ASSESSMENT QUESTIONS
Scenario 1
Lee dreams of opening an Asian inspired fusion café in Croydon. He is looking to take over an existing café that does not need any refurbishments from his side. He is lucky to find a recently closed café that had a similar business concept. He contacts Virat and Rohit, the joint owners of the property, to engage in lease negotiations. Lee discusses all necessary details with the owners. The lease is slightly above Lee’s budget. However, Virat highlights the great location of the café. It is very close to Croydon station. During the meeting, Virat states: “Don’t worry about the lease being slightly over your budget. It is a great spot. The previous café owner easily sold 1000 coffees per day, if not 1500.” Rohit adds: “I think so too.” Lee feels very positive about his venture after the meeting. He signs a standard lease agreement with Virat and Rohit the following week, agreeing to a 5-year lease starting 1 August 2022.
Unfortunately, business for Lee is not as expected. In the first few weeks he sells around 150 coffees per day. His sales increase over the months but never reach more than 500 coffees per day. Lee feels cheated and calls Virat and Rohit to complain. During the phone call Lee says: “You knew that the lease was above my budget. You guaranteed me daily sales of at least 1000 coffees.” Virat responds: “I have not guaranteed you anything like that. Read the contract that you have signed. Why would I guarantee you a certain number of sales? I don’t even know whether you are a good barista.”
Lee has lost his confidence and wants to terminate the contract and/or seek damages.
Advise Lee.
Please use case law to support your answer.
Please only consider contract principles from the prescribed Topics.
Suggested word count: 400-500 words (8 marks)
Note: No research is required for this scenario. Please rely on the course materials (textbook) to answer this question.
Scenario 2
Brian is the sales director for a medium sized local marketing agency “SPACE” in Paramatta, NSW, leading a team of 15 sales representatives. Through his role he became privy to most of his company’s highly confidential information. He also had direct contact with the company’s most important clients. After 10 years in this position, he decides to resign from his position and look for new opportunities. He gives his company 4 weeks’ notice. The HR director responds with a three months’ written notice of termination of his employment, which is the required notice period as per his employment contract. At the same time, Brian is directed not to attend the office and not to undertake any work other than as directed by SPACE, but to remain available during business hours to respond to queries or problems and perform duties as requested until his resignation becomes effective.
Brian is also reminded of the post-employment restraints that he had agreed to as part of his employment contract.
5. PRINCIPAL DUTIES
5.1 The Employee must
(a) devote the whole of their time, attention and skill during normal business hours, and at other times as reasonably necessary, to their duties for the Company.
(b) faithfully and diligently perform the duties and exercise the powers entrusted to them from time to time.
(c) promote the interests and prosperity and enhance the reputation of the Company.
20. POST-EMPLOYMENT RESTRAINTS
20.1 The Employee agrees not to carry on or be engaged, concerned or interested, directly or indirectly, in any capacity specified in paragraph (a) below, in any business or activity specified in paragraphs (b) to (d) below, within any area specified in paragraph (c) below for any period specified in paragraph (f) below:
(a) As … Employee … or consultant
(b) In any business or prospective business in competition with the Company or Related Body Corporate at the time of termination of employment
…
(e) In any areas specified in Item 7 of the Schedule
(f) During the period specified in Item 8 of the Schedule.
20.2 The Employee separately enters into each of the covenants resulting from combining separately each of the capacities in paragraph (a) above with each business or activity in paragraphs (b) to (d) above and combining each such combination with each geographical area in paragraph (e) above and combining each such combination with each period in paragraph (f) above with the Company and Related Bodies Corporate.
20.3 Each of these covenants constitutes an independent and separate restraint imposed on the Employee.
20.4 If any of those covenants is or will become unenforceable, that does not affect the validity and enforceability of the other covenants imposed under this clause, which remain binding on the Employee.
Item 7 Area (i) Australia
(ii) New South Wales; or
(iii) Sydney
Item 8 Period (i) 12 months;
(ii) 9 months; or
(iii) 6 months;
Within weeks of his resignation, Brian is approached by a marketing agency from Newcastle, NSW, that is looking to expand its business to Sydney. Brian is offered the position as Sales Director at NewCastle Marketing. He accepts the offer with the official employment commencing the day after his resignation becomes effective. However, he is also asked by his new employer to suggest capable colleagues at SPACE that might also be looking for new employment opportunities. Over the weekend, Brian calls his best sales representative, Lauchlan, to tell him about the exciting job opportunities at NewCastle Marketing. Lauchlan started to laugh during the conversation. Coincidentally, Lauchlan had seen the job advert and had just finished drafting his application for the vacant position as sales representative at NewCastle Marketing.
Jim, the CEO of SPACE, is outraged when he finds out that Brian not only moved to a competitor but also poached one of the best sales representatives. Jim believes that the intimate knowledge of their marketing strategies, pricing strategies and close relationship with their customers, amounted to confidential information that could be misused by Brian. Jim wants to enforce the restraint of trade in accordance with cl.20.1. He also believes that Brian has breached his fiduciary duties (cl. 5) and was not acting in good faith when he induced Lauchlan to apply for the position at NewCastle Marketing, while Brian was still on SPACE’s payroll. Jim wants to seek an interlocutory injunction that restrains Brian from joining before his non-compete obligation has lapsed and to find Brian in breach of his fiduciary duties. He also remembers a news report about a similar case being decided by a court in NSW.
Advise Jim.
Please cite case law in your advice.
Suggested word count: 600-700 words (12 marks)
Note: Research is required for this scenario. The unit materials WILL NOT be sufficient to score a high grade in response to this scenario.
Scenario 3
James, is a manager of SafeMask Ltd. (SM), a wholesale company in Melbourne that manufactures and sells reusable facemasks, since COVID demand has drastically increased. SM’s supplier for the facemasks is located in Bangladesh. James is instructed to contact the supplier and increase SM’s facemask orders from 500,000 to 1 million facemasks. He is also told to do whatever is necessary to get it done. The supplier advises James that they’re already working at capacity as they also have to fulfill facemask production orders for the domestic market, and that the only way would be to overwork the current employees and hire child labour. James tells the supplier that he would be willing to pay for any contractual penalties plus 50% extra for each mask, if the supplier would ‘do whatever it takes’ to increase the production for SM. James believes that this is the correct cause of action, as he has been told to do whatever is necessary.
James is also aware that the supplier is dumping all its production waste in the local river. In fact, James sees it as a competitive advantage for the supplier in Bangladesh. He believes that production in Bangladesh is a lot cheaper because companies there do not have to abide by these “stupidly strict Australian environmental standards”.
Drawing on your experience and understanding of the Ten Principles of the UN Global Compact, how would you advise about James’s situation.
Please cite specific principles and related international conventions in your advice.
Suggested word count: 200-300 words (5 marks)
Note: Research is required for this scenario. The course materials WILL NOT be sufficient to complete an answer for this scenario because of the International Law component, which is not taught formally. This particular question focuses specifically on ULO4 – which requires students to recognise that international legal standards have a bearing on commercial practises in Australia.
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