LAWS6987 FUNDAMENTALS OF COMMERCIAL LAW Semester 2, 2023
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LAWS6987
FUNDAMENTALS OF COMMERCIAL LAW
Semester 2, 2023
Assignment – Individual
Final Assignment
Instructions:
1. Due Date and Time: Tuesday, 5 December 2023, by 6:00PM (Sydney time)
2. Word Limit: 4,000 words – including footnotes and bibliography
3. Total Value: 50 marks (50% of total assessment: 30 marks + 20 marks)
4. Mode of submission: Turnitin via Canvas (electronic)
5. Style of submission: Report style (headings, sub-headings, bullet-points)
6. Coversheet Required (see 3. Electronic Submission below)
7. Submission presentation: Font size: 12 point / Line spacing: Double
8. Examinable Topics: All Topics – Class 1 to Class 4 (inclusive)
9. Citation:
. Cases: case names to be cited in the text in italics (e.g. Salomon v Salomon & Co
Ltd) with full case citations in footnotes (e.g. Salomon v Salomon & Co Ltd [1897] AC 22) after which an abbreviation may be used (e.g. Salomon’s case)
. Sections: section number and any subsection to be cited in the text in bold, not in footnotes (e.g. s 124(1)(a), Corporations Act 2001 (Cth))
. Footnotes (bottom of page) and bibliography (end of submission) are required
1. Assignment Instructions:
. The due date and time for submission of the assignment will be strictly applied. The assignment must be electronically submitted via Turnitin on Canvas by the due date and time. Refer to Section 3 below for information about electronic submission.
. Always leave plenty of time to submit – it is most unwise to commence submitting at 5 minutes before the due time – and it is most unprofessional, not to mention costly, to be late. For any late submissions, Canvas automatically applies the appropriate penalty (see below). Indeed, there is no rule against submitting early.
. Assignments that are submitted late, without an extension or special consideration, will incur a penalty of a deduction of 10% of the Total Value from the mark awarded for each day, or part thereof, that the assignment is submitted after the due date and time (i.e. a deduction of 5 marks from the mark awarded for each day, or part thereof, that the assignment is late). In the interests of fairness and equity for all students, no assignment can be accepted after the closing date of Tuesday, 12 December 2023.
. The word limit = 4,000 words and will be strictly enforced. Students who exceed the word limit will incur a penalty of a deduction of 10% of the Total Value from the mark awarded for each 10%, or part thereof, in excess of the word limit (i.e. a deduction of 5 marks from the mark awarded for every 400 words, or part thereof, in excess of 4,000 words). The word limit includes all material in the Assignment – including the footnotes and bibliography.
. Appropriateness of Assignment substance and presentation, including expression, citation, layout, style, proof reading, referencing, and compliance with the instructions are taken into account when awarding marks. Any deficiencies in these respects may result in a deduction of marks and referral to Educational Integrity for investigation.
. Any applications for special consideration must be made to the Student Centre (not to the Unit Co-ordinator) – refer to the Unit of Study Outline for details.
2. Content, Style and Layout
. In this Assignment, you are encouraged to use headings, sub-headings and bullet points or numbered points where appropriate – this will enhance the structure of your Assignment thereby making it clearer to read and comprehend.
. An executive summary at the commencement of the Assignment is not required (this is not an Executive Report).
. An overall conclusion at the end of the Assignment is not required.
. While the Assignment is not set as a research assessment, secondary sources in addition to the Textbook may be used (and, if used, then must be cited in footnotes and listed in the bibliography).
. Footnotes are to be used for referencing cases and other resources throughout the
Assignment in accordance with the AGLC (Australian Guide to Legal Citation) – failure to do so can be considered a form of plagiarism and will result in a loss of marks – the USyd
Referencing and Citation Styles site for the AGLC (which is adequate for this Assessment) can be found at the following link:
https://libguides.library.usyd.edu.au/c.php?g=508212&p=3476376.
. A bibliography must be included at the end of the Assignment as follows – failure to do so can be considered a form of plagiarism and will result in a loss of marks:
A. Articles/Books/Reports (listed in alphabetical order by author, eg Textbook details)
B. Cases (listed in alphabetical order)
C. Legislation (listed in alphabetical order by legislation "short title" only – do not include sections cited)
There is no need to cite the lecture slides as a reference.
3. Electronic Submission – Turnitin
. The Assignment submission must be submitted via Turnitin on Canvas.
. Be certain to follow these instructions to ensure that your assignment is correctly submitted by the due date and time (penalties apply for late submission).
. The assignment must be submitted to Turnitin with a file name comprised of your details as follows:
o SID: #########
o Assessment Name: Final
o Semester: 2023 S2
For example – if an SID is 123456789, then the file name will be (no spaces):
123456789final2023s2
. Note – resubmissions: the Assignment may be submitted more than once before the due
time and date, and only the latest submission will be marked – if resubmitted, then Canvas will indicate the resubmission by attaching “-[#]” to the end of the file name ([#] = number of resubmission).
. The Assignment only can be submitted as a Word document (ie [file name].docx or [file name].doc) – it cannot be submitted in any other format (e.g. not .pdf or wps format).
. In accordance with the Anonymous Marking Policy, a student’s name must not appear anywhere in or on the submission.
. Your submission must commence with a coversheet of your own that includes:
o the Unit code: “ LAWS6987”
o the Assessment: “ FINAL ASSIGNMENT”
o your SID Number (no name)
o the Word Count of the submission (text including footnotes and bibliography)
. The Turnitin submission process is complete once the submission appears in your “Submissions” tab in Assignment under Assignments in Canvas.
. If your submission has not been successful, email the Unit Co-ordinator immediately
attaching a copy of the assignment and promptly contact ICT for assistance in
submitting the assignment (your Turnitin submission log will be examined in the resolution process) – the only submission that can be marked is one that has been submitted via Turnitin and is available for marking in Canvas.
Question 1 [30 marks]
Roberto and Maria met while working at a café in 2016. They had much in common and quickly became close: they had both recently emigrated to Australia, neither had completed secondary school and they both wanted to work for themselves one day.
In 2018, Roberto and Maria opened their own café through a company, R & M Enterprises Pty Ltd, in which they are the directors and equal shareholders. They decided that operating under a
franchise might provide them with support to make up for their lack of business experience.
Accordingly, the company entered into a franchise agreement with Café Time Ltd, one of the
largest café franchisors in Australia. This allowed them to operate a shop under Café Time
branding and using the Café Time business system in the primary marketing area of Maroubra (the Maroubra Franchisee). The terms of the franchise agreement required the Maroubra
Franchisee to pay a continuing franchising fee each month based on a percentage of sales in the preceding month and to purchase all coffee beans and other café supplies exclusively from Café Time.
In 2020, the COVID-19 pandemic substantially affected the hospitality industry in Australia. Coffee sales in cafés significantly decreased, which in turn reduced the franchising fees payable to Café Time. The pandemic also created disruptions to Café Time’s supply chains, increasing the cost of sourcing coffee beans by 10%. To make up for the effects of these disruptions to its profitability, Café Time increased the unit price of its coffee beans – in the case of the Maroubra Franchisee by 20%.
Due to the increased purchasing costs of the coffee beans, the Maroubra Franchisee is now
operating at a loss and Roberto and Maria are unsure how long they can continue operating
unless business picks up. Also, Roberto and Maria recently discovered that the unit price of coffee beans for some other franchisees was only increased by 15%. They confronted Café Time about this, but Café Time refused to negotiate on the price, saying that Roberto and Maria should have raised this right away and that in any event Café Time could not afford to reduce the price for their café given its small size in comparison to some of the other franchisees.
This situation also is of concern to Roberto and Maria given that R & M Enterprises Pty Ltd (the Maroubra Franchisee) has the following financial commitments:
. Cuppa Bank Ltd: $60,000 loan used by the company for the subsequent acquisition of a delivery vehicle – collateral created on 27 February 2018
. Latte Bank Ltd: $100,000 loan secured by an AllPAAP security interest – registered on 11 April 2018
. Mocha Bank Ltd: $180,000 loan for the purchase of plant and equipment for the shop as required under the franchise agreement and registered on 22 June 2018
Applying relevant Australian commercial laws, Roberto and Maria as well as R & M Enterprises Pty Ltd seek your advice on their legal rights against Café Time Ltd and your advice regarding the outcome of any claims by the banks in the event of the liquidation of R & M Enterprises Pty Ltd.
Question 2 [20 marks]
Amanda advertised her commercial cleaning business for sale in the local newspaper. The advertisement read “well established local business – our dozens of satisfied clients are your guarantee of success – earn $2,000 per week and more.”
After about 3 weeks of considering this prospect, Rick eventually replied to the ad. Amanda told him the business is “a little gold mine” and that she “expects it to sell quickly” because “there’s no real competition within the area” and so he had “better make a decision to purchase the business without delay”. While Amanda saying that “there’s no real competition within the area” is true, there is competition from commercial cleaning businesses situated outside the local area.
Rick then asked Amanda to show him the financials of the business, at which she eagerly
produced to him a statement prepared by her accountant showing that she had on average made a profit of $2,250 per week in the last financial year. Amanda did not indicate that the profit she
had made since the end of that period had declined substantially due to her ill health. She
reasoned that the business would immediately recover to its former profitability if taken over by a new owner who could devote all their energy to it. Amanda also offered to show Rick the books of the business for the period since that covered by the accountant’s statement, but Rick said he was
too busy to look at them now. Additionally, she told Rick “You know, you can probably improve on these figures; I expect demand for commercial cleaning services in this area to increase”. Amanda
did not have any market research to support that statement, but she thought it sounded encouraging.
Rick agreed to buy the business for $50,000. Consequently, he and Amanda signed a contract which contained the following term:
“The vendor makes no representations or warranties as to the takings or profitability of the business. The purchaser acknowledges that, in entering into this contract, it has not relied on any information provided by the vendor.”
In the first six weeks, Rick made on average a profit of about $1,000 per week. He phoned
Amanda to ask about the difference between his takings and hers. Amanda told him that it always takes a little time for clients to get used to a new owner. Rick replied ‘Well, I guess I’m stuck with
this business now, but if things don’t improve, I’ll be looking for you to pay me some compensation” .
A year later things have not improved; indeed, Rick’s gloomy attitude has lost him more
customers. The business yields only $800 per week profit and Rick’s accountant tells him that, currently, the business would be worth only $5,000.
In order to improve the business’s position, Rick retained Nathan to sell the cleaning services
throughout the local business community. If a potential client looked promising, then Nathan was able to offer a signup bonus of a 10% discount on cleaning services for the first 3 months.
However, where Nathan considered a potential client to be an exceptional prospect, he decided to offer a 20% discount on cleaning services for the first 6 months as an extra inducement to sign up.
What legal issues arise in this scenario and how would they be resolved under relevant Australian commercial laws?
2023-12-05