact that if an offer is valid and contains clear terms and it does not include any specific person, then it is considered as acceptance of the offer by the offeree (Australian Contract Law, 2015). Cosmos, who returned the phone to Anna, did not need to communicate about the intention of acceptance as the offer was general and open for everyone.

The fourth issue is the rent issue from Rains and it is recommended to Anna and Copper that they do not need to continue the leases contract with Rains based on the grounds of breach of contract under Australian contract law. The renovation term is one of the key contract terms that was breached by Rains & Stars and it also caused a delay in the business opening of Anna and Copper (Julie Clarke, 2020). The renovation term was denied by Rain & Stars and due to this decision; they entered into the other lease contract. Based on the breach of contract term provision under Australian contract law, the non-breaching party has the right to terminate the contract (, 2021). Based on the provision and the evidence of a breach by Rains & Stars, it is recommended to Anna and Cooper they can terminate the lease contract with Rains & Stars.

For the newspaper advertisement issue, sec-35 of the Competition and Consumer Act 2010 is applicable. Sec-35 explains bait advertising and special offers. Bait advertising is a legal form of advertising, and it also explains that a person, who advertises to provide a specific service or good at a specific price for a specific period, must provide the goods and service on the specific conditions (, 2012). In the newspaper advertisement issue the free offer provides regarding free social media marketing mentions about conditions that apply and the conditions are also mentioned on the next page. It can be said that they communicated about the offer regarding specific prices and conditions (ACCC, 2010). It is recommended to Anna and Cooper, if they face any problem regarding the advertisement, the bait advertisement can be implemented (, 2020).

Task 4
To Anna and Cooper,

The analysis of the circumstances identifies five legal issues and four of them are related to risks regarding business operations. The first issue is related to the business risk in term of financial loss that caused due to the delay in business opening. The legal principle that applies to the first issue is a breach of contract. The second issue may create business operation risk as the employment contract term is breached and there is a chance of a lawsuit, which may involve monetary compensation for breaching the contract term. The fourth issue needs to be resolved with the help of a breach of contract to avoid the payment of any rent. The issue may affect the business operation in terms of payment of additional cost for lease that is not required. It may cause financial risk for the business. The fifth issue carries risk in business operations in terms of conflict with the clients who will go through the newspaper advertisement if the mentioned conditions are not viewed by the clients.

For the first issue and fourth issue, it is advised to terminate the contract based on the breach of contract principle. The breaching party is Rains & Stars, so the non-breaching party has the right to terminate the contract. If the contract is terminated, then there will be no legal relationship between the parties. The second issue can be resolved based on the grounds of express contract, but the involvement of Creativity's clients in the current business may cause an issue of compensation claim by Creativity. It is advised that the issue needs to be resolved with the settlement of compensation. The reward money issue should be paid to Cosmos as it was a general offer and it is assumed to be accepted by all. The advertisement issue can be resolved based on the grounds of bait advertisement.

The most crucial risk that may affect the business operations is the breach of one employment contract term. The settlement with creativity based on another contract that includes Anna and Cooper are not abide by employment contract terms can resolve the issue and can reduce the risk to business operations. The termination of the contract with Rains &Stars will eliminate any business risk that may occur in the future. ?

ACCC (2010).Advertising and selling guide | ACCC. [online] Available at: [Accessed 12 Aug. 2021].

Australian Contract Law (2012).Aus Contract Law | Cases. [online] Available at: [Accessed 12 Aug. 2021].

Australian Contract Law (2015).Aus Contract Law. [online] Available at: [Accessed 12 Aug. 2021].

Australian Contract Law (2020).Australian Contract Law | Julie Clarke. [online] Available at: [Accessed 12 Aug. 2021].

Australian Taxation Office (2020).Choosing your business structure. [online] Available at: [Accessed 12 Aug. 2021]. (2021).End a contract | [online] Available at: [Accessed 12 Aug. 2021].

Clayton UTZ (2014). Doing Business in Australia: Business structures - Knowledge - Clayton Utz. [online] Available at: [Accessed 12 Aug. 2021].

Julie Clarke (2020). Australian Contract Law | Julie Clarke. [online] Available at: [Accessed 12 Aug. 2021]. (2012).Competition and Consumer Act 2010. [online] Available at: [Accessed 12 Aug. 2021]. (2020).The laws of advertising and your community organisation A guide for Australian community organisations on complying with the laws of advertising and marketing in Australia. [online] . Available at: organisation_Cth.pdf [Accessed 12 Aug. 2021].

Tasmanian Government (2020).Company - advantages and disadvantages | Business Tasmania. [online] Available at: [Accessed 12 Aug. 2021].


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