Running Head: Case Study
BUSINESS AND CORPORATE LAW
“Assessment 2 Case Study”
Table of Contents
Question 1
Issue: The issue within the case study relates to whether Malcolm has any contractual obligations towards Linda and Cynthia regarding selling the sports car.
Rule: Contract law is governed by provisions contained within common law and does not have any specific statutory enactments. Precedents include Partridge v Crittenden [1968] and Carlill v Carbolic Smoke Ball Company [1892].
Application: The facts of the case study present that Malcolm writes a letter to Linda stating that he wants to sell his sports car for $4,500, to which Linda replies that she would need time to think about the offer. Malcolm states that she had till Monday the 19th of July to let him know about the same. Evidently, no contract is formed between Malcolm and Linda in this regard. The judgement passed in the matter of “Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1” is relevant here, which stated that contracts must include five essential elements comprised of an offer, an acceptance, an intention to create legally binding relations, valid consideration and legality within both the form an consent (Australian Contract Law, 2020). Malcolm’s intention to sell the car would be considered as an offer where as the provision of the information that Linda had till Monday to let him know about it would be an invitation to treat as established in the case of “Partridge v Crittenden [1968] 1 WLR 1204” (E-lawresources.co.uk, 2020).Naturally, no contract was formed between the two based on the facts contained within the scenario. Furthermore, the scenario presents that Cynthia, Malcolm’s supervisor agrees to buy the car for $5,000 to which Malcolm promptly agrees. It would result in the formation of a contract whereby Malcolm would be liable to perform the contractual obligations of transferring the ownership of the car to Cynthia for the agreed sum.
Interestingly, the scenario presents that Linda subsequently goes on to send a letter to Malcolm accepting his offer to sell the car at $4.500. However, the letter is not delivered to Malcolm till the 19th of July. It could be inferred that a contract regarding the selling of the car has already been formed between Malcolm and Cynthia on the 15th of July, which would negate the acceptance by Linda that Malcolm came to know of on the19th. Acceptance of an offer must be clearly communicated as established in the case of “Felthouse v Bindley [1862] EWHC J35, [1862] 142 ER 1037” (Jackson, 2019).
Conclusion: Considering the application of precedents to the scenario, Malcolm would have contractual obligations towards Cynthia but not towards Linda.
Question 2
Issue: The issue within the case scenario relates to whether the agreement between Modern Media Sounds and Concert Sales is a joint venture or a partnership.
Rule: Partnerships are governed by individual state legislations within Australia, albeit a federal statue exists in the form of the Partnership Act 1963. Joint ventures are not expressly governed within Australia and are subject to both statutory as well as common law provisions. Statutory provisions include the Corporations Act 2001 predominantly while common law provisions include contract and agency law and others.
Application: The facts of the scenario present that Modern Media Sounds and Concert Sales entered into a written agreement where the interests for the Australian tours of Tyler Slow were divided equally. The contracts were specifically set to be performed as a joint venture, where the net profits were agreed upon mutually to be divided at the end of the contract. Considering the fact that the agreement between the two entities was entered into specifically in the form of a joint venture, the agreement could not be held as a partnership. The fact that the agreement was in the form of a joint venture is further solidified within the case study as it presents that the losses were not to be shared on the same basis as that of the profits. Moreover, partnerships typically entail an ongoing relationship to achieve a common purpose, but joint ventures entail two or more parties working together while maintaining their individual separate identities.
An important case law in this regard is the matter of “Adventure Golf Systems Australia Pty Ltd v Belgravia Health & Leisure Group Pty Ltd [2017] VSCA 326” where an agreement between disputing parties that created fiduciary duties was held to be a joint venture owing to the absence of the characteristics of a partnership (Victorian Reports, 2020). The features of a partnership are stated comprehensively in the case of “United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1” that includes equal sharing of profits and losses (High Court of Australia, 2020). Naturally, owing to the differentiated agreements regarding profits and losses between Modern Media Sounds and Concert Sales, the agreement would be considered as a joint venture and not a partnership.
Conclusion: The agreement between the two entities does not entail the features and characteristic as required to constitute a partnership and would be classified as a joint venture.
Question 3
The case scenario puts forwards that Oldskool Pty Ltd comprised of an old fashioned memorandum of association, which included an objects clause that limited the scope of the company’s operations to development, manufacturing and selling of commercial computing devices. Josie, a major shareholder within the company has identified that Oldskool could potentially expand its operations into remote office management software and mobile applications given the needs of the changing times. Considering the validity of the memorandum of association, companies registered within Australia are not longer required to maintain memorandum or articles since the introduction of the Replaceable Rules on the 1st of July, 1998. It is important to note that companies that have been in operations prior to the date of the introduction of Replaceable Rules could continue relying on their memorandum and articles as the constitution (Legal Vision, 2020). Based on the facts contained in the case scenario, the company would have to amend its memorandum of association to enter into new contracts or repeal their constitution and implement the Replaceable Rules as contained in Section 141 of the Corporations Act 2001 (Australasian Legal Information Institute, 2020). The repeal would have to be carried out in accordance to the provisions contained in Section 135(2) of the Corporations Act 2001.
In terms of how the replaceable rules may be of benefit to Oldskool Pty Ltd in the future, it would be important to discuss the convenience entailed within the implementation of the same. While a modification of the memorandum of association would be time consuming and inconvenience, incorporating the Replaceable Rules as the constitution would be comparatively more convenient as well as more cost effective. It would also allow the company to engage in operations beyond the scope mentioned within the memorandum of association, which in the case of Oldskool Pty Ltd was limited to the development and sale of computing devices. Another very prominent area of relevance for Replaceable Rules in terms of how it could benefit Oldskool Pty Ltd is that the company management could very easily switch back to a constitution in the form of a memorandum and an article of association. Private companies are required to issue a mere 21 day notice for the same in the context of incorporating the constitution through a general meeting (Australian Institute of Company Directors, 2020).
Question 4
Issue: The issue within the case study relates to whether Harry contact all the members of Eaglefly Aviation Ltd. and how along with whether the company can prevent Harry from contacting the company members.
Rule: Standing proxies are governed by Section 250A of the Corporations Act 2001.
Application: The facts of the case scenario present that Harry, a member of Eaglefly Aviation Ltd, which is a public company listed on the Australian Stock Exchange seeks to contact the other members of the company in order to obtain standing proxies. In terms of the reasons behind the decision, Harry feels that the company management has failed to govern the operations in an appropriate manner, which has led to a drastic fall in the share price for the company. Regarding whether Harry could contact the members of the company, it would certainly be possible in terms of the members’ rights to participate in the decisions of the company that are reserved for the shareholders (Thomson Reuters Practical Law, 2020). Furthermore, the contact would be in line with maintaining the interests of the company since the current situation was rather poor and the senior management was failing to adapt to the changing needs of the aviation industry.
Harry could contact the members either verbally or in a written manner, but the proxies would have to be obtained though signed documents including the members name and address, the company’s name, the proxy’s name and the meeting during which the appointment would be used. This is in accordance to the provisions contained in Section 250A of the Corporations Act 2001 (Australasian Legal Information Institute, 2020). In terms of whether Eaglefly Aviation Ltd could prevent Harry from contacting the other members, there is no express mention of any relevant clause within the Corporations Act 2001. However, it a clause is present within the constitution of the company where it has been expressly mentioned that the company could prevent any member from contacting another member regarding obtaining a proxy, Eaglefly Aviation could certainly exercise the clause and prevent Harry from contacting all the members.
Conclusion: It is concluded that Harry would be able to contact all the members of Eaglefly Aviation Ltd. either verbally or through written documentation, but the proxies would have to be obtained through signed correspondences from the other members. The company could not prevent Harry from contacting the other members by default unless it was expressly mentioned within the company constitution.
Question 5
Issue: The issue in the case scenario relates to whether Leonard would be successful in a claim for negligence against Coolies Pty Ltd.
Rule: Negligence is not governed by any specific statutory enactment within Australia and comes under the purview of the common law system and precedents. The case of Donoghue v Stevenson [1932] is relevant in this regard. The Work Health and Safety Act 2011 along with the Work Health and Safety Regulations 2011 governs workplace safety within Australia.
Application: The facts of the case present that Leonard received an injury on his back in 2018, after which he underwent a spinal surgery and returned to his work in 2019. Following the incident, Leonard complained that his back was getting increasingly sore while lifting boxes, to which the company responded with the provision of a hydraulic lifting machine for his assistance. However, Leonard saw that the forklift was limiting his efficiency, as a result of which he began lifting the boxes physically and went on to injuring himself severely, rendering himself unable to work in the packaging industry anymore. In terms of whether Leonard would be successful in a claim for negligence against Coolies Pty Ltd, it would be important to discuss the elements of negligence as established in the case of “Donoghue v Stevenson [1932] AC 562” (Sir Harry Gibbs Legal Heritage Centre, 2020).
Key requirements to establish a case of negligence included the duty of care, breach of the duty of care, injury due to the breach of duty or omission and causation. Considering that Leonard was an employee of Coolies, the organisation was bound to factor in Leonard’s safety when within the workplace premises in accordance to the Work Health and Safety Regulations 2011. In the context of the issue of negligence, Coolies maintained its duty of care towards Leonard by providing him with a hydraulic lifting machine. Furthermore, the fact that Leonard is no longer able to work within the packaging industry is due to him refraining from using the machine as it slowed down his efficiency. The aspect of contributory negligence is relevant in this regard, whereby Leonard’s own actions led to him receiving the injury, thus protecting Coolies from any tort claims based on negligence at later stages. The judgement passed in the matter of “Podresbersek v Australian Iron and Steel Pty Ltd [1985] HCA 34; 59 ALR 492” is relevant in this regard, where the claims for damages due to negligence were not held owing to the lack of safety and care shown by the applicant (D’Alessandri, 2014).
Conclusion: Leonard would not be able to claim a case for negligence against Coolies owing to the exception of contributory negligence that would be applicable to the company as a defense.
References
Australasian Legal Information Institute. (2020). CORPORATIONS ACT 2001 – SECT 141 Table of replaceable rules. Retrieved 24 July 2020, from http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s141.html
Australasian Legal Information Institute. (2020). CORPORATIONS ACT 2001 – SECT 250A Appointing a proxy. Retrieved 24 July 2020, from http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s250a.html
Australian Contract Law (2020). Case | Carlill. Retrieved 24 July 2020, from https://www.australiancontractlaw.com/cases/carlill.html
Australian Institute of Company Directors. (2020). General meetings of members. Retrieved 24 July 2020, from https://aicd.companydirectors.com.au/-/media/cd2/resources/director-resources/director-tools/pdf/05446-4-6-director-tools-me-agms_a4_web.ashx
D’Alessandri, L. (2014). New test for contributory negligence – The Court of Appeal has implemented a new test for contributory negligence, particularly when considering accidents involving pedestrians – Court of Appeal, NSW. Retrieved 24 July 2020, from https://mccabecurwood.com.au/new-test-for-contributory-negligence-the-court-of-appeal-has-implemented-a-new-test-for-contributory-negligence-particularly-when-considering-accidents-involving-pedestrians/
E-lawresources.co.uk. (2020). Partridge v Crittenden. Retrieved 24 July 2020, from http://www.e-lawresources.co.uk/Partridge-v-Crittenden.php
High Court of Australia. (2020). UNITED DOMINIONS CORPORATION LTD. v. BRIAN PTY. LTD. Retrieved 24 July 2020, from https://staging.hcourt.gov.au/assets/publications/judgments/1985/046–UNITED_DOMINIONS_CORPORATION_LTD._v._BRIAN_PTY._LTD–(1985)_157_CLR_1.html
Jackson, N. (2019). Felthouse v Bindley [1862] EWHC CP J35; 142 ER 1037. Oxford University Press. Retrieved from https://www.oxfordlawtrove.com/view/10.1093/he/9780191883750.001.0001/he-9780191883750-chapter-9
Legal Vision. (2020). What are Memorandum and Articles of Association?. Retrieved 24 July 2020, from https://legalvision.com.au/q-and-a/memorandum-and-articles-of-association/
Sir Harry Gibbs Legal Heritage Centre. (2020).Donoghue v Stevenson [1932] AC 562. Retrieved 24 July 2020, from https://legalheritage.sclqld.org.au/donoghue-v-stevenson-1932-ac-562
Thomson Reuters Practical Law. (2020). Shareholders’ rights in private and public companies in Australia. Retrieved 24 July 2020, from https://uk.practicallaw.thomsonreuters.com/2-611-6545?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1
Victorian Reports (2020). Adventure Golf Systems Australia Pty Ltd v Belgravia Health & Leisure Group Pty Ltd. Retrieved 24 July 2020, from https://victorianreports.com.au/judgment/54-VR-625
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