Legal Case Questions On Business And Corporations Law Essay.

Refer to the prescribed textbook: Fitzpatrick J, Symes C, Veljanovski A & Parker D, Business and Corporations Law 3
rd ed. (2017), LexisNexis Butterworths Australia.
2. From Part 1 - Business, Chapters 2 to 6 on Contract Law, refer to the Problem Questions at the end of the chapter and choose one (1) question. Note: it must be a case problem-type question and not a short answer question.
3. You must send your lecturer the number of your question and the page on which it appears for approval. Do not start work on a question without obtaining your lecturer’s prior approval.
4. In not more than 1,000 words, answer your chosen legal case question using the IRAC method.
5. Your answer must be supported by relevant law and cases decided by Australian courts (preferably the High Court) and/or scholarly articles. A minimum of 3 references are required for this part of the report.Your references must be listed in a Reference list at the end of the Part A question.

1. Again, refer to Business and Corporations Law 3 rd edition by Fitzpatrick et al.2. This time, refer to Part 2 Corporations, Chapters 7 to 10 on Corporations. Refer to the Problem Questions at the end of the chapter and choose one (1) question.Note: it must be a case problem-type question and not a short answer question.3. You must send your lecturer the number of your question and the page on which it appears for approval. Do not start work on a question without obtaining your lecturer’s prior approval.
4. In not more than 1,000 words, answer your chosen legal case question using the IRAC method.
5. Your answer must be supported by relevant law and cases decided by Australian courts (preferably the High Court) and/or scholarly articles. A minimum of 3 references are required for this part of the report.
6. Your references must be listed in a Reference list at the end of the Part B question.

Part 1: Registration of a Proprietary Limited Company

The issue that needs to be decided in this question is if the company registered as a small proprietary company or as a large proprietary company. At the same time, it also needs to be considered if the company will remain in the same category or if it will fall under some other category as a result of the future projections regarding the revenue and assets of the company as well as the number of persons employed by the company. At the same time, it also needs to be seen if the particular words can be used in the name of the company.

The Corporations Act, 2001 provides that after its incorporation, the company has to be treated as a legal entity. However, the law requires that the name of the company should point out towards its legal status. Consequently, if the company is a proprietary company, then the term 'Proprietary' or its short form, 'Pty' should be used in the name of the company. Similarly, if the company has limited liability, the term 'Limited' or 'Ltd' should be present at the last. Generally, we come across a proprietary limited (Pty Ltd) company.

However, the law provides that a proprietary limited company cannot have any more than 50 non-employee shareholders (Fitzpatrick et al., 2017). The company is limited by shares. This means that the company is incorporated with the share capital that is made up of the shares that are given to the initial members at the time of the incorporation of the company. However, the accountability is restricted to any unpaid sum on these shares.

A proprietary company falls under the category of a small proprietary company or a large proprietary company.

A large proprietary company can be described as the same if it satisfies at least two of the conditions mentioned below in a particular financial year:

The consolidated revenue of the company for a financial year and any entities controlled by the company is $25 million of more.The value of consolidated gross assets of the company at the end of the financial years, as well as the entities controlled by it is $12.5 million or more; and The company and any entities controlled by it, have 50 or more employees working for them at the end of the financial year.

The law requires that a large proprietary corporation has to organize and lodge financial report, as well as the director's report regarding each financial year with the ASIC. The accounts of the company also need to be audited unless relief has been granted by the ASIC.

Small proprietary company: Conversely, a proprietary company can be classified as a small proprietary company regarding a particular financial year if the corporation satisfy no less than two of the below mentioned conditions.

The consolidated revenue of the company and any entities controlled by it is less than $25 million for a particular financial year.

The value of the gross assets of the company as well as the entities controlled by it is less than $12.5 million; and

Small Proprietary Company vs Large Proprietary Company

The company as well as the entities controlled by it has less than 50 employees working for them at the end of the financial year.

Regarding the name of the company, the corporation’s law provides that unnamed can be used by a company only if it is not identical to a present company or business. For this purpose, it is useful to make a name availability search in order to see if the name desired by the parties is available or not.

In the present case, the parties are willing to use the words, 'Anzac Coffe' in the name of the company that is going to register by them. The parties want to use these words as they represent truly Australian flavor. However, before using this name, it is important to make a business name search in order to see if this name has not been already used by any other business or company. Therefore if the name is not being used by any other business or company, it is possible for the parties to use these words in the name of the company.

In this regard, it is worth mentioning that by the end of the first financial year, the company is going to have gross assets of at least $5 million. Moreover, the company is also going to have at least 20 employee will be working for the company full-time. In the same way, the gross revenue of the company will be $10 million. Under these circumstances are bringing to the provisions that have been discussed above, it can be said that the company needs to be registered as a small proprietary company with the ASIC.

However the 5 year plan of the company reveals that by the end of this period, the gross assets of the company will be $13 million. Similarly, the estimated revenue the company will be $26 million. However, by that time, the company will be required to employ only 5 persons full time. Another 66 employees will be working half the time for the company. As a result, while at the end of the first financial year, the company falls under the category of small proprietary company, but if everything works according to the plan and the company succeeds in receiving its target, the company will have to be classified as a large proprietary company.

Under these circumstances, it can be said that the proposed company can be registered as a proprietary limited company with the ASIC. The company will fall in the classification of a small proprietary company at the end of the first financial year. However, if the estimates become true, after five years, the company will have to be considered as a large proprietary company.

Question 2

The issue in the present question deals with the unilateral offer made by Ming and if Ming can revoke this offer, because a large number of people started to come to Australian Hairline forgetting to hear that at a low price of $10.

Naming a Proprietary Limited Company

According to the law, a unilateral contract can be explained as an agreement that has been created by and offer and it can only be exhibited by performance. Therefore a unilateral contract is created between the parties when one party makes an express offered according to which the offer can be accepted just by performance. An example of a unilateral contract is a reward announced by one party. Therefore, when a party announces that it will give a reward of $500 to anyone who found a lost purse, the contract will be created with the person who finds the purse.

Therefore, in a unilateral contract, only one party, known as the offeror, makes a promise in lieu of some action by the other, which is known as the offeree. Therefore if the offeree decides to act on the promise of the offeror, the offeror will be lawfully forced to complete the terms of the contract. On the other hand, it needs to be noted that the other party (offeree) cannot be forced to act (or not to act). Due to the reasons that those letters promise was made to the offeror. Following the completion of the performance by the offeree, there is just one enforceable undertaking that is made by the offeror. The rules related with unilateral contract have been explained by the court in Carlill v Carbolic (1892). Therefore, in this case it was averted by the court that it is possible to be moved to an individual or a group or even to the world at large.

An offer can be observed in several different ways,, however in a unilateral contract, the offeror dispenses with the need for the communication of acceptance. The requirement according to which, there should be express communication indicating acceptance can be viewed by the party making the offer. This allows the acceptance of the race even without the communication of acceptance, having taken place. The dispensation of the need for communication can be express or implied. Therefore, in case of unilateral contract, in view of the fact that performance needed by the offeror amounts to the act of acceptance, the need for expressly communicating acceptance in such cases is impliedly waived.

On the other hand, the general principle related with the revocation of offer provides that the revocation of offer may occur at any time before the offer is accepted. But it will be effectual only when it has been received by the offeree (Stephenson v McLean, 1880). The revocation of offer can happen at any instance before acceptance (even if a promise was made by the offeror to keep the offer open) (Dickinson v Dodds, 1875).

The revocation of offer becomes effective when it has been communicated to the offeree. This can be done by the offeror or some other reasonably reliable person. However there are certain exceptions present to the application of the general rule discussed above. Among these exceptions, it has been provided that in case of a unilateral contract if performance (acceptance) has commenced, and there is an implied contract according to which the offer will not be revoked, the general rule will not apply and the offer cannot be revoked.

Part 2: Revocation of Unilateral Offer

In Mobil Oil v Wellcome Intl Pty Ltd (1998) the court stated that there was no offer as the statement was too vague and uncertain to be considered as a contractual obligation. It was further stated by the court that there is no general proposition that a unilateral offer cannot be revoked by and offeror before it has been accepted, even where the performance has been commenced by the offeree. But they can be certain cases where an implied ancillary contract is present, according to which the offer should not be revoked once. Performance has been commenced by the offeree.

Therefore the relevant legal position that is applicable in the above-mentioned case can be described as follows. The general rule provides that an offer made by one party can be revoked at any time before the offer has been accepted. However, the law also provides that in case of a unilateral contract, it is not possible to revoke the offer if performance has been commenced by the other party.

In the present case, Ming was running a hair salon under the name of Australian Hairline. In order to promote the business, Ming advertised the special offer in the local newspaper. According to this advertisement, it was mentioned that Hairlines will give a haircut at the low price of $10 to any customer who brings a copy of the advertisement. One day after the publication of the advertisement, nearly 50 persons arrive at the salon and demanded a haircut at $10. Soon, Ming is worried that he will lose a lot of money if the promotion continues. Under the circumstances, Ming places a sign on the window of the saloon according to which the offer has now finished.

(a) In case of the 40 customers who produce the advertisement before the notice was placed by Ming in the shop window. Therefore this case, Ming was trying to revoke the offer even as the performance of the offer has commenced. Under these circumstances, it can be said that Ming is bound to give a haircut to these customers at a price of $10 or be liable for the breach of contract.

(b) The 10 customers who do not have the advertisement with them cannot accept the offer made by Ming. As a result, these particular customers are not in a position to enforce the agreement and they cannot claim a haircut at a low price of $10.

(c) In this case, Ming cannot claim that the price of $10 is insufficient. The reason is that the court does not go into the question of sufficiency of consideration. As a result, Australian Hairline is bound by the promise made by Ming in the advertisement.

References

Fitzpatrick J, Symes C, Veljanovski A & Parker D, 2017, Business and Corporations Law 3rd ed. LexisNexis Butterworths

 Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1

Stevenson Jaques & Co. v McLean (1880) 5 QBD 346

Dickinson v Dodds (1875) 2 Ch D 463

Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475