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Advantages of a Limited Liability Organization

Describe about the Business Law for Limited Liability Framework.

1. With Joe incorporating Robert’s Boating private limited, the key advantages the company will receive are as follows: -

Management of the company- Operating a limited liability organization requires less paperwork and administrative. A limited liability organization does not issue stock certificates nor hold regular meetings. Auditing and record keeping are less tedious relying on the requirements of the members. There is no maximum or minimum number of members in the limited liability company. The owner of the company can take all the decisions and can also hire members to form a management team that would run the organization.

Limited Liability of company – Registering the business as a limited liability company, Joe can run the company with much ease. Incorporation under limited liability will receive much greater tax exemption creating profitability for the company. It also helps Joe in the mitigation of personal liability and the protection of given assets of the corporation (Baxt, Harris and Finnane 2013). It will also help Joe in capping the liability of towards the creditors of the company. Raising capital becomes much easier for Joe once the company follows certain decorum.

Tax – While the normal marginal tax rate for individuals working under normally registered business name stands at 47%, incorporating a corporation in Australia will have a flat tax rate of 30%. Joe has to pay taxes based on the capital gains of the company. Joe needs to pay tax on its accessible income based on the company tax rate, and the company can further be applicable for tax deductions (Baxt, Harris and Finnane 2014). This will help the company save a lot of money in the form of funds which can be spent in other functioning of management creating profitability of the company.

2. The procedures that Joe had to follow under the Corporations Act 2001 to register the Robert’s Boating Pty Ltd are as follows:

To register the company, Joe should lodge an application with the ASIC.

The application should state the following:

The type of organization that is to be registered under the Act;

The proposed name of the company (Burrell and McGinn 2009).

The address and name of each individual who will become the member of the company;

The family and present given name and place and date of birth of each member who will become; the director of the company;

Procedures for Registering a Limited Liability Company

The family and present given name and place and date of birth of each member who will become the company secretary (Davenport and Parker 2011).

The address of each member who will become the company secretary or director;

The address of the proposed registered office of the company;

The address of the principle place of the business of the company (if it is not address of proposed registered office);

Joe has to follow the procedure as the company is limited by shares

The class and number of shares in writing each member agrees to take up

The amount each member agree to pay for each share in writing

Whether each member’s share agrees to take up would be fully paid on registration

If those amounts are not be fully paid for registration – the amounts each member agrees to be unpaid on the shares (Gibson and Fraser 2007).

The application should be in prescribed form

Joe should have the agreements and consents referred to in the subsection 2 when the application is lodged. Joe should give the agreements and consents to the organization after the organization is registered. The company should keep the agreements and consents.

On the basis of subsection 5 an offense would be considered as strict liability.

The internal management rules of the company would be governed by the provisions of section 134 of corporation act 2001. 


3.
The Joe's liability is discussed if Robert's Boating Pty Ltd cannot fulfill the order of Perth Sea Rescue is discussed with following the four step process.

Step 1: Introduce the area of the law

The area of the law focuses on the fulfilment of the order undertaken by Robert's Boating Pty Ltd seems to be consisting of 5 boat order for the Perth Sea Rescue. This law area is focused with considering the liability of Joe who is appointed to the company on January 2016 (Mo 2012).

Step 2: Discuss the applicable law to solve and quote relevant cases and the sections of the Corporations Act 2001 (Cth) where applicable.

The application of the law of Corporations Act 2001 (Cth)-Section 140, depicts the appropriate establishment if the resolution process regarding the effect of the issues created by the organization.  As per the law of the liability of Breaching of contract, if the buyer failed to pay the amount as per the contract depicted, then the seller is liable for cancelling the order with 5% refund on the total amount (Solomon 2009). As per the contract, Joe will have to pay an amount if Robert’s Boating Pty Ltd’s contract is cancelled.

Applicable Laws for Contractual Liability

Step3: Apply the law to the facts to resolve the problem.

The laws depicts the liability for the inappropriate execution or the payment order failure for the Joe is undertaken as per depicted in this case study (Symon 2006). It also provides the failure of the contract for which Joe is liable for the failure of the contract.

Step 4: Come to a conclusion

As per the above discussion, the conclusion that can be drawn is that if Joe is liable for the failure of the contract, then the above mentioned conditions must be implemented against Joe by the Robert’s Boating Pty Ltd.

4. As per Australian contract law, a contract is a legal agreement which should have the following elements offer, intention of binding to a contract, consideration, legal capacity, consent and the formalities. In the undertaken case it has been seen Haana a Factory manager of Robert's Boating Pty Ltd performed a contract with ABC Ltd on behalf of the company to buy a machine that manufactures boats from high tensile plastic without informing the managing director of the company Joe. As a factory manager, Haana is entitled to spend up to $25,000 only. Afterward, Robert's Boating Pty Ltd annulled the contract on the following ground:

The contract is invalid and unenforceable as according to the constitution of the company the company cannot engage any activities other than producing fiberglass boats and the company has not any capacity to enter into such type of contract (Thomas 2010).

And secondly, Haana does have the authority to buy a $40,000 machine as her limit is only $25,000.

The first ground of Robert’s Pty to terminate the contract:

Issue: The Company is involving in manufacturing boats of fiberglass, is the company involve in plastic boat manufacturing?

Law: As per Australian Corporation Act 2001(Cth) the company cannot manufacture from the high tensile plastic boat as according to the constitution of the company the company is entitled to manufacture on fiberglass boats (Vickery, Pendleton and Flood 2008).

Application: According to the Australian Corporation Act 2001 the production companies' production materials and result or products must be predefined and the companies cannot involve in any production other than the predefined production of goods.

Conclusion: The Company cannot involve in any other production, rather than fiberglass boats as per the constitution of the company. However, it is not the headache of the ABC Ltd. Haana is a representative of Robert’s Boat Pty Ltd and on behalf of the company she contract with ABC for buying the machine for the Robert’s Pty Ltd from the company.  As the senior executive of the company Haana should know the constitution of the company thus, as she indulges in this contract on behalf of the company the company Robert's Boat Company cannot avoid the liability of the contract.

The second ground of Robert’s Pty to terminate the contract:

Issue:  Whether Haana has the authority to involve in a contract on behalf of accompanying to buy a machine of $40,000 or not.

Law: As per the Australian Contract Act, the company representative can perform a contractual duty on behalf of the company. The rules and policy of a company describes the role and responsibility of each member as per the Australian Corporation Act 2001 (Watson, Gleeson and Higgins 2013).

Application: Haana can perform the contract on behalf of her company as she was in a position of Sales Manager and representative of the company thus the contract should be valid.

Conclusion:

Moreover, the ABC Ltd would not see that the limit of spending of Haana is  $25,000 as a factory manager. Whether Haana is authorized to spend $40,000 or not the company is liable for the contract by Haana.

References

Barker, David. 2005. Essential Australian Law. Sydney, N.S.W.: Cavendish.

Baxt, R, Jason R Harris, and Edmund Thomas Finnane. 2014. Corporations Legislation 2014. Pyrmont, N.S.W.: Thomson Reuters.

Baxt, Robert, Jason R Harris, and Edmund Thomas Finnane. 2013. Corporations Legislation 2013. Pyrmont, N.S.W.: Thomson Reuters.

Burrell, David and John G McGinn. 2009. Cornerstone Law Series. [Adelaide]: Law Society of South Australia.

Davenport, Shayne and David Parker. 2011. Business And Law In Australia. Pyrmont, N.S.W.: Thomson Reuters (Professional) Australia.

Gibson, Andy and Douglas Fraser. 2007. Business Law. Frenchs Forest, N.S.W.: Pearson/Prentice Hall.

Mo, John Shijian. 2012. International Commercial Law. Chatswood, N.S.W.: LexisNexis Butterworths.

Solomon, Richard. 2009. Cornerstone Law Series. [Adelaide]: Law Society of South Australia.

Symon, Helen. 2006. Corporations Act 2001. Melbourne: Leo Cussen Institute.

Thomas, Geoff. 2010. Cornerstone Law Series. [Adelaide]: Law Society of South Australia.

Vickery, Roger, Wayne Pendleton, and MaryAnne Flood. 2008. Australian Business Law. Frenchs Forest, N.S.W.: Pearson Education.

Watson, J. A, Justin T Gleeson, and Ruth C. A Higgins. 2013. Historical Foundations Of Australian Law. Annandale, N.S.W.: Federation Press.

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