Describe about the Business Laws for Fiduciaries and Insider Trading.
Case: Marlena offered to sell her car to John for $78,000. John said that he would, “need to think about it”, and would get back to her. After three days John called Marlena and said he has accepted her offer. Marlena informed John that, since she hadn’t heard from him, she had sold the car to Kristen. Advise John whether he is entitled to the car or not?
With regards to the aforementioned case, it is imperative to note that Marlena and John did not enter any formal contract. This is due to the fact that Marlena simply offered to sell her car to John and because he was not in the immediate position of accepting her offer, he told Marlena that he ‘needed to think about’, her offer (Fisher, n.d.; p. 5). It is of the essence to note that however the case may seem clear-cut there may exist two arguments. Firstly, before the agreement was made, Marlena did not disclose to John that she was in a hurry to sell her car. Without this important disclosure the agreement can be easily contested by John; meaning that the omission clause which is referred to in the case can not be relied upon by Marlena. Secondly, it is suffice to say that Marlena and John entered an informal contract which was not binding; this type of contract is known as ‘willing buyer, willing seller’, meaning that Marlena was willing to sell John her car but because John was not willing to buy the car at the stipulated time, Marlena had no choice but to sell the car to a more willing buyer who was Kristen (Carter, 1999; p. 1). Having this in mind, it is important for John to know that he is not entitled to the car for a number of reasons, firstly, he was not initially entitled to the car because he did not expressly agree that he was going to purchase the car, secondly, he was not willing to purchase it at the stipulated time, and moreover, they did not have a formal contract be it verbal or written.
Case: The plaintiff took a suit to be dry-cleaned at 20 Minute Cleaners Pty Ltd. After handing over the clothes and paying for the cleaning the plaintiff received a docket. On the reverse said of the docket was the following statement: “we accept no responsibility for goods damaged during the cleaning process.” The defendant did not take reasonable care of the garments and, as a result, they were damaged. Advice the plaintiff as to whether the dry-cleaner is liable to compensate the plaintiff for the damage caused. Note that all the ACL provides, in s 60, that there is an implied term in all consumer contracts that services will be rendered with “due care and skill”.
It is important to note that in this instance, the dry-cleaner is debatably not in contravention of any given express term of the prevailing contract. On the other hand, the said dry-cleaner contravened an Implied term at common law or under the ‘Competition and Consumer Act of 2010 (Cth)’ (Fisher, n.d.; p. 6). The dry-cleaner therefore breached his contract term by simply failing to take rational care when cleaning the clothes. Additionally, the ‘Australian Consumer Law’ endows in Section 60that there is an oblique term in all customer contracts that implies that services will be provided with ‘due skill and care’ (Burnett, 2004; p.12). This therefore means that there exists two possible arguments especially for the observation that the omission clause which is referred to in the case can not be relied upon by the dry-cleaner. This means that the cleaner as the defendant may not use the exclusion clause in his defence as it is not part of the original contract. Furthermore, due to the verity that the said exclusion clause was not in fact brought to the plaintiff’s awareness either before, or the time the agreement was made (Parliamentary Education Office, 2015; p. n.p.). Additionally and most prominent, even though this may seem quite wrong, the ‘Australian Consumer Law’, under sections 23 - 28 tends to make void the exclusion clause in that the defendant in question is not in a position of relying upon it (Barron, 2006; p.32).
Case: The plaintiff, a Management Consultancy Firm, made an urgent contract with a computer repairs company, Paxes Pty Ltd, to repair the plaintiff’s mainframe computer. Since the plaintiff firm could not operate without the mainframe, the firm ensured that time was of the essence in the contract – stating that Paxes must complete the repairs within three working days. Due to illness of certain key staff members Paxes has not made the deadline. The plaintiff stands to lose $4,000 per day each day the mainframe is down, and a lucrative government tender if it is not up by the end of the week. Advise the plaintiff firm.
Due to the fact that the Management and Consultancy Firm before entering the contract with Paxes Pty. Ltd. Made it quite clear to them that time was of the essence with regards to the repair of their mainframe computer, Paxes was clearly in breach of contract with the plaintiff firm. This is because they accepted the terms of the agreement prior to whn it was formally made. It is thus very important to note that Paxes is legally responsible for the naturally flowing losses emanating from the breach in addition to the losses in the deliberation of both the parties at the time of formation (Anon., 2015; p. n.p.). Having this in mind, it is vital for the plaintiff firm to be aware that even though the daily loss of revenue naturally flows due to the breach of contract, the potentially lost government tender will not naturally flow as a result of the breach of contract except if Paxes initially made aware of this crucial information at the formation of the contract (Andre, n.d.; p. 872). This makes it quite difficult for the plaintiff firm to lodge a formal litigation against Paxes, the contracting firm.
It is thus of paramount importance for the plaintiff firm to realize that despite the aforementioned facts, they have a duty to alleviate loss. This may be accomplished by outsourcing their production and computing tender if at all this solution will reduce the loss which is ultimately emanating from the breach in question or the said losses will be rendered irrecoverable (Anderson, n.d.; p. 341). I believe that this would be the vest advice to give the plaintiff firm and this is what it ought to consider.
Doc.x Tutorial Questions:
Name two features of the Australian legal system?
Two features of the Australian legal system include the ‘Representative Democracy’, where people tend to vote for representative who not only sit in parliament but make laws on their behalf and ‘The Common Law’ system which operates as a legal system, as a source of law inside the legal system, and as a classification inside the source of law (Fisher, n.d.; p. 7).
Describe the following:
The Australian Constitution, also referred to as the ‘birth certificate of a nation’, is a document providing the basic rules for the Australian government (Burnett, 2004; p). This constitution binds everyone with the inclusion of the Commonwealth Parliament and the parliament of each state
The Australian Court System tends to be structured in a hierarchical manner; this means that various courts are inclined to be more authoritative or powerful as compared to others depending on the gravity of a given offence, (Carter, 1999; p. 3). It is important to note that there are two basic types of courts, viz, a viz, Federal courts which are set up under the Commonwealth laws and State courts which tend to be set up under State laws (Parliamentary Education Office, 2015; p. n.p.).
The Australian Parliament is responsible for making laws, scrutinizing government activities, and authorizing the Australian government to spend public money. It also offers information on the work of Parliament, the Senate and the House of Representatives, as well as information for those visiting the Parliament House (Barron, 2006; p. 45).
The Australian Statutes are written laws which are able to forbid certain acts, direct certain acts, make declarations or lay out governmental mechanisms in order to assist the society (Anon., 2015; p. n.p.). Similar to any statute, Australian Statutes normally begin as proposed bills or those sponsored by a given legislator.
Explain why ethics is good for business?
Ethics is good for business because it creates trust between the organizations conducting their respective businesses and the relevant stakeholders thus ensuring that the said organizations uphold and maintain a good reputation while ensuring no harm befalls the consumers. This ensures that more investors are attracted to the firms which uphold good ethics (Andre, n.d.; p. 873).
Luke is a pharmacist. He has one customer, Pete, who is particularly difficult. Pete recently entered Luke’s pharmacy and accused Luke of poisoning him. Luke is extremely upset, although relieved that the store was empty and no one witnessed the episode. He wishes to use Pete for Defamation as the statements are completely untrue. Advise Luke.
Even though Pete indeed accused Luke of poisoning him, there was no one in the store to prove that Pete made defamatory remarks against Luke. It is important for Luke to understand that defamation cases more often than not require irrefutable proof in order for the claim to be regarded by the courts of law (Anderson, n.d.; p. 343). Nonetheless, due to the verity that Pete has a reputation of being difficult it is advisable for Luke to install audio enabled CCTV cameras so as to catch Pete in the act of making defamatory remarks.
Ken, A 15 year-old animal lover, went horse-riding for a day with some friends at a local horse-riding park. On hiring his horse Ken was told by the owner not to attempt to jump the creature over the fence. Unable to resist the temptation, Ken got the horse to jump over a tall fence, leading to an injury to the horse. Advise the owner as to whether she can sue Ken to recover the cost of the medical bills to the horse.
In this particular instance, the horse owner is in the advantageous position of suing Ken in order to recover the cost of the medical bills. This is because the owner initially warned Ken not to jump the creature over the fence but due to temptation, he still jumped the horse over a tall fence. Being a breach of agreement, Ken is legally responsible for incurring the costs of injury to the horse (Fisher, n.d.; p. 10).
The Managing Director of Pipemakers Pty Ltd and Senior Staff Members of Waterduct Pty Ltd, Competitors in the market for supplying fittings and valves for use with Ductile Iron Cement Lined Pipe, meet in Gold Coast Restaurants and coffee shops to agree to increases in their list prices and to formulate pricing strategies for particular tenders in which they are both involved. They also occasionally discuss such matters over the telephone.
Would such conduct contravene the CCA?
Yes! Such conduct clearly contravenes the Competition and Consumer Act 2010 (CCA); this is because both the Senior Staff Members of Waterduct Pty Ltd. and the Managing Director of Pipemakers Pty Ltd. are engaging in activities which constitute to unfair business practices (Carter, 1999; p. 12). Both the parties are engaging in anti-competitive behavior and are unfairly discussing how they are going to rig the pricing strategies in their market niche.
Recently A Corporation has been advertising in women’s magazines an Electronic Muscle Stimulation product known as “Slendertone” stating that the product can: “tone and firm any party of the body with no effort by the user”, “provide the user with the benefit of a workout without exercise”, “reduce the user’s body measurements by an inch or more” and “give the user, in 40 minutes per day, the equivalent of 300 general exercises.” The product in fact does none of these things. Advise the ACCC and affected consumers.
The aforementioned acts clearly contravene the ACCC. According to the Competition and Consumer Act 2010 (CCA) it is illegal for a business to issue misleading claims and advertising (Burnett, 2004; p. 39). It is imperative for consumers to understand that they have the right to receive truthful and accurate messages regarding the services and products which they are prompted to buy. The ACCC should therefore take action against the corporation in question and encourage the affected consumers to litigate the said corporation.
Anderson, A. G. (n.d.). “Fraud, Fiduciaries and Insider Trading”. Hofstra Law Review. Vo. 10. Pp. 341.
Andre, G. R. (n.d.). “Constructive Insider Liability and the Arm’s Length Transaction under Footnote 14 of Dirk’s”. George Washington Law Review. Vol. 52. Pp. 872.
Anon. (2015). Australian Constitution/ Learning/ Parliamentary Education Office (constitution, Australian, parliament, Australia, Federal). [Online]. Available at: https://www.peo.gov.au/learning/fact-sheets/australian-constitution.html [Accessed 29th Nov. 2016].
Barron, M. (2006). Fundamentals of business law. North Ryde, N.S.W.:McGraw-Hill.
Burnett, R. (2004). Law of International Business Transactions. Federation Press, 3rd Ed. Ch. 1.
Carter, J. W. (1999). ‘Party Autonomy and Statutory Regulation: Sale of Goods’. Journal of Contract Law. 14(1).
Fisher, G. E. (n.d.). ‘UNCITRAL Gives International Trade Law CLOUT’. Australian Business Law Review. 21(5).
Parliamentary Education Office. (2015). The Constitution and the High Court. [Online]. Available at: https://www.peo.gov.au/learning/closer-look/the-australian-constitution/the-constitution-and-the-high-court.html [Accessed 29th Nov. 2016].