- LAWS20028 BUSINESS LAW
- Individual Assessment
Question 1 (15 marks)
Frank is a factory owner. Mike is an electrical contractor who operates his business as a sole trader. Frank asks Mike if he will undertake to install a large new manufacturing machine that Frank has just bought.
Being a licenced electrician, Mike agrees to the job and gave a quote for his labour cost as $40,000 for the installation which was later agreed by Frank. Mike then prepares a written contract which he presents to Frank to sign. Frank does not bother to read through the entire contract. He and Mike both sign it. Unknown to Frank, the contract expressly states that in the event of any claim for breach of contract, Mike’s liability for damages will not exceed $6,000.
Mike and his assistant begin installing the machinery. One day Mike was not feeling well in the morning at work and was finding it difficult to concentrate. He connects an important electrical wire wrongly. When everything has been connected, Mike asks his assistant to turn on the electricity on the premises.
The assistant did urged Mike to check all the connections first before switching the machinery. Mike refused and asked the assistant to just follow his instructions as that would take a whole day and they will find out anyway once the power is switched on.
When power was switched on, the wrongly connected wire causes massive sparking and a large fire. The normal checks would have disclosed that a wire was wrongly connected.
Frank’s factory is damaged by the fire and costs $40,000 to repair. Furthermost production in the factory has to be stopped for three weeks while the repairs are made and Frank loses $20,000 of the trading profits he would otherwise have made.
1) On the basis of the known facts, what type of contract has been entered into between Frank and Mike?
2) In the circumstances, is it likely that Frank can establish a breach of the terms of the contract by Mike?
3) If Frank can prove a breach of contract and claims damages for breach of contract, will he be limited to a maximum claim to $6,000 even though Frank was not aware when he signed the contract or of the term limiting the amount of damages that can be claimed?
4) Could Frank choose to bring an action in tort against Mike for Negligence, rather than an action for breach of contract, what he has to prove to establish a claim in Negligence?
5) Assuming that Mike owed Frank duty of care, do the facts suggest that this duty was breached or not?
6) Assuming Frank succeeds in establishing that Mike is liable for Negligence, how would the court quantify the damages which Frank has suffered? Does the exclusion clause in the contract limit the amount that can be claimed in an action based on Negligence?
With reference to relevant cases and legislation explain the above questions.
Question 2 (10 marks)
Chelsea is going to her Call Centre teambuilding weekend. She needs a pair of running shoes for the occasion so goes to Comfee a local shoe store. She is amazed at the range available and asks the assistant for advice, explaining that she needs them for “running and workouts at gym”. The assistant selects a pair from a range described on the shelf as “all-purpose sports’ shoes and tells Chelsea “this brand is good – I wear them all the time and they are very comfortable”. Chelsea tries them and on and they fit perfectly. She purchases them and wears them on a run through bushes. Unfortunately, part way along the track, the right shoe suddenly falls apart. Chelsea trips and falls, injuring her knee. Comfee refuses any liability for the shoes or for Chelsea injuries, saying that the shoes were unsuitable for cross-country running.
With reference to Sale of Goods legislation and case decisions, discuss what legal options, if any Chelsea has against the shoe store.
Question 3 (9 marks)
Henry, a Brisbane based finance expert advises professionals on retirement investments. In mid-2014, he advised Ms Beattie to invest $500,000 in Queensland Subprime Bank Ltd (“QSB”) shares. Its main business was lending at high interest rates but on secured mortgage 95-100% of the cost of a new house, to borrowers across Australia with a poor credit rating. However, in early 2015, the Retirement Advisors Trust (“RAT”) which Henry was required by regulation to be an accredited member to run his advisory business, issued a special warning to its members not to promote high risk investments like QSB shares. That proved to be good advice because by late 2015,QSB shares crashed by 80%, reducing to $100,000 the value of Ms Beattie’s QSB shares.
Advise Ms Beattie of her legal rights under Australian law against Henry for negligent advice with reference to the leading cases and relevant provisions of the Civil Liability Act(s).(Refer the act of your state.)
Question 4 (6 marks)
A provincial Queensland firm of accountants and financial advisers, Frank, Daniel and Desai (-FDD-) as part of its community activities, managed the financial affairs of the local Fitzroy Pensioners' Society (-FPS-) on a voluntary ex gratia basis, i.e. for no charge. The FPS had 1,000 members whose average age was 70 years. Members paid an annual fee of $500. The FPS had property worth $10 million and cash reserves of $3 million.
In 2014, Frank, Daniel and Desai:
• Failed to renew the insurance of an FPS building valued at $2 million. It subsequently burnt down and was a total loss.
• Invested $1 million of FPS funds it was managing in a high risk Perth property rust, West Point. Four months later West point went into liquidation, with FPS losing its entire $1 million. West Point had been the subject of ongoing bad publicity and was dropped from an investment guide that most Australian accounting firms, including FDD, subscribed to.
(a) Advise Frank, Daniel and Desai, of their liability (if any) to the Fitzroy Pensioners' Society under Australian Tort Law.
(b) Discuss avenues for limiting or entirely excluding liability for FDD's potential liability under Australian tort law in relation its voluntary unpaid work for the Fitzroy Pensioners' Society.
The term assignment will use the following assessment criteria:
Problem solving: The focus of many parts of the assignment is upon developing applied problem solving skills. This requires students to read and analyse fact scenario matrix and identify legal issues and apply these in conjunction with case law and or provisions of legislation to develop a reasoned outcome to the issue presented by the problem matrix.
Critical thinking: Students are required to critically analyse and evaluate information, facts and law in a problem solving context. The skills being emphasized involve the critical appraisal and reflection of legal issues and the application of case law and legislation against a factual matrix.
Information literacy: The assignment tests understanding and comprehension of critical legal knowledge and legal concepts discussed in the course in topics covered prior to submission of the assignment. Students need to develop understanding and familiarity with legal terms and words introduced in topics covered prior to submission of the assignment. This information understanding and literacy is tested in an applied rather than a descriptive context.
Information technology competence: This assignment tests student’s aptitude and capability to access web-based information and resources. Competence in producing academic written work with use of technology forms part of this assignment exercise.
Ethical practice: In formulating response to questions in the assignment students are exercising judgement and weighing possible courses of action in resolving on particular outcomes to legal problem solving questions. This process indirectly applies ethical practice in action.
Student are expected to go beyond textbooks to answer their assessment questions. Use of online databases such as Austlii is recommended for your research.
Students are expected to go beyond their textbooks to answer this assessment questions.
Australian Commercial Law
Author/s : Clive Turner and John Trone : 2015
Edition: 30th edition Publisher: Thomson Reuters (Professional) Aust Ltd
City : Sydney State : NSW
Country : Australia.
sSHATNE DAVENPORT AND DAVID PARKER Business law
The word limit is maximum 4000 words and is due on 10 May 2015 at 5.00pm.