Answer To: (1520) Semester 2, 2015 BULAW5914 COMMERCIAL LAW Page 1 of 5 School of Business EXAMINATION (1520)...
Preeti answered on Oct 06 2021
Law Questions
Question 1: Business structure and relationship
a) When someone acts as agent for a principal while contracting with third party, it is understood as ‘contract of agency’. Agents owe certain duties towards principal and customers as well. These duties include acting within the scope of authority, adhering with the directions and instructions of principal, acting with reasonable skill and diligence, disclosing material information to the principle, and, not disclosing any confidential information of the principal to the customers (Busch, Macgregor & Watts, 2016).
b) In the underlying case, Abdul used apparent or estoppel authority leading third person or party to rely on such representation to deal and accept agent’s authority. Peter has by his words, behaviour or act led Colin believing that Abdul is his agent and is authorised to enter into contract with third person on his behalf.
c) Unincorporated companies are not considered as having legally separate and distinct identity from their owners. It is quite easy to establish unincorporated companies as it takes no effort and no complexities. In an unincorporated corporation, Max, Asgar and Fatima act as general partners sharing business losses, profits and management duties with each other (Bennett, 2014).
d) Relationship between trustee and beneficiary is understood as similar to the relationship between a company director and shareholders. Trustees enjoy fiduciary relationship with the trust’s beneficiaries. They assume responsibility of taking good care of the property owned by the trust and kept for the beneficiary. There exist relationship of trust and confidence between trustee and beneficiary, and, trustee can be held responsible for breaching this relationship of trust and confidence. The company director and shareholders also enjoys same nature relationship of trust with each other. Both company director and shareholders are responsible for acting in continuum of trust towards each other, shareholders and directors can be held responsible for breach of this relationship and compensating each other.
e) Joint venture is not a legal entity, it operate through the existing legal status of partners and co-ventures. As Joint venture is not a legal entity, it is not allowed to enter into contracts, hiring employees and assuming tax liabilities. All these activities and obligations should be handled by co-ventures or governed by the contract law (Macgregor, 2013).
A company is a legal entity under the provisions of the Companies Act. It can act as an artificial legal person having separate identity from members, officers and employees. A company can enter into contract on its name, and, can hire personnel, assumes tax responsibility and other obligations.
A franchise is not a legal entity but it is business model that can operate under several legal structures such as sole trader, limited company, and business partnership. Franchise operates through agreements depicting how the franchised business should be run, right and obligations of the franchisor, and, relationship between franchisor and franchisee (Munday, 2010).
A sole trade is a type of business format in which there is no legal distinction between owner and business entity. All profits, losses and debts are bear by the proprietor, and, is entitled to employ or hire other people.
Question 2:
As per the provisions of contract law, a valid contract is ‘an agreement between the two or more parties who have clearly created and defined the obligations’. In order to form a valid contract, process of proposal should happen and occur in formal and detailed manner. It means proposal or offer should be made by one party and accepted by other party. This involves a process of negotiation asking parties to use their intelligence and creative ability to make offer and acceptance and forming a valid contract (M. A. Clarke, R. J. A. Hooley, et.al. 2017).
In the underlying case scenario, proposal given or made by GTX Pty Ltd to Mark, offering specialist business consulting services, is not accepted in absolute and qualified terms. The process of negotiation took place between the parties where Mark offers advertised...