Business Law Assignment Evaluating Business Scenarios Using Australian Laws
The questions to be answered in the business law assignment are:
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 store owner wishes to know:
a) Whether Egeeay Supermarket owes a duty of care to Barbara?
b) If they do, has it breached that duty of care?
c) Whether your answer would be different if Barbara had slipped on some grapes in the fruit section of the store.
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.
Has Brown any remedy or remedies available to him against the retailer, Underwear Galore, under the Australian Consumer Law? Explain what Brown has to establish in order to succeed in an action and whether, in your opinion, he would be successful.
What are the advantages and disadvantages of becoming a franchisee? Should a person considering going into business the first time consider a franchise? Discuss.
What is the significance of Salomon v A Salomon & Co Ltd  AC 22? What is the ‘corporate veil’ and when is it permitted to be lifted under the Corporations Act?
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. Finally, Tristan asks: how does a person cease to be a member of a company?
As discussed in this part of business law assignment, breaching of duty is a situation when one party fails to perform the duty of care and fails to act reasonably (Kiran 2017). The same has been proposed by the Australian that a breach of duty happens when a person fails to adhere to the obligations and when the owner or director breaches the professional obligations. As per the case ruling of Fardon v Harcourt-Rivington  All ER Rep 81 it is observed that defendant needs to provide reasonable facts that duty of care has not been breached.
a. In the given scenario, Egeeay Supermarket does not owe a duty of care to Baraba who broke her ankle by slipping on the floor of the food section. In this scenario, it can be commented that the store policy was to check the floor condition every 15 minutes but not the overall store. There was a mention by the manager of the spillage incident in the grocery store however nothing has been mentioned of the overall store. Thereby, the management was to look after the spillage or check the floor that happens in the fruit section every 15 minutes. Hence, no breach of duty happened thereby liability does not fall upon Egeeay Supermarket
b. No breach of duty was committed by Egeeay Supermarket because there was nothing mentioned regarding the pet-food section and hence there was no liability in this regard.
The general ruling stands as such is that the defendants is expected to act with due diligence and skills in the activity being undertaken. The instance was observed in the case ruling of Nettleship v Watson. The standard of duty of care has been followed by the defendant and no breach occurred. The store policy only mentioned the regular check of the floor in the fruit section. Hence, the duty of care is not breached by the store or the staff in any situation. However, the staff must take due care of the fruit section and ensure that any accident should not happen. However, the said accident happened in the pet-food section thereby no breach of duty has happened. Hence, it can be concluded that the breach of duty would have occurred when the accident would have taken place in the fruits section of the store.
c. If Barbara slipped on grapes in the fruits section then the same would have tantamount to breach of care because it is already mentioned in the store policy that a check would be conducted every 15 minutes to ensure there was no spillage. Had the incident happened in the fruits section then Barbara could have sued the supermarket store for the damage she incurred. In that case, the store will be liable for compensation to Barbara because there was a breach of care. When breach of care is justified the aggrieved party needs to be compensated (Ingram 2017). Barbara slipped and damaged her ankle and it was the fault of the store. The store should have cleared the spillage and ensure there was no spillage on the fruits section. The failure of this duty tantamount to breach of care and hence the store is liable for compensating the aggrieved party that is Barbara.
As per the Australian Consumer Law, a consumer can be defined as a period that acquires the goods and it is the full responsibility of the manufacturer to provide information pertaining to the goods and services that are displayed for sale. However, it is the responsibility of the seller to provide relevant information that will help in projecting the correct information to the consumer. As per the ruling of the case Raretto vs. T.R. Pruce it has been held that defendant should provide a proper satisfactory product free from flaws.
As per the case study, Mr. Brown purchased woolen underpants from Underwear Galore and after wearing it for the first-time contracted dermatitis as there was the content of soda bisulfate. However, the point to be noted is that the underpants were covered in a cellophane wrap and contained no information regarding the product. Further, no specific information was provided to Mr. Brown by the retailer relating to the presence of soda bisulfate. Another important observation is the fact that there was no mention of the information regarding the washing of the underpants before wearing them for the first time. Hence, there was no mention or detail through which Mr. Brown could have ascertained the presence of soda bisulfate. As per the Australian Consumer Law, the retailer needs to contain all the information from the manufacturer and the same must be provided to the consumer. The retailer must act bona fide and the product should have all the information where the consumer can be satisfied with all the relevant information (Morrison, Abraham & Sheargold 2010).
However, in this case, neither the retailer nor the packaging provided any adequate information.
To establish legal action and remedy for the harm inflicted by the use of the woolen underpants, Mr. Brown must establish that the usage of the woolen underpants caused harm and physical damage. Moreover, there was no adequate information that will aware of Mr. Brown of the presence of the chemical in the underpants. It is the duty of the retailer to aware of the customer of the presence of any chemical or any risk associated with the product. Failure to do so results in a breach of duty and care. In this scenario, it can be commented that Mr. Brown needs to prove that the purchase was bonafide and needs to furnish the details by presenting the bill.
As per the Consumer Law of Australia, it can be commented that the packaging must provide the relevant information or the retailer must pass the information to the consumer (Morrison, Abraham & Sheargold 2010). In this case, Mr. Brown can take the recourse of statutory power and rules that safeguard the rights of the consumer. In this scenario, Mr. Brown can claim for damages and injuries by the use of the goods from the retailer. Since the goods contained chemicals it was essential that the same must be stated to the consumer. Hence, Mr. Brown has the right to claim compensation owing to the missing or concealing of the important information (Bruno & Editor 2016).
The franchise is a business model where the operation of the business is done under the brand name of different businesses. The franchiser provides the rights to the franchisee for marketing the goods and services through the trademark or the franchiser brand name.
The advantages of becoming a franchisee are as follows:
i. Established business
It provides the benefits of operating under the umbrella of the established business. The notions, the brand, and the model are already in place and requires the operation at new places
ii. Known brand
Operation under the franchise model helps the franchisee to take benefit of the previous model and the brand (Franchises 2019). Hence, the cost and efforts needed to establish the brand are removed and added benefit is loyal customers.
iii. Simpler business financing
Another major advantage is the acquisition of business finance is easy. Investors are ready to invest in a business that has an established brand and a strong network. In certain cases, the franchisor acquires finance making it relatively easier for the franchisee (Franchises 2019). However, the franchise form of business is not free from drawbacks such are:
i. No control
The franchisee has no control over the business and the rules are stated in the agreement and needed to be abided.
ii. Tied to suppliers
In the franchise model, it is essential to use the franchise supply and hence there is a major difference when it comes to usage of another supply system that helps in cost reduction.
The franchise is a lucrative option going by the presence of different beneficial factors such as security, less risk, and less investment but the selection of this idea as the initial one to enter into business is not a viable option because the initial business would thrive under the presence of creativity and self-made decisions rather going by the pre-defined terms and stringent rules.
In the case of Salmon V A Salomon & Co Ltd, the fact states that the shareholders are different from the company and hence, the creditors cannot sue the shareholders to repay the company’s debt. Hence, a corporate is a separate legal entity that is different from the shareholder. Companies whether parent or a subsidiary is a separate legal entity and has their rights and liabilities (Cheng 2011). In any scenario, the same cannot be clubbed with that of the shareholders. The same ruling was applied in the case of MacLaine Watson & Co Ltd v Department of Trade and Industry where it was recognized corporation is a legal entity.
A corporate veil is a legal concept that differentiates the action of a company and the shareholder thereby safeguarding them from the liability of the corporation debts and liabilities. Held in the case of The King v Portus; ex parte Federated Clerks Union of Australia[iv] that the shareholders are not liable for the company’s debts. In short, it is a safeguard mechanism that helps the shareholders; however, it does not imply that the safeguard is permanent. The court can decide whether the shareholder is responsible for any acts of the company. Lifting of corporate veil implies that the court can remove the curtain to know the real person behind the fraud. Lifting of the corporate veil enables the court to understand the illegal acts and the person responsible for conducting such illegal acts (Cheng 2011).
As per the Australian Law, a member can be a body corporate, a person, or a body politics. In this scenario, it is important to note that a member can be sued however, the business cannot be stated as a member. On behalf of trusts and estates, the trustee or executor can be nominated. However, it is important to determine that shareholding cannot be done by trusts and estate. A shareholder can be defined as an individual or institution that owns shares or stocks of a company. often shareholders are termed as members of the corporation. To become a member, it is important to understand that registration must be done at the time of the company’s registration. Written communication must be followed at the time of registration (Varzaly 2015).
For becoming a member of a company already into functioning it is important to observe that the person should provide written consent and the same need to be notified in the register of the members. In the case of a public company, at least one member is needed for the formation while the maximum remains unlimited (Varzaly 2015). However, in the case of a Proprietary Company, the maximum should not exceed the limit of 50. It is upon the company to make rules regarding the minimum age criteria of the member. The member can be ceased when the company undergoes the process of deregistration done voluntarily and all members agree with the process. Moreover, as per the rules, members can even resign on their own and even replaced.
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Franchises. (2019). Franchising explained. Retrieved from: https://www.business.gov.au/Planning/Business-structures-and-types/Franchises
Ingram, T. (2017). Ellison accused of duty breach. The Australian Financial Review Retrieved from https://search.proquest.com/docview/1869926214?accountid=30552
Kiran, M. (2017). Amazon asked to adapt contract terms to Australian law.
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