LT018715 Workplace Simulation Test (Test A), Commercial law Ed 1

Question 1 (20 marks): Insurance Contracts, Business Organisational Structures, Property Law Including Intellectual property, Companies, Electronic Commerce, Insolvency and Bankruptcy, Remedies for Breach of Contract


Short Answer Questions

( Select FIVE ONLY of the following ten short answer questions worth FOUR MARKS each)

(a) Outline the two main principles contained in the doctrine of “utmost good faith” in the context of insurance contracts.

(b) Outline the requirements for an ordinary partnership to exist

(c) Provide two distinguishing features between a copyright and a trademark

(d) Outline the difference between real property and personal property?

(e) Provide two distinguishing features of a public company relative to a proprietary company

(f) Describe the primary purpose of the Electronic Transactions Act (Cth) 1999

(g) Briefly explain the main features of a trust

(h) Explain two legal requirements for superannuation fund to continue as a complying superannuation fund.

(i) Briefly explain the difference between insolvency and bankruptcy

(j) Identify one common law remedy and one equitable remedy for breach of contract?


Question 2 (20 marks) : Contracts/Torts/ Consumer law/ Remedies

Examine the below mentioned facts and consider what respective legal actions/remedies Justin Bibi could take against Australian Guitars Limited in:

1. Contract only (4 marks)
2. Negligence law only ( 4 marks)
3. Statute Law using the Australian Consumer law ( 12 marks)
   
   

Song Limited is private company registered in South Korea. Song Limited manufactures electric guitars in South Korea and has no assets in Australia.

Australian Guitars Ltd. is an Australian company that exclusively imports and wholesales guitarsfrom Song limited in Australia. Australian Guitars Ltd hassubstantial assets and public liability insurance in Australia.

Australian Guitars Ltd does not supply its Song electric guitars direct to the public but only through independent retailers.

Rocking Ltd. is one of these retailers. Rocking Ltd sells Song electric guitars directly to the public. Rocking Ltd obtains Song electric guitars under contract from Australian Guitars Ltd.

On 14 February 2014 Justin Bibi purchased from Rocking Ltd a Song electric guitar imported by Australian Guitars Ltd and manufactured by Song Limited. On Sunday 10^th March Justin Bibi performed in a rock concert with the Song Limited electric guitar he had purchased from Rocking Ltd on the 14 February 2014. Despite following all instructions one of the strings of electric guitar broke off and unfortunately blinded Justin Bibi’s left eye.

The electric guitar was clearly defective and the fault was in its manufacture by Song Limited in South Korea.

Rocking Ltd has gone into liquidation and has no assets.

Question 3 (20 marks): Australian Legal Systems and Processes, Consumer Law, Business Organisational Structures, Bankruptcy and Insolvency law

Extended theory questions (4 marks each)

(a) Briefly describe the jurisdiction of the High Court

(b) Describe the statutory consumer guarantees in the supply of a service to a consumer. Include in your answer whether these guarantees can be excluded by contract.

(c) Briefly explain the duties of superannuation trustees provided by the Superannuation Industry

(Supervision) Act ( CTH) 1993

(d) Briefly explain the concept of apparent authority ( as oppose to actual authority) in agency law

(e) Briefly explain the doctrine of relation back in bankruptcy law

Question 4 (20 marks)

(a) 10 marks: Companies/Finance/ Insolvency

Titanic Limited is non-listed public company manufacturing ship components.
The Company has issued one million ordinary shares.

The Company in its last statement of financial position as at 31^st December 2014 had assets of over $24 million with non-current assets valued at over $10 million. The non-current assets were primarily made up of real property and plant at Port Botany valued at $4 million.

The Company has current liabilities of $4 million dollars and non-current liabilities of $10 million dollars and shareholder equity of $10 million dollars.

Titanic Limited has had some difficult recent trading results over the last three financial years:
2009 $1 million profit
2010 $1 million profit

2011 $2 million loss

2012 $1.5 million loss

2013 $1 million loss

To 31/12/2014 $1 million dollar loss

The Company has not paid a dividend for the last five financial years.
The Company has substantial cash reserves of $5 million as current assets.

The Board of Directors resolved on 31^st December 2014 to declare a dividend of $2 per share.


Examine whether or not the Board can legally pay such a dividend? (2 marks)
Explain the 1)capital maintenance rule and 2)the grounds upon which a company can pay a dividend? (5 marks)
Advise the Board 1) their duties as directors and 2)if they can subsequently revoke such a dividend ( 3 marks)

You must include relevant sections of the Corporations Act 2010 in your answer.

Question 4 (b) 10 marks: Personal Property/Leases/ Possession/ Ownership/ Finance/ Credit and Companies
Sportycars Pty Ltd was in the business of renting out sports cars. Sportycars Pty Ltd leased 20 of their sports cars on the 31/12/2014 for two years to the China Millionaires Travel Club Ltd who service the

travelling needs of wealthy chinese tourists in Sydney. Under their standard written rental Agreement used by Sportycars Pty Ltd title or ownership in the sports cars always remained with Sportycars Pty Ltd.

Sportycars Pty Ltd registered their security interest in the sports cars( which they leased to China Millionaires Travel Club Limited) on the Personal Security Property Register.

China Millionaires Travel Club Ltd operated from their(sole) premises situated at 10 ,Richman Street, Double Bay which they leased from Century 22.The rented sports cars( if not out on the roads) were all parked in the basement of their Double Bay premises . China Millionaires Travel Club Limited was significantly overextended and went into receivership. Their principal secured creditor was NAZ Bank Ltd. The Bank had a fixed and floating charge and debenture over all assets and undertakings of China Millionaires Travel Club Limited which the bank had registered on the 8/4/2015 on the Personal Security Property Register.

On the 1/6/2015 NAZ Bank Ltd appointed a receiver and controller who took possession of all assets and equipment of China Millionaires Travel Club Ltd on the Double Bay premises. The receiver has refused to return the sports cars to Sportycars P/L and says they have seized them and will sell them to the highest bidder.

i)What type of property are the 1)sports cars and 2) lease of the Double Bay premises? (two marks)
ii)Who has lawful possession of the sports cars ? (one mark)

iii)Who gets to keep the sportscars? Can the Receiver sell the sports cars and keep the proceeds of sale (two marks)
iv)Explain the legal reasons for your answer to (iii) above. (five marks)
Question 5 (twenty marks):

(a)10 marks: Contract law and Tort law

Vincent is 40 years old. He is a successful and famous portrait and landscape painter . Vincent’s paintings usually sell for hundreds of thousands of dollars. Vincent owns his own home a beautiful cottage in Leura ,Blue Mountains and several vintage cars as well as $10,000 in term deposits.

Vincent has to date led a nomadic life indulging in his love to travel and paint with his wife Picassa .

Vincent and his wife recently decided to start a family. He has just sold a painting which fetched $200,000 and has decided to invest the $100,000 in an investment portfolio that will fund his children’s education .

Vincent is a customer/shareholder of ARZ Limited. He sees a sign at his local branch of ARZ Limited offering free investment advice. Vincent has asked his wife Picassa to make an appointment with Jobbie an employee of ARZ Limited. Jobbie informs Picassa that investing is risky. “The higher the risk the higher the return”.

Jobbie advises Picassa the highest return she and Vincent can get is from investing in a cutting edge digital currency venture start-up-DDD-a Malaysian syndicate . Jobbie also informs Picassa that the Reserve Bank of Australia is one of DDD’s client ie RBA has contracted with DDD to print cheap Aussie currency. The investment will net a return of 18% per annum (coincidentally the promoters of this investment pay ARZ Limited the highest rate of commission). Jobbie does not disclose that the ARZ Ltd and their financial planners will each earn each $5,000 commission if Vincent invests his money in DDD.)

Within six months of making these investments Vincent has lost the entire $200,000 after the Malaysian government raided DDD premises and shut down its operations after a tip-off for foreign currency forgery and corruption.

Answer the following questions:

Does Vincent and Picassa have a simple contract with the bank? (one mark)
Upon what legal cause of action could Vincent and /or Picassa sue? ( two marks)
Outline the grounds or elements of such a legal cause of action (five marks)
Does the bank have any defences ( two marks)

Question 5:

(b) (i)5 marks: Statutory Duties of a Director, Competition law, Real Property Law

Wally is one of directors of ARZ Limited. He is the director in charge of sales and commissions. Wally is aware of the arrangement and the DDD investment scheme which Jobbie has advised Picassa .He is also aware that there has been allegations of untoward conduct namely forgery and corruption by the directors of DDD.

Wally has decided to keep quiet about the allegations because he was one of the promoters of DDD and currently holds quite a substantial share portfolio in DDD.

The main competitor of ARZ Limited is East Pac Ltd.

Wally is approached by the Managing Director of East Pac Limited over a number of matters. James discloses confidential information of ARZ Limited to the Managing Director of East Pac Limited without the approval of his fellow directors. Wally also agrees with the Managing Director of East Pac Limited at y by way of reply email that ARZ Limited and East Pac Limited will always charge a minimum commission to customers on a sale of 1.5%. and they will never go below that price.



Answer the following questions

(a) Identify and describe any statutory duties under the provisions of the Corporations Act (Cth) 2001
Wally may have contravened (4 marks)

(b) Explain which anti-competitive provisions of the Competition and Consumer Act (Cth) 2010 the
agreement of ARZ Pty Limited and East Pac Limited may breach . (3 marks)

5(ii) Explain what is a lease, the rights of the lessee, if any, to remain in possession of the(commercial) premises upon the sale of the property which is subjected to the lease. ( five marks)

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