Please answer the question mention in the paper. Please write 50 words for each 1 mark.
Page 5 of 5 QUESTION ONE (COMPANY LAW)-(TOTAL 15 Marks) (a) Johnny and Sam are currently partners in a partnership. They have read the case of Salomon v A Salomon & Co Ltd [1896] UKHL 1 (hereafter Salomon) with great interest and now think perhaps a company is a better structure for them. Advise them on the significance of Salomon’s case as well as on the advantages and disadvantages of a company structure. (5 marks) (b) Tom is intending to start a business providing childcare services in an office complex for busy parents working in businesses in the complex. He has discovered through his research that there are various types of companies that can be set up. Advise him on the characteristics of each of these types of companies and advise him on the specific one you would recommend him to use in the first few years while his business grows. (5 marks) (c) Vincent is a minority member in Top Shotz Pty Ltd who has discovered that the directors, Larry and Dunton who are in addition majority shareholders, have been diverting company profits to their own personal company, ABC Rockz Pty Ltd. Larry and Dunton have advised Vincent that he is unable to do anything to address this unfair situation. Advise him as to any appropriate members’ remedies that can assist him in the circumstances. (5 marks) Page 2 of 5 2 QUESTION TWO (CONTRACT LAW) TOTAL 15 Marks David owns a catering business that operates 12 hours a day making special string hoppers (an indian delicacy). On the premises, is a special machine which mixes all the ingredients to make the string hoppers. In the week before New Year’s, which is when he tends to get the highest number of orders, the machine breaks down. David informs the manufacturer of the machine, Quality Machinz Pty Ltd, who sends a carrier service to pick up the machine for repairs. David informs the manufacturer that it was very important that the machine be returned within the next four days this was the only machine he had to keep up with orders requiring large scale production. Unfortunately, as the manufacturer was short on staff in the lead up to New Year’s, it was unable to start on the repairs until three days after it had picked up the machine. The manufacturer rings David and informs him that the work will only be completed in a week’s time. David attempted to use his backup machine but found that he could not keep up with his orders. He then called up Premium Rentalz Pty Ltd and hired out another machine at an increased cost (due to it being the holiday period). Despite using the two machines, both machines were of a lower capacity and hence had lower production efficiencies than the one that was being repaired and he therefore suffered significant loss of sales during the New Year period. In addition, he has lost out on a very profitable contract to cater for a wedding hosting 500 guests. He had not informed Quality Machinz Pty Ltd about this contract at the time of entry into the contract. Please answer the following questions using CONTRACT LAW: (a) Advise David, based on the facts above, whether there is a breach of contract here and whether the losses can be claimable against Quality Machinz Pty Ltd in damages, with reference to concepts such as remoteness and mitigation. (10 marks) (b) David further recalls that prior to the purchase of the special machine from Quality Machinz Pty Ltd, a sales representative had made various promises about the functionality and efficiencies of the machine. These statements all turned out to be untrue, although none were in the written contract. Advise him what arguments he can raise under contract law. (5 marks) Page 3 of 5 3 QUESTION THREE (CONSUMER LAW) TOTAL 20 Marks Dickson has set up a restaurant. He has leased a suitable location and begins to fit out the premises. He purchases $100,000 worth of carpets from Carpet Galore Pty Ltd. The carpets are described as ‘premium and industrial quality’, ‘designed for long lasting use’ and ‘slip-resistant’. Dickson opens the business and is regularly fully-booked, with up to 200 customers each weekend. A few months after the business is opened, Dickson notices that many of the carpets are worn out or damaged, resulting from heavy foot traffic. He contacts an employee of Carpet Galore Pty Ltd named Ronald, and demands that the carpets be replaced or that he get a refund. Ronald refuses, saying that the damage is a result of wear and tear and points out a clause in the contract Dickson has signed that states: “Carpet Galore Pty Ltd assumes no responsibility or liability regarding the quality or the fitness of the supplied mats for any purpose. No refunds, exchange or compensation given.The Australian Consumer Law (ACL) is hereby excluded.” On the premises as well, is a bakery selling pastries to patrons of the restaurant. The pastries have been described as ‘freshly made and organic’, although in reality, the dough used for the pastries was made in Malaysia and shipped to Australia only to be baked almost one week after the dough is made. The café is aware that the dough is made in Malaysia using non-organic ingredients but continue to use the ‘organic’ description on its menus and packaging. Further, the café claims that these pastries have a tick on the packaging with a statement next to it stating that they have been certified five stars by the ‘Heart Foundation’ as being healthy due to having low fat and that they are 100% nut-free. In fact, the ingredients have a high fat content, are not nut-free and the tick turns out to be one invented by the bakery and not one used by the Heart Foundation. A number of customers have now discovered the truth of the nature of the pastries being sold. Please answer the questions below, using the AUSTRALIAN CONSUMER LAW (ACL). Please do NOT use contract law to answer this question. a) Dickson’s restaurant is a consumer under the ACL. Advise Dickson as to whether any of the consumer guarantees could assist him. (7 marks) b) Advise Dickson as to what remedies are available to him under the ACL. (4 marks) Page 4 of 5 4 c) Explain if the above clause in the contract is legally valid under the ACL. Refer to relevant law in your answer. (3 marks) d) Explain if Dickson has been subjected to any type of ‘Prohibited Conduct’ as per the ACL and what remedies/penalties might apply. (6 marks) 5