Corporations Act, 2001 - Business and Corporation Law Assignment Case Analysis

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Task: Use the ILAC (Issues, Law, Application, Conclusion) structure to respond to the two problem-style questions below. A worked example of this format can be found in the Resources folder.

Question 1: Terence is a Charles Sturt University question majoring in jewellery design. Terry starts Terry's Terrific Designs as a business after graduating. Peter and Sara, who have both graduated from the CSU, work for him. Sara is hired as a designer, while Peter is named the supplies buyer. Sara and Terence collaborate on the design work. 

In each of the following circumstances, provide Terence with guidance while referencing pertinent legal authority:

Gabby requests a brooch be made for her when Sara visits her. Sara displays to Gabby images of a variety of her own ideas. Sara neglects to inform Gabby that she is Terence's employee. Sara's art impresses Gabby, who commissions her to create an elephant-shaped $1000 brooch. The following day, Terence calls Gabby and informs her that he has received her order and will complete the brooch within two weeks. "Who are you?" asks Gabby. Sara and I have a contrac.

Terence advises Peter to only purchase silver because the business has an excess of gold. Peter, on the other hand, is enjoying a drink with Mary, a gold dealer with whom he has previously done business frequently on behalf of Terry's Terrific Designs, and she makes the excellent offer to sell 50 grammes of gold for $1500. Terence accepts Peter's offer to buy the gold on his behalf, but when Mary shows up at his shop with the gold and demands $1 500, Terence declines to take the metal or give her the money.

Terence dismisses Peter on Monday as a result of him disobeying his order to refrain from purchasing gold. However, Peter's access to the company's email system is not terminated by Terence until Thursday. Gordon, a diamond vendor that Peter frequently worked with on Terence's behalf, contacts Terence on Friday. Gordon claims that Peter wrote him an email on Tuesday ordering a $5,000 diamond for the business store, which Peter picked up on Wednesday. Peter has vanished into South America and is no longer recognisable. Gordon is requesting payment.

Question 2

Roger Smith, who founded United Chemicals Pty Ltd in 2009, holds 92 of the company's 100 shares. His wife Mary, who owns the remaining 8 shares, serves as the company secretary. They choose Roger Smith's brother Timothy to lead United Chemicals Ltd. Industrial Machines Ltd. sold the business a phosphate processing equipment in 2015 for $600,000. Payment was due in three equal instalments in 2015, 2016 and 2017. The agreement was in writing, and Roger signed it as follows:

Timothy Smith, Director of Operations

United Chemicals Pty Ltd., for and on its behalf.

Business is booming in 2015 and 2016, and the firm has little trouble making the payments in full. However, in 2017, a sudden slump in the agricultural sector produces a decline in fertiliser sales, and United Chemicals discovers that it is unable to make the final $ 200 000 instalment. Given that the board of Industrial Machines is aware of Roger's riches, he has received a letter from the company suing him personally for the $200,000 in damages.

Roger looked into expanding into the manufacture of explosives as one of the actions he made in the beginning of 2016 to try and turn around his business's fortunes. However, according to Commonwealth law, "any person who has a criminal conviction" is not eligible to receive an explosive manufacturing licence. In 2005, Roger was found guilty of theft. Explosive Industries Pty Ltd, of which Roger holds 99 shares and his wife one share, is founded by Roger. He serves as the firm's managing director, and his wife serves as the company secretary. He requests Mary to submit an application for a licence to the Commonwealth Department of Industry on behalf of Explosive Industries Pty Ltd. In its letter rejecting the application, the Department cites the law's prohibition on anyone with past felony convictions.

Give Roger advice based on the Department of Industry's decision and the claim submitted by Industrial Machines Ltd.


Answer 1:

Issues: The following concerns were raised in this instance:

Is Sara legally justified in failing to disclose that she is working for Terry's Terrific Designs, and is Gabby correct in thinking that he had signed a contract with Sara? Is the agreement Peter and Terrance reached to buy 50 grammes of gold still enforceable, and is Terrance still responsible for paying Mary $ 1500?

• Does Terrance have any obligation to Gordan for the $5,000 that Peter stole from him when he was fired from his job prior to placing the order for the diamond?

Law: It is well established under the employment act that employees are subject to certain obligations placed on them by their employers, and that employers are likewise subject to certain obligations to avoid potential conflicts of interest for their own employers. However, as it reveals the employee's position within the organisation, employees are not permitted to disclose their job status to customers. As it is well established legislation that employees work for the firm, carry out their obligations, and enter into contracts on its behalf.

Application: In the present instance, Sara met Gabby and showed him some of her ideas. This impressed Gabby, and he commissioned her to create an elephant-shaped brooch for $1,000. Sara accepts the commission (Echeverry Botero, 2015). Sara alerted her boss about the order because it was evident what she intended. She complies with the employer's obligations of care and devotion in this way. It is important to note that Sara entered into an arrangement with Gabby on behalf of her employer, and that she did not abuse the relationship in any way. This is evident from the facts themselves ("Tort Law, Corporate Groups and Supply Chain Liability for Workers Injuries - The Concept of Vicarious Liability," 2017). The purpose of the parties to a contract, which is a necessary precondition for a legally valid agreement, must exist (Doris, 2014). The acceptance of an offer made by one person by another without being under any pressure is the second crucial requirement. And last, consideration in return is the third and final requirement. The three prerequisites are met in the current instance, and it is important to note that only Gabby accepts the contract after seeing all of Sara's designs, therefore it is lawful to enter into an agreement with either Terry's Terrific Designs or Sara as long as Sara provides the designs (Wright, Ellinghaus & Kelly, 2014).

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