Name: Adam Ghamraoui
Name: Adam Ghamraoui
Subject Name: Enterprise law
Student number: 20477976
Tutor Name: Bader Unnisa Mehdi
Word count: 1100
Question -1
Scenario 1: Bookshop Contract
Issue Does David have any rights under the advertisements for discounted finance textbooks and the $30 gift card promotion at the University co-op bookshop?
Rule For a contract to be formed, there must be offer, acceptance, and consideration. An offer can be revoked any time before acceptance, and advertisements are generally not considered binding offers (Partridge v Crittenden (1882)). Additionally, terms must be clear and not misleading.
Trade Practices Act 1974 (Commonwealth) - Section 52:Prohibits misleading or deceptive conduct in trade or commerce.However,it's unlikely to apply here as the advertisements were not intentionally misleading.
Application 1. Textbook Discount: The advertisement for "Up to 50% off" is vague and does not constitute a specific offer. It is subject to interpretation and does not guarantee any particular discount on specific books. Therefore, David cannot claim breach of contract based on this advertisement.
2. Promotional Table: The sign on the table stating "All Finance books $10.00" could be considered an offer. However, the cashier informing David of the pricing error before acceptance revokes the offer. Furthermore, the advertisement in the catalogue mentioned "while stocks last," suggesting the offer was subject to availability and potentially withdrawn when the cashier learned of the mistake. Thus, David cannot rely on this offer either.
3. Gift Card: The advertisement for the $30 gift card with a minimum purchase of $50 is even more problematic. The cashier explicitly stated that it was not meant to be taken seriously. This negates any potential offer and David cannot claim entitlement to the gift card.
Conclusion David does not have any rights under the advertisements in this scenario. While some elements of contracts were present, the offers were either vague, revoked, or not meant to be taken seriously.
Scenario 2: Laptop Purchase
Issue Does David have any rights regarding the purchase of Peter's Macbook Air?
Rule For a contract to be formed through email correspondence, there must be mutual agreement on all essential terms, including price, subject matter, and payment terms. Offers can be withdrawn before acceptance, and counter-offers constitute rejection of the original offer.
Trade Practices Act 1974 (Commonwealth) - Section 52:Prohibits misleading or deceptive conduct in trade or commerce.However,it's unlikely to apply here as the advertisements were not intentionally misleading.
Application 1. Initial Offer and Counter-Offer: Peter's initial offer is for $2000, and David's counter-offer for $1500 is a rejection of the original offer. However, Peter's reply with a final price of $1900 can be considered a renewed offer.
2. Acceptance with Condition: David's response accepting $1900 but requesting payment in instalments introduces a new condition to the offer. This constitutes a counter-offer, which Peter is not obligated to accept. His statement about needing a lump sum payment implies non-acceptance of David's counter-offer.
3. Withdrawal of Offer: Peter's statement about assuming non-purchase after 3 days effectively sets a deadline for acceptance. Since David did not provide an unconditional acceptance within the timeframe, Peter was entitled to withdraw his offer and sell the laptop to someone else.
Conclusion David does not have any rights regarding the Macbook Air. While negotiations took place, there was no final agreement as David's counter-offer was not accepted and the offer was later withdrawn before becoming binding.
Both scenarios illustrate the importance of clear communication and agreement on all essential terms for a contract to be formed. Vague offers, counter-offers, and withdrawals before acceptance can prevent a binding contract from arising.
Question -2
IRAC Analysis of Business Structures for Isabel Vision's Eye Lux Business
Issue What business structures should Isabel Vision consider for her Eye Lux business, keeping in mind her concerns about control, liability, ease of set-up and termination, reporting burden, capital raising, and protection from poor management decisions?
Rule When choosing a business structure, several factors must be considered, including:
Liability:The extent of personal liability each owner holds for the business's debts and obligations.
Control:The level of control each owner has over the business's management and decision-making.
Taxation:The tax implications of each structure.
Capital raising:The ease with which capital can be raised through external investors.
Registration and reporting:The administrative requirements for setting up and running the business.
Case Law applied:
Partnership Act 1892 (NSW):Governs partnerships and partnership agreements.
Corporations Act 2001 (Cth):Governs the formation and operation of companies.
Limited Liability Partnership Act 1988 (NSW):Provides for the creation and operation of limited liability partnerships.
Application Potential Business Structures:
Sole Trader:
Advantages: Simple and inexpensive to set up, full control over the business, low reporting burden.
Disadvantages: Unlimited personal liability for business debts, difficulties raising capital.
Partnership:
Advantages: Shared resources and expertise, flexibility in profit-sharing arrangements, relatively simple to set up.
Disadvantages: Unlimited personal liability for partners' debts and actions, potential for management disputes.
Limited Liability Company (LLC):
Advantages: Limited liability for owners (members), flexibility in management and profit-sharing, separate legal entity from owners.
Disadvantages: More complex set-up and reporting requirements than sole traders, potential double taxation in some jurisdictions.
Company:
Advantages: Limited liability for shareholders, easy to raise capital through issuing shares, clear separation between ownership and management.
Disadvantages: Most complex and expensive to set up and operate, high level of compliance and reporting requirements.
Addressing Isabel's Concerns:
Control:Sole trader offers maximum control, followed by partnership and LLC (depending on operating agreements). Companies have the least owner control due to board and shareholder structures.
Liability:LLC and company offer limited liability protection, while sole trader and partnership expose owners to unlimited personal liability.
Ease of Set-up and Termination:Sole trader is easiest, followed by partnership and LLC. Companies are the most complex and expensive. Termination is easiest for sole trader, followed by LLC and partnership. Companies require formal winding-up processes.
Reporting Burden:Sole trader has the lowest, followed by partnership and LLC. Companies have the highest reporting requirements.
Capital Raising:Companies are the easiest to raise capital for, followed by LLCs. Partnerships and sole traders are more challenging.
Protection from Poor Management:Limited liability structures (LLC and company) protect owners from poor management decisions of employees and partners. However, directors in companies may still face personal liability for certain decisions.
Recommendation:
Based on Isabel's concerns, an LLC may be the most suitable structure. It offers limited liability protection, flexibility in management and profit-sharing, and a relatively simple set-up process compared to a company. However, a detailed comparison of all options considering specific legal and tax implications for her business and jurisdiction is crucial.
Conclusion As your legal counsel, I recommend a thorough analysis of all potential business structures for Eye Lux, taking into account the specific regulations and tax implications within your jurisdiction. While an LLC appears initially attractive due to its balance of control, liability protection, and flexibility, a detailed comparison alongside partnerships and even a well-structured company should not be overlooked.
Remember, the optimal structure hinges on your precise needs and future ambitions for Eye Lux. Your contributions, Pat and Vince's roles, and potential expansion all influence this choice. Together, we can ensure Eye Lux's launch on a foundation of optimal legal and financial security, ready to revolutionize the beauty industry.
Reference
Partridge v Crittenden (1882),https://ipsaloquitur.com/contract-law/cases/partridge-v-crittenden/#google_vignetteTrade Practices Act 1974 (Commonwealth) Section 52, https://treasury.gov.au/publication/section-52-trade-practices-and-dealings-securities
Partnership Act 1892(NSW), https://legislation.nsw.gov.au/view/whole/html/2004-04-05/act-1892-012
Corporations Act 2001 (Cth), https://www.legislation.gov.au/C2004A00818/2018-01-01/text
Limited Liability Partnership Act 1988 (NSW), https://www.legislation.qld.gov.au/view/pdf/asmade/act-1988-078
