Table of Contentsc\Lecture 1- Introducing the Law...........................................................................................5

What is Law?..............................................................................................................................5Purpose of Law:.........................................................................................................................5Rules of Law:..............................................................................................................................5Law changes because:................................................................................................................5Types of legal system:................................................................................................................5

Lecture 2-...........................................................................................................................5- Primary Legislation.............................................................................................................6- Delegated legislatio............................................................................................................6- Common Law.....................................................................................................................6- Injunction..........................................................................................................................6

Lecture 4- Torts 1.............................................................................................................10Tort of Negligence:...................................................................................................................10Difference between action of tort to court vs. action of criminal...............................................10- Duty of Care.....................................................................................................................10QLD Civil Liability Act:...............................................................................................................10Duty of Care:............................................................................................................................11o Kinds of injury.....................................................................................................................11o Defences.............................................................................................................................11o Remedie.............................................................................................................................11When answering Negligence Questions.....................................................................................11

Lecture 5- Negligent Misstatement...................................................................................12Break up negligent misstatement into 2 and 3 party cases........................................................12o 2 Party Cases......................................................................................................................12o 3 Party Cases......................................................................................................................12

Lecture 6- Contract...........................................................................................................15What is a contract?..................................................................................................................15Kinds of Contract:.....................................................................................................................15Difference between a deed and a simple contract....................................................................15Elements of a Contract:............................................................................................................15Elements of a valid offer...........................................................................................................15Test to determine whether a statement is an offer:..................................................................15To whom can an offer be made:...............................................................................................16What can happen to a valid offer..............................................................................................16Termination of an offer............................................................................................................16Rules of acceptance..................................................................................................................16Acceptance:..............................................................................................................................16Acceptance can be made:.........................................................................................................16- Consideration...................................................................................................................16Consideration can take the form of:.........................................................................................16- Executed..........................................................................................................................16- Executory.........................................................................................................................17The Parties:..............................................................................................................................17

Lecture 7 Contracts..........................................................................................................181- The terms.........................................................................................................................18

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Difference between Term and Representation...........................................................................18Representation...........................................................................................................................18

Express vs Implied Terms..........................................................................................................18Conditions................................................................................................................................18Warranties...............................................................................................................................18Inominate................................................................................................................................18Inominate................................................................................................................................18Oral or written Express terms:..................................................................................................18Written terms...........................................................................................................................18Implied Terms:.........................................................................................................................19Exclusion Clauses:....................................................................................................................19Exclusion Clause in a signed contract:.......................................................................................19Exclusion Clauses in an Unsigned Document:............................................................................19Time of notice:.........................................................................................................................20Previous course of dealings:.....................................................................................................20Effects of misrepresentation:....................................................................................................20Contra Proferentum Rule:........................................................................................................20Scope of the Exclusion:.............................................................................................................20Rescission.................................................................................................................................20Right to rescind contract is lost if:.............................................................................................20Discharge.................................................................................................................................20

Lecture 8- Consumer and Competition Law......................................................................22Elements of a Valid Contract:...................................................................................................22Policy Underpinnings:...............................................................................................................22Vitiating factors:.......................................................................................................................22Mistake....................................................................................................................................22

- Common Mistake...............................................................................................................22- Mutual mistake..................................................................................................................22- Unilateral mistake..............................................................................................................22

Misrepresentation....................................................................................................................22Elements of an Actionable Misrepresentation............................................................................23- Actionable misrepresentations..........................................................................................23Types of misrepresentation........................................................................................................23Fraudulent Misrepresentations:.................................................................................................23

Misrepresentation at Common Law:.........................................................................................23Undue Influence:......................................................................................................................23Duress......................................................................................................................................23Unconscionable Conduct:.........................................................................................................24Consumer and Competition Law...............................................................................................24Statutory reform:.....................................................................................................................24

- Reasons for statutory reform.............................................................................................24- Misleading/Deceptive Conduc...........................................................................................24- Trade or Commerce...........................................................................................................24- Engaging in Conduct...........................................................................................................24

Mislead or Deceive...................................................................................................................25Lecture 9- Consumer and Competition Law...............................................................................25o 3 main sections prohibiting unconscionable conduct........................................................25

s20......................................................................................................................................25 s21......................................................................................................................................25 s22......................................................................................................................................25o Unconscionable..................................................................................................................26

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- Procedural Unconscionability...........................................................................................26- Substansive Unconscionability.........................................................................................26- Unfair term......................................................................................................................26- Specific Prohibitions.........................................................................................................26- Inertia selling...................................................................................................................27The ACL implies into contracts for the sale of goods to consumers guarantees that:.................27The ACL implies into contracts for the supply of services to consumers guarantees that:..........27- Price fixing.......................................................................................................................30Primary Boycotts......................................................................................................................30- Misuse of market power..................................................................................................30- Exclusive Dealing..............................................................................................................30s50...........................................................................................................................................31

Intellectual Property........................................................................................................32Copyright.................................................................................................................................32

Requirements for Protection:.....................................................................................................32Extent of copyright protection....................................................................................................32

Infringement............................................................................................................................33Trade Marks.............................................................................................................................34- Trade mark will only be registered if it.............................................................................34Extent of Trade Mark Protection:.............................................................................................34Infringement............................................................................................................................34

- Unregistered trade marks..................................................................................................34Patents.....................................................................................................................................34Extent of Patent Protection......................................................................................................34Infringement............................................................................................................................35

Lecture 11 Business Structures.........................................................................................36- Sole trader.......................................................................................................................36o Advantages.........................................................................................................................36o Disadvantages....................................................................................................................36

- Partnershi........................................................................................................................36o Advantages.........................................................................................................................36o Disadvantages....................................................................................................................36

- Joint venture....................................................................................................................36o Advantages.........................................................................................................................36o Disadvantages....................................................................................................................36

- Trus..................................................................................................................................36- Company..........................................................................................................................37o Company’s internal rules....................................................................................................37o Directors and shareholder..................................................................................................37 Director must.....................................................................................................................37 Director’s dutie...................................................................................................................37 Shareholders......................................................................................................................37 Types of decisions on which shareholders are netitled to vote include.............................37 Shareholder who is dissatisfied by the way company is being managed,..........................37

Factors to be considered for the choice of a business structure................................................38

Lecture 11 Business Structures.........................................................................................38- Franchise..........................................................................................................................38

Franchising Code of Conduct..............................................................................................38 Advantages.........................................................................................................................38

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Disadvantages....................................................................................................................39- Business difficultie...........................................................................................................39o Receiver..............................................................................................................................39

- Bankruptcy.......................................................................................................................40o Debtor is insolvent if they are unable to pay all debts as and when they become due and payabl.........................................................................................................................................40 Debtor entitled to keep......................................................................................................41

Liquidation...............................................................................................................................43Administration.........................................................................................................................44Agency.....................................................................................................................................44o Various types of agency arrangements recognised by law.................................................45o How is an agency created...................................................................................................45- d of an Agen.......................................................................................................................46o Duties of Agent...................................................................................................................46

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Lecture 1- Introducing the LawWhat is Law?

- Set of rules- Regulate people’s interaction- Sets standard of conduct between individuals

Purpose of Law: - Resolves disputes- Maintains social order- Preserves/enforces community value- Regulate economy- Prevents misuse power

Rules of Law:- Law is predictable- Passed by proper authority- Everyone (incl. govt) is bound by law- Law is not retrospective- Law is enforceable

Law changes because:- Political change - Need to fix problems with law- Changing community values- Pressure from lobby groups- Changing technology

Justice = Fairness- Fair compensation/punishment- Fairness has influence development of business law

Legal = EthicalTypes of legal system:

- Civil law - Common Law- Etc.

Lecture 2- - Legal system in Aus: common law legal system- Statute law/Legislation/Primary Legislation/Act of Parliament: body of law enacted

by 9 parliamentso 1 commonwealtho 6 stateso 2 territories

- Australia is a federationo Because we have federal/commonwealth parliamento 6 state parliaments and 2 territoies

- A statute/act of parliament sets out the general legal principles of that area of law. It also sets out the legal framework within which the principles operate.

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- Parliaments delegate law making powers to delegated bodies- Primary Legislation: Act of parliament- Delegated legislation: not passed by a parliament

o Written/put together relevant public service (council, ministers,etc.) E.g. Regulation

o Contains the detail to support the application of the Act- Common Law: body of unenacted laws that emanate from

federal/states/territory courtso Judge-made law source of law

1- Rules of Common Law e.g. Rules of contract law

o Trespass to land Very strict

2- Principles of Equity injunctions and specific performance Equity is based on fairness and justice

- Entire common law made up of:o Statute lawo Judge made lawo Equity

- Injunction: order by judge to stop someone from doing something- Statute law overrides judge-made law- Equity overrides common law- Each parliaments comprises 3 elements

o Lower house: house of representativeso Upper house: senateo Queen: governor general

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Laws made by Court:- Role of judiciary to interpret and apply laws made by the courts and relevant

parliamentso 1- By precedentso 2- Statutory interpretation

- Doctrine of Precedent: judgement of court that establishes a point of lawo DOP: Binding- on lower court when set by a higher court on the same

hierarchyo Persuasive- court strongly considers decision of another court in reaching

decision, but is not bound by ito Advantages off Precedents: certainty, predictability & uniformity

- Hierarchy of Courts Links to Doctrine of Precedent: precedent can only be binding within the same court hierarchies

o Between different court hierarchies- precedent can only be persuasive o Ratio of a case refers to legal principle/rule/ruling used by the judge to settle

disputes between parties

- Within the same court hierarchy, precedent is binding on lower courts, but only persuasive on higher courts

- High court of Australia is not bound by its own previous decisions- Alternative Dispute Resolution (ADR)

o Arbitrationo Mediation

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Lecture 3-

Rules of Statutory Representation:- Literal Rule:

o Interpreting according to the ordinary meaning of words usedo Rule based on the idea that the intention of the parliament is reflected in

words used and courts must give effect to that intentiono Justified on basis that the duty of courts is to interpret the wordso NEGATIVE: Literal interpretation of statuses may give rise to absurd

interpretations- Golden Rule:

o Literal interpretation will lead to absurd/ambiguous/inconsistent meaningo Court may modify words to give effect to original intention of parliamento Where the LITERAL approach results in an absurd meaning, under the golden

rule- a judge should interpret that section and give a meaning that is not absurd

- Mischief Rule:o Courts to consider circumstances leading to the passing of the Act in

question: What was the state of the law before legislation was passed? What mischief/defect resulting from the law did the parliament

intend to address by passing the legislation? How did parliament intend that mischief or defect will be cured, in

other words, what remedy? What are the reasons (policy) behind the remedy (legislation)?

- Acts Interpretation Act 1954 (QLD)- assists judges in the process of statutory interpretation in relation to Queensland statutes

- Extrinsic Material in Interpretation: (page 10 TBOOK) o The 2ND reading speech is an example of thiso Another example are explanatory notes and memorandumo Material that a judge can use to help interpret and statute

- Parliamentary intention in passing laws?- Interpreting the constitution:

o In relation to the Commonwealth constitution, the high court of Aus might have to consider whether the commonwealth parliament has passed a statute which is outside of the parliaments constitutional authority

o The commonwealth parliament, may only validly pass a statute which is within its express/implied constitutional authority

o Commonwealth parliament is subject to constitution And whether or not it complies- is determined by high court

o *These rules of interpretation were developed by common lawo Judges now have to take note of interpretation statutes to guide them

Division of Powers between Commonwealth and State Parliaments- Exclusive Powers: powers exclusive to commonwealth (statute law making power)

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o E.g. defence, currency, customs, immigration- Concurrent powers: powers exercised by Commonwealth and State

o Banking, trade & commerce, tourism, - Residual Power: powers left to states

o Not specified in commonwealth constitution- e.g. education, health, criminal law, etc

- S109 of constitution: applied by high courto When a law of a state, is inconsistent with a law of the commonwealth

Commonwealth prevails and state statute is invalid- S128 of Aus Constitution: Constitution can be changed provided the follow

conditions are met:o Proposed amendment must be:

Passed by over 50% of all elected members in both houses of parliament

Put to referendum of all Australian voters within 2 to 6 months after the absolute majority vote

Approved by a majority of voters and by majority of voters in majority of states

Given royal assent by governor-general on behalf of the queen- Doctrine of Separation of Powers

o 3 arms of government legislative arms (parliament)- makes (statute) laws executive arm- administers laws- Government judicial arm (courts & police)- interprets laws

o Under the doctrine of separation of powers, the functions of the parliament, the executive and the courts must be separate

o The executive appoints the Judgeso Judges/Courts must have independence from executiveo Government should not tell Judges what to do

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Lecture 4- Torts 1- A wrong has been committed

o And the law of torts might prevent a remedy/compensation/etc- The law of torts might still be applicable even when there has been no

contact/agreement/voluntary arrangement between parties- Under the law of contract- parties must voluntarily enter into an agreement

o And the parties to that contract determine the scope of it- The law of torts will protect a person from suffering bodily injury, property damage,

reputation through defamation, etc…- Tort may exist independent of any contractual relationships- Both tort and contract law primarily been developed by courts

o However, the QLD Civil liability act has been modified by statute law- Negligence is not an intentional tort (it’s unintentional)- Criminal law treats my wrong as a wrong against society- If it is under tort law: the accused has committed a wrong against the victim

Tort of Negligence:o Party complained of should owe to the party complaining a duty to take care

and the party complaining should be able to prove that he/she has suffered damage as a consequence of a breach of that duty

o For a plaintiff (injured person & starting court action) to succeed against the defendant in a court action for negligence, the plaintiff must prove:

1- that the defendant owed the plaintiff a duty of care 2- the defendant breached the duty of care 3- the breach caused the plaintiffs’ harm/damage

IF ANY OF THESE are not proven: the defendant will not be charged

The plaintiff MUST suffer some damage/harmo E.g. personal injury, property damage, economic loss o If the plaintiff has not suffered damage, he/she will not

succeed- Negligence can be though of as possible carelessness

Difference between action of tort to court vs. action of criminalo Tort: wanting compensation for injuries suffered o Criminal: TOTALLY SEPARATE MATTER

Police might prosecute- Duty of Care: whether or not a duty of care is owed is determined by the

Common Law Cases- Standard of care breach is determined by section 9 of the QLD Civil Liability Act- Damage: causation, remoteness- section 11 of the QLD Civil Liability Act

QLD Civil Liability Act:o If you are providing advice to someone about negligent

1- find if the party has been negligent 2- Defendant raises defences

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Contributory negligence: determined by s23 & 24 of QLD Civil Liability Act

Voluntary Assumption of RiskDuty of Care:

o Defendant owes duty of care to their neighbouro In relation to duty of care, only the recognised categories will be consideredo Questions of Duty of care:

Well-recognised categories of duties: Employers, occupiers of land, drivers, manufacturers, school

teachers, doctors, nurses, lawyers, auditors and accountants, bankers and other professionals

Through common law:o Employer: owes duty of care to employee

1- to provide a safe place of work 2- safe equipment, machinery, plant, etc 3- A safe system of work

o an occupier of a land/building owes a duty of care to those who enter occupier liability

o Breach of Duty of Care: Reasonable person: hypothetical person

If a reasonable hypothetical person would have acted differently to the defendant, the defendant has breached the duty of care

If a reasonable hypothetical person would not have acted differently, the defendant has not breached the duty of care

o Kinds of injury: Physical injury to person Psychiatric harm Economic loss Damage to property

o Defences: Voluntary assumptions of risk Contributory negligence Denial of negligence Disclaimers/exclusion clauses Inevitable accident

o Remedies: Award of damages is typical remedy for tortious wrong Primary purpose of tort liability is to compensate person who is

injured by making person at fault pay for damage they have caused Objective is to place person injured, in position they would have been

had the tort not been committedI ssue (s) L aw (relevant law) A pplication of law to the facts C onclusive

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When answering Negligence Questionso 1- Duty of Care?o 2- Breach of duty

if (Civil Liability Act): risk was foreseeable risk was not insignificant in the circumstances, a reasonable person in their positon

would have taken the precautionso 3- Harm caused by the breach

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Lecture 5- Negligent Misstatement- With negligent misstatement, duty of care is also determined at common law

through common law cases- Liability for negligent misstatement is simply a variation of liability for negligence

generally- The plaintiff must still show that the defendant owed them a duty of care, that the

defendant breached that duty, and that there was resulting loss- The difficult in negligent misstatement lies in ascertaining whether, on the facts,

there is the required proximate relationship between the parties to warrant a finding that a duty of care arises

- Liability for Negligent Misstatements:o Dual requirements of:

Assumption of responsibility by the adviser; and Reasonable reliance upon that advice by the other party

what a prudent person would believe and act upon if told something by another. Typically, a person is promised a profit or other benefit, and in reliance takes steps in reliance on the promise, only to find the statements or promises were not true or were exaggerated

o In Australia, the focus is on reasonable reliance Very important issue

Break up negligent misstatement into 2 and 3 party caseso 2 Party Cases: Duty of care & Direct Dealings

The Barwick Test and Mutual Life and Citizens Assurance Company Ltd v Evatt (1968) 122 CLR 556

A person (defendant) providing advice or information owes a duty of care if:

o The subject matter of the advice/information is of a business or serious nature;

o The defendant knows our ought to know that the plaintiff intends to rely on the advice/information

o It is reasonable in the circumstances for the plaintiff to rely on the advice/information

o 3 Party Cases: Indirect Relationships

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Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 (page 95-98 textbook)

The reason why excel chose Esanda finance to do auditing was for statutory compliance

PMH owed Esanda a duty of care For an auditor to owe a third party a duty of care, the third

party (C) must proveo Defendant auditor (A) knew that information/advice

given to B (A’s client) would be communicated to C o This advice would be very likely to lead C to enter into

a transaction of the kind C usually enters into, ando It would be very likely that C would enter into such a

transaction in reliance on the information/advice from A and thereby risk suffering economic loss

Liability of Auditors: An auditor owes a duty of care to their clients and not usually

to third parties who rely on the auditor’s report and suffer damage

Disclaimer: Hedley Byrne v Heller [1964] PG 92 textbook

Breach of duty of care: Defences:

The defences of contributory negligence and voluntary assumption of risk are not raised with negligent misstatements

Vicarious Liability: an employer is vicariously liable for a tort committed by an employee causing harm to a third party

o However, for the employer to be vicariously liable, the employee must be acting within the scope of employment

o Two issues: Who is an employee?

There is no vicarious liability in relation to independent contractors, but there is potentially- in relation to an employee

Therefore, the employer can argue that the person that has caused the injuries is actually an independent contractor and therefore is fully liable

How do you know whether the person who committed the tort is a contractor or an employee?

o Court will consider: How much control does

the employer have over

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the way in which the work of the contractor/employer is carried out

The mode of remuneration- does the person get a regular salary

The provision/maintenance of equipment- if the person brings/owns their own equipment, it could indicate that the person is a contractor

If the person has a stable/certain hours that he/she has to come in

Provision of holidays: e.g. 4 weeks paid holiday leave indicates an employee

o Courts will take into account all these factors when making decision

What is the scope of employment? To be within the scope of employment,

what the employee has done must be connected with/incidental- to the employment

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Lecture 6- ContractWhat is a contract?

o Agree between two or more people which is legally enforceableKinds of Contract:

o Simple: can be made verbally or in writing, or implied by the conduct of the parties

o Formal: requires legal formalities and is valid only when it is made according to the form which is required by the law. There are two kinds of formal contracts: deed and contracts of record

Difference between a deed and a simple contracto Deed is always in writing and signed by he party again whom it will be

enforcedo A simple contract contains the following ingredients:

Intention to create legal relations Offer and acceptance

o A simple contract can be made verbally, in writing and implied by the conduct of the parties

- Principles of contract law come from common law- To for a simple contract:

o Must have consideration, agreement and intention If one of these elements is not met, the contract is not legally

enforceableElements of a Contract:

o Legality of the subject-matter and legal formalitieso Free and voluntary consento Capacity of partieso Certainty of termso Intentiono Considerationo Offer and acceptance

- Contract = consideration + intention + agreement- Agreement = Offer + Acceptance- Offer: a proposal made by one party to another to enter into a legally binding

contractElements of a valid offer

o Offer must be firmo Offer must be certaino Offer must be communicated to the offeree

Test to determine whether a statement is an offer:o Whether a valid offer has been made by one party to the other will depend

on the words used or the conduct engaged by the offeroro Courts use objective test to determine whether an offer has been made

Use reasonable person test

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- Invitation to treat: initial approach to others inviting them to deal/instigate dealings on certain specified terms

o Auction, advertisement, goods displayed in shops, price lists, vending machine

To whom can an offer be made:o One persono Group of peopleo World at large

What can happen to a valid offero offer can be accepted (contract made)o offer can be rejected (no contract)o A counter offer can be made to offeror (if offeror accepts the counter offer-

contract will be made)Termination of an offer

o Death o Time lapse

Rules of acceptanceo Silence cannot constitute acceptanceo Acceptance must be made within a reasonable timeo Acceptance must be in reliance upon the offero Offer must be in force before it may be acceptedo Acceptance is final and unqualifiedo Acceptance be communicated to the other party unless waived

Acceptance:o A final and unqualified assent of all the terms of the offero Whether or not there has been an acceptance will be decided objectively by

reference to the words or actions of the offeree, not by their thoughts Acceptance can be made:

o By spokeno By written wordso By conducto Performance of an act

- Silence is considered no acceptance - Consideration: price paid by parties to buy each other’s promise

o Generally, person who sues another for a broken promise under a contract should prove that they paid the price and seek remedies from the other party through the court for the broken promise or breach of contract

Consideration can take the form of:o Payment of moneyo Provision of goodso Provision of a serviceo Undertaking of an onerous obligationo Refraining from doing something, such as agreeing not to sue, oro A promise to do any of these things

- Executed: one party pays the price

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- Executory: both parties still have to pay the price- Consideration: needs not be adequate

o Consideration must be sufficient and cannot be: A vague promise Past consideration Performance of a prior legal obligation

- Renegotiating debts: payment of a lesser sum in lieu of the full amount on the day it is due t(due date) does not constitute satisfaction of the whole debt as the agreement to accept lesser sum is not supported by any consideration

- Promises that do not need consideration:o Contracts under sealo The doctrine of promissory estoppel

- Elements of Promissory Estoppel: legal principle that a promisee is enforceable by law when the promisor (person making the promise) makes a promise to the promisee (person being promised) who relies on it to his / her detriment

o Promisor made a promise/representation/assumptiono Reliance by the promisee (person who receives promise)o Material detriment suffered by the promiseo Unconscionability (overwhelmingly one-sided in favor of the party who has

the superior bargaining power, that they are contrary to good conscience) of the promisor

The Parties:o Capacity to contract: certain individuals and entities are prohibited by law

from entering into legal contractso One reason for the existence of such laws is to protect vulnerable individuals

from being exploitedo Valid Contracts with minors: can definitely contracts for under 18

Contracts for necessaries, and Contracts for beneficial services

o Mentally incapacitated: contract with mental ill persons I’ll po Bankrupts can’t enter into contractso Drunkards: of unsound mind when enter a contract

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Lecture 7 Contracts1- The terms:

Difference between Term and Representation- The courts look at the following factors:- The language used by the parties; - The context in which the statement was made; • - The time the statement was made- The maker of the statement; and - the importance of the statement.

Representation: mere statements made by one party to another before the contract is formed

- not contractual/binding in nature- no remedy available for breach of representation- contract remains in force unless there is misrepresentation

Express vs Implied Terms- terms can be expressly agreed by parties in words- or implied by law

Conditions: major terms of the contract breach of which will entitle innocent party to terminate contract and sue for damages

Warranties: minor terms of the contract breach which will entitle parties to sue for damages

Inominate: hybrid term that is capable of being a condition/a warrant

How do courts determine whether a term of a contract is a condition or warrant?- Courts apply test of essentiality- Whether the statement is of such importance to the innocent party that it would not

have entered into the contract unless the promise by the defendant was made. Inominate Terms:

- Can be major and minor (conditions and warranties)- Terms are capable of being breached in minor and major ways- remedies available for breach of an innominate term do not necessarily depend on

the classification of the term, but rather upon the effect of the particular breach complained of

Oral or written Express terms:- terms of a contract will be determined by the words

o written or verbal- used by parties at the time of making or just before making the contract- Question of fact: will be determined by courts by calling in witnesses and the people

that were present during the time of formation of the contract

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Written terms: Parol Evidence Rule- Contract is reduced in writing- it is presumed that writing contains all the terms of it- No other evidence may be admitted to vary or add to the terms of the contract- EXCEPTIONS TO PAROL EVIDENCE RULE:

o Extrinsic evidence may be allowed/admissible under the following circumstances:

When contract partly written and partly oral Contracts that are impliedly subject to some trade usage or custom Clarify any unclear language used in written conduct Due to mistake of the parties, their agreement has been recorded

incorrectly To show written contract is not binding because of fraud/duress Show that subsequent oral agreement rescinded written agreement Show there is collateral contract in existence

Implied Terms:- Terms can be implied into a contract through the following ways:

o Common lawo Custom/trade usageo Statute

Requires of implied terms: Reasonable and equitable Necessary to give business efficacy to the business contract Must be so obvious that it goes without saying Capable of clear expression Must not contradict any express terms of the contract

Exclusion Clauses:- Term of the contract that limits, excludes or restricts liability of one party to another- Function of this clause is to limit/exclude liability for breach of an express/implied

term or to exclude liability for negligence in a contract- Courts interpret an exclusion clause narrowly

Exclusion Clause in a signed contract:- When the exclusion clause is included in a signed document, the person generally is

bound by it. - Three exceptions to the rule regarding effect of signature:

o If document appears to have no contractual effecto If contents of document or their effect are misrepresentedo Please of ‘non est factum’ ( this is not my deed)

Exclusion Clauses in an Unsigned Document:- Exclusion clause will be binding only if the clause was brought to the notice of the

customer- This notice must be reasonable, and reasonableness is determined objectively by the

courts.

- Document containing exclusion clause must be contractual in natureo The document is contractual if:

Of a kind which members of the public generally regard as contractual

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If the person who receives it knows either that it is contractual in nature or that it contains terms that governs dealing with another person

Time of notice:- Notice of the exclusion clause may be express or implied

Previous course of dealings:- If the customer has had previous course of dealings with the defendant, the court

will infer that the customer has the knowledge of the exclusion clause.Effects of misrepresentation:

- If the person seeking to rely on the exclusion clause misrepresents the clause or its effect, the full protection of the clause will be lost.

Contra Proferentum Rule:- Courts will interpret exclusion clause against person who is relying on the clause- Any ambiguities in the clause will be constructed against the person relying upon it.

Scope of the Exclusion:- Scope of the exclusion clause is limited to only acts performed within scope of the

contract- Exclusion clause will not exclude liability for acts occurring outside the contract

Rescission:- Term means rightful termination of a contract for breach of condition or reputation

of a contract not performed- term refers to the restoraion of the parties to the positions they occupied before the

transaction because of the presence of one of the vi>a>ng factors- equitable remedy- looks to conduct of party seeking the remedy

Right to rescind contract is lost if:- substantial restitution of rights/contract is impossible- contract is affirmed- there is a lapse of time/delay- there is intervention of third party rights- the contract is executed/completed- unconscientious conduct of party seeking relief

Discharge:- refers to a process whereby a valid and enforceable contract can be brought to an

end, thereby releasing the contracting parties from all further obligations- Contracts may be discharged in the following way:

o By consento By operation of law: frustrationo By breach/repudiationo By performanceo By lapse of time

- Contract may be discharged by reason of a change in the law that prevents one or both parties from fulfilling their obligations under the contract

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- In some circumstances, when no party is at fault (death/permanent incapacity), the contract is frustrated and comes to an end

- Discharge by breach of contract:o Where the other party to the contract breaches a condition (essential term)

This entitles the innocent party to treat the contract as terminated and is termed ‘repudiation’ of the contract

o If one party breaches a warrant (non-essential term) Innocent party is only entitled to claim damages for the breach

- Anticipatory breach: where contract is entirely underperformed on both sideso And one party announces that they are unwilling to perform their side of the

bargaino Innocent party entitled to terminate the contract and sue for damages

- Types of repudiationo During performance (unlawful termination)

Where there has been some performance of the contract, but one party decides not to continue to perform their obligations under the contract

Innocent party entitled to discharge agreement and sue for damageso Impossibility of performance:

Where a party to the contract renders future performance impossible, then the contract is said to be frustrated and the innocent party entitled to discharge the contract

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Lecture 8- Consumer and Competition LawElements of a Valid Contract:

o Offer and acceptanceo Considerationo Intentiono Certainty of Termso Capacity of partieso Free and voluntary consento Legality of the subject-matter and legal formalities

Policy Underpinnings:- Freedom of contract- Caveat emptor: let the buyer beware

Vitiating factors: - Factors that affect genuine contractual consent are called vitiating factors- These factors vitiate a contract and allow the innocent party to set it aside- Innocent party may set aside the contract and/or sue for damages or the courts may

declare the contract void due to lack of genuine consent- Lack of free and voluntary consent may arise from:

o Mistakeo Misrepresentationo Duresso Undue influenceo Unconscionability

- Void and Voidable Contracts:o Transaction said to be void when it is of no contractual effecto Transaction described as voidable when it is capable of being either set side

OR confirmed at the option of one party to it (the innocent party)o Until set aside or avoided, transaction is a valid & legal binding contract

Mistake:- Mistake occurs when one or more of parties to a contract misunderstand each other

about a facto Mistake prior to or at the time of the contracto Mistake is fundamentalo Mistake, not misrepresentation

- Common Mistake: aka shared mistake: both parties make the same mistake as to a fundamental fact

- Mutual mistake: both parties are mistake though there appears to be an agreement between them. Both parties parties misunderstand each other and make different mistakes

- Unilateral mistake one party makes a mistake to the terms or effect of the contract or to the identity of the other party

o The other party knows or ought to be aware of the mistake made by the innocent party

Misrepresentation:

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- A false statement of fact is made by one party (representor) to the other party (representee) before contract is concluded

- Statement leads the party to enter into contract- Whether or not pre-contractual statements are promissory in nature, the court will

judge the intention of the parties by using the ‘reasonable bystander test’Elements of an Actionable Misrepresentation

- Actionable misrepresentations:o 1- a false representation is made one party to the othero 2- with regard to some existing fact/past evento 3- Before or at the time the contract is madeo 4- intended to induce and which does in fact induce the other party to enter

the contractTypes of misrepresentation:

- innocent misrepresentation: when representor does not intend to deceive anyone. The misrepresentation is made unintentionally

- Negligent misrepresentation: the representor makes an honest but incorrect statement negligently and carelessly

- Fraudulent misrepresentation: representor knows or believes that the statement is untrue and presents it to be true/accurate

o Aim of the representor is that the other party enters into the contract with the representor

Fraudulent Misrepresentations:- Elements:

o False statement of fact is made by one party to the othero Statement is made with a lack of belief in its trutho Statement induces the other party to enter into the contracto Statement results in damage to the innocent partyo Parties affect by fraudulent misrepresentation may rescind the contract and

sue for damagesMisrepresentation at Common Law:

- Types of misrepresentation:o Fraudulent: innocent party can rescind the contract and sue for damageso Innocent: no damages- rescission possibleo Negligent: damages in negligence- rescission possible

Undue Influence: - ‘Every case where influence is acquired and abused, where confidence is reposed

and betrayed’- undue influence occurs where a person with influence and power dominates the will

of another persono in special relationships, there is a presumption that undue influence may

occurDuress:

- pressure exerted by one party to coerce another to contract on particular terms- physical, mental psychological duress to a person/relative to the person (duress to

person)- duress to goods

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- Economic duressUnconscionable Conduct:

- Unconscionable conduct is a conduct that is unfair, unjust and against good conscience

- At common law, mere harshness of a clause is not an adequate ground to set aside the contract

- Problem with common law’s reluctant treatment of the harsh and oppressive clauses in contracts led an attempt in the 1970s by courts to mount a new defence of ‘inequality of bargaining power’

Requirements necessary to frame a please for ‘unconscionability’- Weaker party must have been under a special treatment of the harsh and oppressive

clauses in contracts led to an attempt in the 1970s by courts to mount a new defence of ‘inequality of bargaining power’

- Equity stepped in to fill in the gap to remedy for harsh and oppressive contracts

Consumer and Competition Law1. Misleading and deceptive conduct2. Unconscionable conduct

Statutory reform:- S18 imposes direct liability on corporations to engage in ‘truthful and fair conduct’- Such a provision is necessary to curb short-comings of the common law- Why statutory reform:

o Australian Consumer Law overcomes many of the difficulties with common law of misrepresentation and provides better remedies for ‘consumers’ whose contracts are induced by false statements or by misleading or deceptive conduct

- Reasons for statutory reform: o Traditional contract principles- caveat emptor

Ando Freedom of contracto Modern consumer-business relationship including standard form contract

and the information asymmetry between business consumers; ando The economic consequences of the information asymmetry between

consumers and business- Misleading/Deceptive Conduct

o S18 (1) of ACL states: ‘a person must not, in trade/commerce, engage in conduct that is

misleading or deceptive or is likely to mislead or deceive’- Trade or Commerce:

o Terms ‘trade’ and ‘commerce’ are ordinary terms which describe all the mutual communing, the negotiations, verbal and by correspondence, the bargain, the transport and the delivery which comprised commercial agreements

- Engaging in Conduct: term does not seem to have been defined under ACL. However, s.4 (2) of the TPA defines ‘engaging in conduct’ as ‘doing or refusing to do an act’

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o Definition included making a contract, making or giving effect to a provision of a contract

Mislead or Deceive:- Terms misleading or deceptive had not been define under the TPA- Deceive: to cause to believe what is false, to mislead as to a matter of fact, to lead

into error, to impose upon, delude, take in- Mislead: to lead astray in action or conduct; to lead into error; to to err- The conduct will be caught under section 18 if it has the likelihood of deceiving or

misleading others

Lecture 9- Consumer and Competition Law

- Misleading and deceptive conduct- Statutory unconscionable conduct

o 3 main sections prohibiting unconscionable conduct: s20: unconscionable conduct in general

person must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law from time to time

section is designed to allow access to more flexible remedies to consumers and attracts civil penalty for individuals or corpora-on who breach the provision

s 20 confers remedial and procedural advantages (i.e. access to the Federal Court) for plaintiffs who ‘suffer’ from unconscionable conduct of the defendant

s21: unconscionable conduct in consumer transactions involves connection with supply or possible supply of

goods/services to another person Remedies for breach:

o Court can declare contract voido Compensation for loss/damageo The ACCC can issue infringement notice to the person:

(a) 600 penalty units for a listed company (b) 60 penalty units for body corporate (other than a publicly listed company) (c) 12 penalty units for individuals

s22: unconscionable conduct in business transactions remedies:

o varying a contract or arrangement; o allowing the refund of money or return of property;o requiring the specified services be performedo ACCC issuing infringement notice to the person

(supplier)o Civil pecuniary penalties ($1.1 million for Companies;

$220,000 for individuals)

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oo Unconscionable: not defined in Act

Conduct will, in general terms, be unconscionable where conduct can be seen ‘so against conscience that a court would intervene.’

Prerequisites of statutory unconscionability under ACL: Defendant must be a person Transaction must be in trade/commerce Each statutory provision specifies circumstances/situations

where a particular provision may apply- Procedural Unconscionability:

o Complex and incomprehensible language and terms hidden away in the document (contract)

o Inequality of bargaining power between parties due to factors like age, infirmity of body and mind or illiteracy

o Harsh or oppressive behaviour, unfair tactics used by the stronger party- Substansive Unconscionability:

o Imbalance in the termso Harsh, oppressive or unreasonable terms o Exclusion clauses or excessive payment clauses advantaging the stronger

party o Overall terms of the contract operate to benefit the stronger party and

unduly one-sided from perspective of weaker party- Unfair terms

o A term of a contract will be unfair in contravention of ACL s 23 and therefore void if:

1. the contract is a consumer contract; 2. the contract is a standard form contract; and 3. the term is unfair.

- Specific Prohibitions:o Business must not make a false representation:

that its goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use

that its goods are new that it has a sponsorship, approval or affiliation it does not have with respect to the price of its goods or services, concerning the availability of facilities for the repair of its goods or of

spare parts for its goods concerning the place of origin of its goods concerning the existence, exclusion or effect of any condition,

warranty, guarantee, right or remedy: s 29 s35: business must not engage in bait advertising

when it advertises a product at a price that is likely to attract buyers to its premises when it knows or should know that it is likely to run out of stock very quickly

s36: must not accept payment from a buyer when it either does not intend to supply the product or it knows or should

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know that it will be unable to provide the product within the specific time or a reasonable time

- Inertia selling: sending an unsolicited product and pressuring customers into buying it

o Business must not claim right to payment unless it believes it has one under s40

The ACL implies into contracts for the sale of goods to consumers guarantees that: • the seller has title: ACL s 51; • the consumer will have undisturbed possession: ACL s 52; • there are no undisclosed securities: ACL s 53; • the goods are of acceptable quality: s 54; • the goods are fit for any disclosed purpose: s 55; • the goods correspond with their description: s 56;• the goods correspond with any sample or demonstration model in quality, state or condition: s 57; • the manufacturer will ensure that repair facilities and spare parts are reasonably available: s 58; and • the manufacturer will comply with any express warranties given in relation to the goods: s 59

The ACL implies into contracts for the supply of services to consumers guarantees that: • the services will be rendered with due care and skill: s 60; • the services, and any product resulting from the services, will be fit for any disclosed purpose: s 61; and• the services will be supplied to the consumer within a reasonable time: s 62

Consequences:- pecuniary penalties;

• injunctions; • an order that the business pay damages to any person who has suffered loss because of the contravention: • a compensation order for injured persons;an order declaring a contract void, varying a contract, refusing to enforce a contract, ordering a refund, ordering compensation, ordering repair of the goods, or ordering the provision of services; • non-punitive orders including orders directing the business to perform a community service or to establish compliance and education programs for its employees;

• an adverse publicity order; and • an order disqualifying a person from managing a corporation.

- Australia’s competition law primarily covered under Part IV of the Australian Competition and Consumer Act 2010 (Cth)(CCA)

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o Objective of Part 4 is to promote competition and in Aus Industry by prohibiting conduct that would otherwise amount to anticompetitive behavior

-

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-

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- business cannot make a deal with competitor (s) that will reduce competition in the market s45 ss(B)

- Price fixing: business cannot make a deal with competitor that they will charge the same price for particular product or raise, lower or maintain prices

Primary Boycotts: action by individual/group that prevents or is intended to prevent another individual/group from buying/selling products in a marketSecondary Boycotts: occurs if two or more businesses put pressure on another business with whom they have no dispute to discourage them from dealing with the target of the boycott

- Misuse of market power:o Business with substantial market power cannot take advantage of that to

eliminate or damage a competitor- Exclusive Dealing: CCA s47

o Prohibits Full line forcing: when a company refuses to supply its product unless the buyer agrees to:

Not buy from competitor Not resupply products from competitor Not resupply its product to another place

o Prohibits third line forcing: occurs when business makes supply of its product to a consumer conditional upon the customer also purchasing the product of another business

TPC v Sony (Australia) Pty Ltd (1990) ATPR 41-031

s50: mergers and acquisations are prohibited if they will substantially lessen competition in a substantial market for goods/services

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- s50A: deals with mergers/acquisitions outside Australia that would significantly lower competition in a market within Aus

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Intellectual Property- Form of intangible creation such as the expression of an idea or a trade mark- Product of intellectual rather than a physical manufacturing process- Intellectual property law: grants business the right to prevent others from copying,

using or exploiting its IP without its permission- IP is a valuable commercial asset- Owner of IP has exclusive right to exploit IP for a profit

o Includes right to license IP: in return for a few owner of IP permits others to exercise their exclusive rights in relation to IP

Copyright:- Legal right to prevent unauthorised copying of the expression of an idea

o Copyright in Australia regulated by Copyright Act 1968 (Cth) Requirements for Protection:

o 1- Creation is a ‘work’ or ‘subject matter other than works’ literary works, musical works, dramatic works, artistic works

Sound recordings, films, television and sound broadcasts, published editions

o 2- Creation is original creation must be the result of person’s own skill and effort and not

copied from another source minimal degree of creativity is required Desktop Marketing System Pty Ltd v Telstra Corporation Ltd (2002)

o 3- Creation is expressed in a material form it is the expression that is protected, not the information or idea itself John Fairfax and Sons Pty Ltd v Consolidated Press Ltd (1960) It is not the originator of an idea who owns the copyright, but the

person who first expresses the idea in material form Donoghue v Allied Newspapers (1938)

Use of copyright symbol is not essential but it does mean that any infringement of copyright will not be ‘innocent’

Extent of copyright protectiono Copyright owner has exclusive rights

To reproduce work in material form To publish work To perform work in public To communicate work to public To make adaptation of work

Rank Film Production Ltd v Dodds (1983)o How long does copyright last?

Literary, dramatic, musical or artistic work: 70 years after creator’s death or first publication

Film or sound recording: 70 years after first publication Television or sound broadcast: 50 years after first publication Published edition: 25 years after first publication

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o Person who creates original work is usually owner of copyright in original work

o “Where an original work is created by someone ‘in pursuance of the terms of his or her employment by another person’, then the employer is the copyright owner”

o Independent contractors usually own copyright in what they createo Common practice for creators to assign copyright to publishers and

employersInfringement

o Copyright infringed when person exercises copright owner’s exclusive rights in relation to create without their permission to do so

o Copyright will be infringed if following requirements are satisfied: Substantial part of creation is copied: Larrikin Music Publishing Pty Lrd

v EMI Songs Australia Pty Limited (2010) There is objective similarity between the original and copy: Zeccola v

Universal City Studios Inc (1982) Causal connection between original and copy: ABKCO Music Inc v

Harrisongs Music et al (1981)o Person accused of infringing copyright may use following defences:

Fair dealing: for purposes of criticism or review, parody or satire, reporting news, judicial proceedings or professional advice, or research or study, and

If it is a reproduction that is authorised by the copyright owner Other statutory defences

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Trade Marks- Distinctive mark used in commercial dealings to show a connection between

particular business and product- Can be letters, a word, a name, a device, an aspect of packaging, a shape, a colour, a

sound or a scent- Regulated by Trade Marks Act 1995 (Cth) - Trade marks must be registered to gain protection under Act- Trade mark will only be registered if it:

o Does not contain proscribed signo Is able to be represented graphicallyo Is distinctiveo Is not scandalous or cause confusion, ando Is not identical with or deceptively similar to another pending/registered

trade markExtent of Trade Mark Protection:

o Trade mark owner only has right to restrain others from using registered trade mark in relation to class of products for which trade mark has been specifically registered

o Exception to this is if trade mark is ‘well known in Australia’ in which case trade mark owner would be able to prevent someone from using trade mark in relation to unrelated goods/services

o Virgin Enterprises Ltd v Klapsas (2011)o As long as they keep using trade mark and continue paying periodic renewal

fees every 10 years- trade mark owner can renew registration of trade mark indefinitely

o Using trademark symbol prevents trademark from entering public domainInfringement

o If another business markets its products using trademark that is substantially identical or deceptively similar to a registered trade mark, it has infringed that registered trademark

- Unregistered trade marks:o If a trade mark is unregistered the business may still be able to prevent

another from misusing it by bringing a legal action: In tort of passing off, or Under ACL s18

Patents:- Patent is a form of legal protection granting creator of a new technology the

exclusive right to use and exploit that new technology for a limited period- Intended to encourage invention and innovation by rewarding creator with

potentially valuable limited monopoly- Patent must be registered with Patents Office of IP Australia- Regulated by Patents Act 1990 (Cth)

Extent of Patent Protectiono New technology only patented if:

Manner of manufacture

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Novel Inventive or innovative Useful

o Standard patents grants protection for 20 years from date of patento Innovation patent grants protection for 8 yearso Patent owner can also assign/license patent to someone else in return for

royalty paymentsInfringement

o Patent owner’s rights are infringed if new technology protected by patent is copied, used or exploited without their consent

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Lecture 11 Business Structures- Introduction- Sole traders

o Advantages: no outside interference Low cost and no formality Confidential

o Disadvantages: Unlimited liability Isolated working and business environment Limited lifespan, no continuity Business closure or limited trading capacity due to holidays, illness or

incapacity Limited access to finances

- Partnershipo Two or more persons carrying on a business in common with a view of profito Mutual liability: each partner in a partnership has express authority, implied

authority and apparent authority to act on behalf of the other partnerso Each partner has unlimited personal liability for debts and obligations of the

businesso Relationship between partners is contractualo Advantages:

Informal and relatively low-cost Confidential

o Disadvantages: Unlimited personal liability of partners for partnership debts Upper limit on numbers (usually 20, except in the case of certain

professional partnerships) Transfer of partnership interest may not be easy; compare with

companies, particularly publicly listed companies, where there is a liquid market for the valuation and transfer of shares

- Joint ventureso Advantages:

Similar to those of partnershipo Disadvantages:

Number of transaction costs High stakes arrangement between two legal entities and therefore,

need to have a significant contract- Trust

o Defined as obligation binding a person (called trustee) to deal with property over which he/she has control (the trust property) for the benefits of person or persons (called beneficiaries)

o Trust may be created inter vivos (between the living) or by the will of a decreased person

o There are numerous categories of trust, for example: Express: declared and communicated by settlor

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Implied arising as a matter of law Private: to benefit specified people Public: for public benefit via charitable donations

- Company:o Company is a corporation incorporated/registered under the ˆCorporations

Act 2001 (Cth). Once incorporated, a company becomes a separate legal entity in the eyes of the law

o Company is a distinct legal entityo Features of a company?

Limited liability Permanent existence

o Company’s internal rules: Company is internally regulated or governed according to its

constitution However, under s134 company may choose not to:

o Directors and shareholders Directors have the power to generally manage the business of the

company and the shareholders are only entitled to vote on limited maters

Directors: proprietary companies must have at least 1 director, and public companies must have at least 3 directors

Director must: Be individual and not a company At least 18 yo Not be disqualified

Director’s duties Duty of care Duty to prevent insolvent trading Duty to act in good faith Duty to act for a proper purpose Duty to disclose conflicts of interest

Shareholders: each shareholder is part-owner of the company:o Voting rightso Distribution rightso Rights to receive information

Types of decisions on which shareholders are netitled to vote include:

o Decisions relating to structure/constitution of the company

o Decisions relating to composition of board of directorso Decisions to veto certain transactions, included related

party transactions by public companieso Decisions about winding up

Shareholder who is dissatisfied by the way company is being managed, can:

o Commence legal action against company if they establish oppressive conduct

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o Seek injuction to stop director, shareholder or other person breaching Corporations Act

o Bring statutory derivative action in event of breach of duty by a director

Factors to be considered for the choice of a business structure- Purpose of the business- Duration of the venture- Availability of finance- Type of assets to be acquired- Taxation implications by each type- Degree of control by those investing capital

Lecture 11 Business Structures- Franchise: contractual arrangement between franchiser and franchisee

o Where franchiser allows franchisee to use franchiser’s products, trademark, method of operation and business name

o In return, franchisee pays franchiser a fee/percentage of income/profitso Maccers, pizza hut, hungry jacks, 7-11, KFCo Regulation:

Franchising Code of Conduct: mandatory industry code: Part IVB of Competition and Consumer Act gives legal validity

to industry codes of conduct Australian Competition and Consumer Commission may

administer and enforce industry codes of conduct Code of conduct may be enforced by individuals under

common law good-faith principles Advantages:

Franchisee does not have to undertake marketing Franchisee guaranteed an exclusive geographic area in which

to market, sell and distribute Set-up costs are minimal Economies of scale exist for purchases and supplies Reputable brand provides considerable market clout Franchiser provides equipment and training Franchisee receives professional and/or business advice Franchisee’s business risks reduced Franchisee takes advantage of franchiser’s goodwill in

marketplace Communication flow between franchiser and franchisee can

provide additional ideas on how to grow business Franchisee takes advantage of the franchiser’s investment in

research and development

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Disadvantages: Franchise agreement may place excessive controls and

restrictions on franchisee Ongoing franchise payments need to be made by franchisee Franchisee may not invest in brand or may market brand in

ineffective manner Franchiser-franchisee relationship may break down Excessive penalties may exist if franchisee decides to sell/quit

business Franchiser may make mistakes that adversely affect

franchisee’s business Franchiser’s plans may differ from franchisee’s expectations Franchiser may exert excessive control over franchisee or third

parties, such as suppliers

- Business difficulties

o Receiver: person appointed to take control of some or all of a business and its assets

o Receiver may be appointed by court or by secured creditor wishing to enforce their security

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o Once receiver has sold sufficient assets/generated enough income to repay outstanding secured debt, management of business is returned to business owners

o If receiver however, is unable to recover enough money to repay secured creditor, insolvency proceedings may be commenced

- Bankruptcy:o Legal process by which trustee is appointed to sell debtor’s assets to repay

their debtso At conclusion of process all of the debtor’s debts are forgiven

o Debtor is insolvent if they are unable to pay all debts as and when they become due and payable

May become bankrupt: Voluntarily (debtor’s petition) Or as a result of action taken by unpaid creditors (creditors’

petition) To quality to apply for a creditors’ petition:

Creditor(s) must be owed at least $5000 Debtor must have committed an act of bankruptcy within

previous six months At the hearing, if court decides debtor should be declared bankrupt: it

will issue a sequestration order: Effect of this order is to make debtor bankrupt Upon being made bankrupt, debtor’s assets automatically vest

in the trustee in bankruptcy so that their outstanding debts can be discharged

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Trustee will contact debtor’s creditors and place advertisements calling upon any person to whom debtor owes money to identify themselves and lodge a proof of debt

Debtor entitled to keep: Assets held on trust Most ordinary houseold/personal items Tools used to earn income Vehicles upto threshold value Life insurance policies Superannuation Compensation for any personal injury Awarding a sporting, cultural, military or academic nature such

as medals or trophies may be exempted by a vote of creditors In certain circumstances, trustee can recover assets that debtor

disposed of prior to date they were declared bankrupt Doctrine of Relation Back: bankruptcy is deemed to have

commenced on the date of the first act of bankruptcy within 6 months prior to presentation of creditors petition

o Number of other transactions- called voidable transactions- entered into prior to commencement of bankruptcy which may be reversible by the trustee

Property seized within previous 6 months under a writ of execution or a garnishee order

o Property transfer for no consideration or for less than market value:

To related entity within previous 4 years To non-related entity within previous 2 years To any entity within previous 5 years if

transferee is unable to prove that debtor was solvent at the time

Property transferred within intention of protecting it from bankruptcy process and keeping it away from creditors (no time limit)

o Property transferred at a time when debtor was insolvent to a creditor in repayment of an outstanding debt such that creditor has received an unfair preference within previous six months

Person to whom debtor has transferred property may be able to avoid having to transfer money/property to trustee if they can establish that:

o They had no notice of debtor’s insolvency AND

o Transaction was in good faith and in ordinary course of business

Once trustee has sold debtor’s assets and recovered as much of the estate as possible, they will distribute estate as quickly as possible amongst creditors who have lodged a proof of debt

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- Debtor will be automatically discharged from bankruptcy after 3 years, unless:o Bankruptcy has already been annulled

ORo Objection to discharge has been filed by trustee

If objection is successful, bankruptcy may be extended to either 5 or 8 years

- Upon being discharged from bankruptcy, debtor is released from debts, even if they have not be repaid in full

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o However, debtor is still liable for: Court penalties and fines Damages claims from accidents Child support and maintenance debts Student HELP debts and student loans, and debts incurred by fraud

- Alternatives to Bankruptcy:o Part IX Debt Agreements: for smaller estateso Part X Personal Insolvency Agreements: for larger estates

If these fail, creditor can resume recovery proceedings, including having them declared bankrupt

Liquidation:- If company is insolvent: relevant procedure is liquidation: aka winding up- under

Corporations Act 2001 (Cth)

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Administration:- Voluntary administration is mechanism by which an insolvent company can enter a

temporary ;safe zone’ away from creditors’ claims while a decision is made by creditors on whether company should:

o Execute a deed of company arrangement Or

o Be wound up Or

o Be turned to control of board of directors

Agency- Agency is relationship that exists between 2 parties

o Whereby one (the agent) is authorised by the other (the principal) to do, on his/her behalf, certain acts which affect the principal’s rights and duties to third parties

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o Other relationships that may be mistaken for agency (BUT AREN’T) Employer-employee Independent contractor Persons with power of attorney

- Agency responsible for making contract between principal and third party, but agent is not a party to this contract

- Agent has separate contract with principal and this agreement is referred to as contract of agency

- Relationship of agent and principal gives rise to a number of obligations and duties on the part of both principal and agent

o Duties and obligations are contractual and fiduciary(person who holds legal/ethical relationship of trust with one or more other parties)

- Types of Agency Relationships:o Various types of agency arrangements recognised by law,

including: Universal agents; General agents; Special agents; Factor/mercantile agents; and Del credere agents: where agents acts not only as salesperson/broker

for principal, but also as a guarantor of credit extended to buyero How is an agency created (only 1 required of below):

Expressly (by agreement) By deed By writing By word of mouth

Impliedly (by operation of law) By cohabitation By necessity

o Great Northern Railway Co. –v- Swaffield (1874-80) ALL ER Rep 1065

o Pianta –v- Marcow & Sons (1925) By ratification: principal’s approval of an act of its agent where agent

lacked authority to legally bind principal Involves retrospective authorisation of agent’s act and can be

in writing or by conduct Context of agency law: ratification refers to principal’s later

approval/confirmation of agent’s acts where acts were not within agent’s orginal authority

Ratification may ccount in the following ways:o Where there was no agency in the first placeo Where the agent had authority to act for principal but

exceeded their authorityo Conditions must be met before ratification is effective:

Agent is known to be acting as an agent Transaction in question is being carried out on

behalf of principal

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Principal exists at the time the agency relationship is created

Act of ratification relates to whole of the contract

Principal is fully informed of the transaction If no time is stipulated, ratification occurs within

a reasonable timeo Restrictions on doctrine of ratification

Ratification may not be for future, always retrospective

Forgery can not be ratified Principal must have capacity both at the time of

making contract and at the date of ratification Ratification must be for the whole contract Act must be done on behalf of the principal Unless time is stipulated, ratification must occur

within a reasonable time Principal must be fully informed of transaction

By estoppel (holding out) Representation by principal that agent has authority to enter

into contract on behalf of the principal Representation as intended to be acted upon by third party Representation was in fact acted upon by third part

- Authority of an Agento Actual authority:

Express Implied

o Ostensible or apparent authority “If a (person) holds a license for an hotel, and leaves his name on the

premises ... the occupier of the premises is the agent for the licensee, both for buying and selling, in the usual way of business”

o Capacity to create agency: Can be authorised to do anything that a principal may do, and a

principal can not authorise to do anything that he/she can’t do himself/herself

o Duties of Agent: Follow principal’s instructions Exercise due care, skill and diligence Must act in person Must act in principal’s interests Must not to make secret profit or give/take bribe Duty to disclose conflict/s of interest to principal Duty to keep and render and correct and appropriate accounts

o Principal’s rights and obligations Principal’s duties include duty to remunerate, reimburse and

indemnify agent for expenses incurred in proper course of agencyo How agency can be terminated:

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Act of parties: Mutual agreement Principal revoking agent’s authority Agent renouncing agency

By operation of law: Frustration Death Mental disability Bankruptcy of principal

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EXAM TIPS

Focus on:- Torts 1 and torts 2

o All of it- Contracts 1 and contracts 2- Consumer and competition law 1- Intellectual property

o All of it- Business structures 1 and 2

o All of itDon’t need to focus on: consumer and competition law 2

Areas of law/principles covered solely in following chpaters of TBOOK:

o Chapter 6 (except- UNDERSTAND PRVITY)o Chapter 8o Chapter 12

Franchise and business difficulties material covered in topic 12

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