ACTY5320 Law of Business Obligations

The objective of this assessment is to:
Demonstrate understanding of the New Zealand legal structure and functions;
Be able to identify liabilities arising from the tort of negligence and provide remedies; 
Understand the essential elements for a valid contract and remedies if there are defects. 

1.  Understand core elements of the New Zealand legal system and examine legislations and case law 

2.  Apply basic principles of liability arising from tort of negligence 

3.  Apply basic contractual principles to business situations 

What is the theory of separation of power and how is it achieved in New Zealand? In your own words, answer the question with reference to the specific operations of the three different branches of government. 

Required:

1.What is the definition of Partnership? Refer to the relevant section of the Act in your answer and briefly summarise this in your own words. 

2.Can partners in a partnership bind the firm through their actions? Refer to the relevant section of the Act in your answer.

3.What is the purpose of the Partnership Law Bill and at what stage is the progress of the Bill?

4.According the Partnership Law Bill, what is one type of relationship that is not a partnership?

5.Under which section of the Partnership Law Bill can information be found about the liability of a partner who has left the partnership?    

Describe in your own words the three elements required to establish a tort of negligence. Support each element with reference to the corresponding caselaw (refer to at least three different cases). 

1.A word count must be included. Maximum word length is 500 words. Marks will be deducted for going over the word limit or not including a word count.

2.You must use your own words and cite references in APA style. The Learning and Achievement staff can assist you with APA style referencing and writing style.

3.The following are useful resources to start your research for

Question 1, but you will need to extend your reading beyond these:

Ask the librarians for assistance in searching for material if you have difficulties. 

4.Wikipedia may be a good place to get started for your research topic but is not an acceptable source to cite in academic research.

5.When searching within a document, use control F and key words to assist you in finding information quickly.

International Resources Ltd (IRL) is a global investment company with major holdings in mining and timber companies throughout the world. To expand their investment, IRL began investigating the New Zealand market for potential acquisitions. 

Clifton Timber Ltd (CTL), a New Zealand based company that owns several lumberyards and forests has recently put out notices that its founder, Sir Gregory Clifton was in search of investors to take over the company after his retirement. Sir Clifton has managed CTL for several decades and holds 100% of the company’s shares.   

After negotiations, IRL has entered into a sale and purchase agreement to acquire Sir Clifton’s 100% shares in CTL and become new owners of CTL. The purchase is subject to the condition that IRL obtains due diligence approval from their nominated accountants.

Cautious Accounting was appointed to conduct a due diligence on CTL’s financials, including the value of its assets and report back to IRL with their opinion, for IRL to decide whether to go ahead with the purchase or not. 

After viewing the relevant documentation on CTL’s financials and assets, Cautious Accounting confirms there are no issues and the purchase price fairly reflects the actual value of CTL.
Relying on Cautious Accounting’s opinion, IRL declared the sale and purchase agreement unconditional and went ahead with the purchase. 

Twelve months later, new managers appointed by IRL reported that the CTL was in major trouble. It seems that for the last five years, Clifton Timber Ltd was poorly managed and major issues have developed. Machinery in the lumberyards did not have proper maintenance and are creating major health and safety risks. In addition, replanting in the forests held by CTL did not take place due to poor planning which meant that 50% of the forests are overgrown with useless vegetation. 

On examination of IRL’s records it was clear that these issues were known and recorded on several internal company documents. These documents were provided to Cautious Accounting but for some reason not reflected in the opinion that was given. 

IRL is now attempting to recover their investment from Cautious Accounting.

James was a very talented baker and started a bakery under the trading name ‘Tasty Treats’. To purchase the expensive commercial baking machines, he asked for a loan of $5000 from his mother, Betty. Betty agreed provided they put the loan agreement “on paper” as she didn’t want any “family argument” about the loan later and that James need to pay her back upon demand. James agreed and both of them signed the agreement. 

The bakery become popular with locals and became quite successful after a few months. As business got more and more busy, James found himself needing to get help to meet the increased demand. He called up his old classmate Amelia who also happens to be a amateur baker. James offered to take Amelia onboard, to teach her his skills and to pay her if business continued to be good. Amelia liked the opportunity but wanted the terms recorded on paper. James didn't want to sign any documents and preferred to keep things informal but ultimately agreed as he really needed the help. However he insisted on putting a clause in the agreement which stated "this agreement is not a formal or legal contract and shall not be enforceable in the Courts". Both Amelia and James then signed the agreement. 

James' bakery continued to thrive and for the next three months Amelia helped James with the business and James taught her many of his tips. However, he did no pay her during this time. Unfortunately, the stress of running the business became too much for James and one day he suffered a nervous breakdown. 

James' therapist advised him to close the business for now and go take a long extended vacation. James decided to take up this advice and told Amelia not to come anymore. Amelia was upset and asked James to pay her for the three months that she worked there. James refused and said that there was no agreement that he would pay her.  

When Betty heard that James had closed the bakery, she asked for her money back. James ignored her request. James have now heard from mutual friends and family that Amelia and Betty were getting lawyers to represent them and claim against him on the basis of the two agreements that he signed. 

Required

1. Advise James whether Amelia will be successful in an action against him. In your answer, please refer to the relevant caselaw. 
2. Advise James whether his mother, Betty, will be successful in an action against him. In your answer, please refer to the relevant caselaw.