Business Law and Ethics - WorknTalk Communication Limited - Assignment Example

Business Law and Ethics [Student’s Name] [Course Title] [Tutor’s Name] 16th August, 2011 WorknTalk Communication Limited Introduction 1. Business structure The company’s name is WorknTalk Communications Limited. The suitability of the name was considered since the company will be dealing with the sale of mobile phone. The business is designed as a partnership. A partnership enterprise involves two or more members who form a strategic liaison. Partnership that is successful is grounded on mutual understanding, trusting one another, equality and who have a common goal which is making profit. The agreement is formal. Each party’s functions and obligation are spelled out in a written agreement. According to the Australian agreement act (1892), the act was in favor of the decision that was made to go for a partnership agreement. 2. Business Name The company’s name that was proposed was not being used by any other company hence its availability. The registered name was different from any other registered name. This made it suitable for the company to call it WorknTalk Communication Limited. The various checks to make the registered company’s name was available are; a test on an identical of names. The name given was checked whether it was against the corporation names on the National Names Index. The second test was to identify whether the name was similar and identical against incorporated association, name of the business and companies registered in Australia. Another was to test whether the name was misleading and finally testing whether the registered name holds the domain licence. The written verification from the Australia’s Domain Names gives a way forward for the registered name to be used. There are various things that are not tested which include; similar name of the company, any mistake in the spelling in the business name is not also checked out, trademarks registered is not under Business Acts names (1992) finally business names interstate is not tested. The process involved to come up with a catchy name and unforgettable one was first to take up several hours to plan. The next step was to do some research to prevent using a name of another company. To avoid the company from growing particular names should never be used. 3. Characteristics of a Company A company as an entity has various separate features which make it a distinctive organization. There are various essential characteristics of a company. One of the essential characteristics is continuous succession. These means that a business enterprise does not come to an end except on particular point in time that the work for which it was formed has been wound up. The life of a company is never affected by the changes of membership; similarly death of member does not too have an effect on the continuation of a business. A second essential characteristic is a company’s property is its own. Affiliates of the company can never declare to be owner of the company’s property while the company still exists hence a company being a distinct legal entity. The third feature includes a company as a legal unit or entity which is distinct. A company turns out to be a distinct legal entity to its affiliates under incorporation law. The law mandates the company to be different and separate from its member. A corporation can have property, can have a bank account, can incur debts, and borrow money, can be sued it can also sue, entering into contract and employing people. A company also has its own name and seal, its assets and liabilities are separate and diverse from its associates in law Nelson (2006). Limited liability of its associates is another essential characteristic of a company. The legal responsibility of company’s members is limited to the assets to contribution of the company up to shares held worth by him. An associate is responsible to give barely the uncalled cash owing on shares held by him. If the material goods of the firm are not adequate to pay the legal responsibility of the firm, the creditors can compel the allies to make good the arrears from their own possessions. A company can sue or be sued in its own name as distinct from its members. Be complied in the case of a business once the affiliates have compensated every outstanding towards the shares held by them in the business. A company allows its members to transfer their shares freely but various conditions or rules must be followed. For instance no share-holder is permanently committed to a company. The person who has been transferred to the shares that is the (transferee) becomes member of the company and obtains all the privileges of the person who transferred the shares that is the (transferor) in reverence of those shares. A company does not have a physical presence. A company comes into a range of agreement through its board of directors while carrying out its duties. Various contracts have to be under the seal of the company. Official signature is mostly used as a seal of the business enterprise whereas company’s name has to be carved on the common seal. Any document not bearing the seal of the company may not be accepted as authentic and may not have any legal force. The rule of voting that is applied in a company is One Share-One Vote for instance if a person has 30 shares, he has 30 votes in the company. This is very much different from the cooperative society. In cooperative society the rule of voting is one - Member- One Vote. For example one member has only one vote despite the number of shares held. 4. Internal Management of the Company When the company’s name has been named, set of rules that will apply have to be chosen that will be used to manage the company within. One may decide to either use constitution or the replaceable rules. There are a range of advantages involved in using either replaceable rule or the constitution. Several people find it easy to use the constitution because one has ability to shape it the way they need their company operated. Distinct rules can be put in place. In case one wants to operate a special purpose company, the only option they have is to use a constitution. It has a lower annual review Australian Securities and Investments Commission (ASIC) fee that is for special purpose company. In case a company is using the constitution they don’t have to inform the Australian Securities and Investments Commission (ASIC) the option they have selected but they must keep their constitution in their company records so that it can be examined if needed. In case a company goes for the replaceable rules they are default options. One of the advantage of using these rules is that you don’t have to keep the rules updated when they is change of law. It automatically changes and no legal advice is needed. Rules are easily to find online since Australian Securities and Commission (ASIC) keeps them. One of the set backs of using replaceable rules are that for sole director company can never use this rules. Special rules have to be used as set out in the Corporation Act. For special purpose companies they can never use replaceable rules also. Every shareholder and director must be given a copy of either the constitution or rules. Hanrahan, (2011) 5. Duties of an officeholder The duties of an officeholder in the company are governed by the Corporate Act (2001). The Australian Securities and Investment Commission is the law regulator in the company. The company’s rules or constitution mostly set out the director’s function and powers. Most likely the company is always controlled by the staff in the company. As a director one is supposed to inquire various questions to manager and the other staffs about how the business is going. In case the company requires a more informed decision an outside professional should be invited since he will help the company to make a more detailed decision. A director is supposed to know what is taking place in the company and he should be fully up-to-date in all the company’s activities. According to Corporate Act, a director is supposed to take up all vital responsibility for the company. A company’s director is also required to pass a resolution of solvency to the Australian Securities and Investments Commission (ASIC) in duration of two months after the date is reviewed by the company. This can never be so if the company has wedged their financial reports within 12 months prior to the review date with the Australian Securities and Investment Commission. One must never act as a director or secretary without the approval of the court. This can only happen if one has been found guilty and has several offences for example if a director breaks his duties as a director or has an offence under law of the company. Another reason is if someone has not compiled fully with the Bankruptcy act (Part X of the Bankruptcy Act1966) or is subject to the insolvency accord. If the person is discharged bankrupt then they are not supposed to take up the role of a manager secretary or a director in the company. Question Two: Case Studies. PART A: Case Analysis Walton’s Stores (interstate) Ltd v Maher (1988)164 CLR 387 Area of law, main facts and arising legal questions/issues This is contract law; in this area of law, existence of legal agreement is determined which involves the reflection of the existing evidence over the elements of the contracts. However, evidence might not be readily distinguishable or available in the case where one party denies the existence of other enforcing rights under the contract or of the contract. Halbert and Ingulli, (2011) states that the “Law of Estoppel” seeks to explain the evidential issue by the provision of guidelines in the determination of the existence of the contract, through the promises or assumptions and undeniable representations that arise between parties. In the view of Doyles Construction Lawyers, (2007), the plaintiffs, Mr. & Mrs. Maher had negotiations with Walton Stores for a lease of their property in Nowra. A draft of the lease was sent to the Maher’s solicitors in October 1983. The proposal entailed the demolition of the existing building for the erection of a new one. On 7th of November 1983 Mahers solicitors informed Walton’s solicitors that there was an impossibility of completing the new building on time not unless the completion of the agreement took place within the next couple of days, due to the fact that it would be difficult for the Mahers to organize and obtain labor and materials before the Christmas holidays, they would also not demolish the old building until the lease contract was settled. On 11th November 1983 the Walton’s solicitors received an executive lease from Mahers’ solicitors by way of exchange. This was followed by the demolition of the building; however Walton started to have second thoughts over the lease, this is after he learnt of the demolition of the building in early December. The Mahers’ commenced building works in early January. Walton’s solicitors informed Mahers’ solicitors that the Walton’s did not intend to proceed with the lease. At that time the construction was 40% complete, there was no earlier legal affiliation amid the two parties. Some Issues arose such as; was Walton estopped from withdrawing from its promise to complete the contract or was there existence of a valid lease contract between Walton’s and Mahers’? A flow chart of all the legal parties Frey and Frey (2001), suggest that the major issue to consider in a contract is to make sure it actually exists in the first place. In a legal binding contract certain elements must be present for it to take place. This includes; acceptance, this is the expression of unconditional and absolute agreement to terms set out in an offer. The acceptance must be a reflection of the original offer made; an offer; expression of willingness to take up a contract given a particular set of terms that are made by the offeror with an intention that she or he will be bound by that contract; counter offer; it is made to extinguishes the original offer, once made the original offer cannot be accepted; request for information, if clarification or information about the offer is asked, this does not make it a counter offer actually one is free to accept the original offer if wishes to; consideration, the parties of the contract must attain a valuable thing; intention of creating legal relations, business arrangements are assumed to be used as binding contracts. However, these assumptions can be rebutted in court once evidence is produced. INTENTION TO CREATE LEGAL RELATION NO there is no contract that can be formed Yes AGREEMENT NO No contract can be formed Yes SUFFICIENT CONSIDERATION NO No contract can be formed unless agreement is made under seal Yes SIMPLE CONTRACT Yes CAPACITY TO CONTRACT NO the contract is voidable Yes CONSENT OF THE PARTIES NO the contract is voidable Yes LEGALITY OF PURPOSE NO the contract is void ab initio Yes QUALIFIED CONTRACT FORM NO the contract is voidable Yes EXISTENCE OF VALID CONTRACT NO the contract is voidable Yes UNILATERAL CONTRACT Majority/minority judges’ decision and rational of the judges The Mahers’ were awarded damages by the lower court and Walton’s appeal was dismissed by five high court justices Brennan, Wilson, Gaudron and Deane. They unanimously decided to dismiss it based on the application of “Estoppels Doctrines”. There was however contradictory opinions over application of this principle in support of the decision. Wilson J and Mason CJ propounded that “Estoppel” based on the assumption that the facts had not been shown in evidence; there was no assumption of the existence of the contract or exchange of the documents. They also held that “Promissory Estoppel” includes an encompassing doctrine which covers “Proprietary Estoppel” such that it might include the enforcement of rights that did not exist previously if it is necessary in barring unconscionable deeds in line with the overarch doctrine. Basing on the facts in the case, “Promissory Estoppel” results to the enforcement of the voluntary promises made to the Mahers’ spouses by the Walton’s. Gaudron stated that basing on the courts finding at first instance, the Mahers’ believed there was existence of a valid contract that resulted from an exchange they had with the Walton’s. This fact rules out Walton’s denial of the agreement. PART B: REFLECTIVE QUESTION Process of finding a case When finding a case, a wide variety of cases is considered and then screening is done to arrive to a specific case. I viewed all the cases given that were involved in contract law. A number of cases were investigated so as to arrive to the cases that dealt with land contract. I classified the cases that I found according to the question at hand. The issues in the case were considered and screened. I classified the cases according to appellant’s name. This is how I came up with the case; Walton’s Stores (interstate) Ltd v Maher (1988)164 CLR 387. Challenge encountered I had difficulties in identifying if the contract was valid considering the fact that the Wantons had earlier sent a lease to the Mahers’. Question 3 Negligence Debbie will use the law of tort to bring Matt into his own action of driving while drunk. Tort’s law implies that a wrong imposed to a civil which a civil right of action for damage may arise. Debbie must prove that the report of her facts will be convincing enough against Matt. The law of tort in the modern times functions on the originality of solutions to the person affected by the deeds of other people. A tort as a law has various elements which will be used to bring Matt into an account. The damage will be based on whether Matt was responsible for the act or whether he interfered with Debbie’s interest hence causing the injury. The damage will also be based on the cause of the accident. The case will also look at whether Matt intentionally (directly) which handles defamation, trespass or unintentionally (indirectly) which is negligence caused the damages. Tort law will be of great importance if Matt is found negligent hence causing damage to Debbie. Clarke, (2003) Negligence being an indirect tort means failing to do what a reasonable person is expected of. There are various steps that Debbie will have to use in order to take actions of negligence against Matt. In the first place Matt owed Debbie a duty of care and the action Matt took to give Debbie a lift yet he was drunk was a foreseeable reason that a higher chance of damage would be caused. To some extend there was a vulnerability relationship that damage would be caused following the state Matt was in. Matt could have controlled the injury since he knew he was drunk whereas Debbie was in position to use other means apart from using his car. Matt was also in a position to protect Debbie. Matt should in some extend should be held liable in case of policy contemplations but action fails since both are accountable. The risk involved here was foreseeable since Matt knew there was a higher chance of getting involved in an accident and the damage was insignificant. In this case a person who was reasonable enough could have taken various measures to prevent the damage. This implies that Matt had a breach of duty of care for Debbie since he accepted to give her a ride in his state. Debbie damage is reasonably foreseeable meaning it was not too remote but on the other hand Matt caused the damage hence have a breach of duty so no action on him. She also knew the risk involved in being driven by Matt who was drunk and there was a higher risk of getting an accident these implies she voluntarily assumed and well understood the risk. Matt has no defense on him and he is the one who caused damage on Debbie. On the other hand Matt damages lessened proportionately but Debbie on the other case does not recover anything and a total defense is figured out. In conclusion Matt is liable wholly for the injury caused to Debbie since he knew all the risks that were involved because of driving while drunk and he was too responsible for any damage that would have occurred to Debbie hence Debbie proved negligence to Matt. This is in accordance to the DeMitchell (2007) about the negligence and liability. Part B. Debbie in the first place knew that Matt was drunk and so she had a reason to get another tax to take her home. Debbie obviously knew that being driven by Matt who was drunk was a dangerous thing. Debbie being reasonable enough would have taken the necessarily precautions like staying in the night club till morning. In terms of tort’s elements it can be considered that Debbie was reasonable enough to avoid the risk since the risk was foreseeable. On the other hand Matt was negligent since it’s not right to drink and drive since there are various dangers that are involved. Matt had duty care since he was supposed to take care of Debbie hence he knew the dangers that were involved in driving while drunk. For these reasons he was reasonable enough and knew the risks that would occur hence had breached the duty of care. This led to negligence which is a question of the law. It is solid to proof whether the night club owner or Matt was responsible for the negligence. There are circumstances, though, where enough information is not in the person who is in a claiming position to let them to fulfill the burden of proof. The challenge can be prevailed over the notion that some things speaks for themselves by maxim. These can be used when some facts have to be proven by fact. QUESTION FOUR: law of Contract Part A 1. Legal Issues in Relation to Ms Jones Ms Jones had a verbal contract with Fashion Afloat Ltd (FAL) concerning the lease of commercial premises. There was an agreement that Ms Jones was going to refurbish all the three floors of the building and also make necessary renovations; she went ahead without receiving a signed contract from FAL. For a contract to take place there must be an agreement of promises between two or more parties; they must also have the intention of creating certain obligations and legal rights upon these parties and to that, the agreement is enforceable in a court of law (Yorston, 1954). Ms Jones had the intention of being part of the contract and she agreed to the terms set to her. There was consideration of the offer by Ms Jones, she went ahead and invited her nephew to relocate to Sidney to come and help her. Ms Jones received a letter from FAL stating their withdrawal from the contract; she was already halfway through the renovations. There was breach of contract by FAL since they had an agreement, however the two parties having reached agreement did not mean that a contract had been formed but in this case the intentions had been made clear in the first place. Ms Jones had incurred costs in the renovations she had already carried out based on the fact that she had a contract with FAL. The contract between Ms Jones and Fashion Afloat Ltd needed not to be in writing. Absence of writing should therefore not affect the validity of the contract between them and hence it is enforceable in the law courts. 2. Advice to Ms Jones on her Legal rights. Ms Jones is a party in the contract between FAL and herself, after a negotiation took place. She was given an offer by FAL and she accepted it hence there was an agreement between the two parties. In that offer there were some terms that Ms Jones had to adhere to, and also bound her to the contract she was supposed to refurbish all the three floors of the building and also make necessary renovations once she leased the commercial premises. There was breach of contract by FAL; this took place when they sent Ms Jones a letter informing her that she had to end the contract since they no longer wanted to lease the building. She should file an action seeking for damages basing on the fact that there still was an existence of a valid contract between FAL and herself, this is due to the fact that she was already halfway the construction when her counterparts withdrew from the contract. FAL made voluntary promises to Ms Jones during their negotiations which made her enter into the lease contract. Although there was no exchange of leases FAL can be “Estopped” from the denial it was bound. A condition in the contract was the leasing of the building. There was breach of this condition by FAL, similarly Ms Jones can choose to handover the condition or regard it as breach of warranty. The plaintiff (Ms Jones) seeks legal action, she bases on the following, “an assumption that there was a binding contract whether or not contracts had been exchanged”, “an expectation that the parties would exchange contracts” and “an assumption that contracts had been exchanged.” PART B: 1. Legal Issues in Relation to Joseph Joseph and his aunt Ms Jones did not have any contract, Ms Jones had asked his nephew to relocate from Brisbane to Sydney so that he could help her in her renovation. He was not legally bound by any conditions since he come voluntarily (this was a voluntary agreement, Joseph volunteered his services and did not intend to create any legal relations) and had no intention of being part of the contract neither did his aunt have any thoughts of including him in it. There was no offer or promises made to Joseph by Ms Jones of being part of the contract. Joseph was entitled to some money for helping his aunt, his aunt latter dismisses him with nothing claiming that he has no legal rights to payment. They had a contract between themselves and Ms Jones breaches it. Fashion Afloat Ltd (FAL) had no contract with Joseph, they owe him nothing. The contract was between Ms Jones and FAL and Joseph is a third party. It is a coincidence when FAL sends a letter informing Ms Jones that they are no longer interested in leasing the building, Joseph was around. 2. Joseph’s Rights Joseph’s agreement with Ms Jones and FAL’s contract with Ms Jones are two different contracts; none is dependent on the other. Ms Jones is supposed to honor Joseph’s contract regardless of her contact with FAL. She orders him to leave without pay simply because her contract with FAL failed. This should no determine her obligation to other contracts. Joseph has no rights against FAL; he is not a party in the agreement made by Ms Jones and FAL. He is not entitled to any payment made by Fashion Afloat Ltd. The parties in a contract are the only ones obliged to any payment. Despite the fact that Joseph is Ms Jones nephew, he needs to get his fair share of the deal; he is a builder and relocated all the way from Brisbane to Sydney so as to help his aunt renovate the commercial premises. He gave up his full time paying job so that he would work at Sydney; he had no other means of survival as much as he had come to help. He should take action against Ms Jones or should get some remedies because he contributed in the performance of the contract. In this case Joseph and Ms Jones agreement is not enforceable at law; there is no intention of creating legal obligations. It is a social agreement which has no legal consequences. An agreement is not necessarily a contract, but a contract can be an agreement states Prince, (2009). References Clarke, A., 2003. Negligence: a practical learning approach. Butterworth: LexisNexis. Davis, D. et al., 2009. Companies and other business structures: commercial law. Oxford: Oxford University Press. DeMitchell, T. A., 2007. Negligence: what principals need to know about avoiding liability. Melbourne: Rowman & Littlefield Education. Doyles Construction Lawyers, 2007. “Walton Stores (Interstate) Ltd V Maher And Anor (1988) 164 Clr 387” Retrieved on 16th August 2011. Frey M. and Frey H., 2001. Essentials of Contact Law. New Delhi: Cengage learning. Hanrahan, P., Ramsay, I. and Stapledon, G., 2011. Commercial applications of company law 2011. Australia: CCH Australia Limited. Halbert,T. and Ingulli, E., 2011. Law & Ethics in the Business Environment. New Delhi: Cengage Learning. Nelson, B. L., 2006. Law and ethics in global business: how to integrate law and ethics into corporate governance around the world. Sydney: Taylor & Francis. Prince, R., 2009. "Patrick McLoughlin, Camerons smell tester claims £3,000 for windows". The Daily Telegraph (London: Telegraph Media Group Limited). Yorston, R. K., 1954. Company law in New South Wales: a concise manual of the principles and practice of company law. Australia: Law Book Co. of Australasia. Read More