BSL165 Foundations of Commercial Law
Semester 2, 2015 Assignment
This assignment is worth 30 marks. It must not exceed 2000 words (including footnotes). The assignment is due by 9pm (WST) on 28 September. (You will be advised on how to submit your assignment by announcement on LMS in due course).
In answering the assignment you must use a 12 size font, double spacing and default Microsoft Word margins. The mark for your assignment will be determined by reference to the quality of its analysis, its clarity and organisation, and its presentation, including its freedom from distracting stylistic errors (grammatical, spelling, punctuation and typographical). Where appropriate, references should be made to statute sections, cases, texts and other commentary.
In answering the questions you may like to use the IRAC approach (see the last page of the Unit Information and Learning Guide. This is not compulsory. For more general guidance on answering law problem questions like those in the assignment, I strongly recommend that you read: “Answering Examination Questions in Law” by Michael Powell (available from the library’s Electronic Course Material Service for BSL165: http://prospero.murdoch.edu.au/search~S1/)
Late assignments will have 10% of the marks deducted per day or part thereof. Extensions for the assignment will be granted only in exceptional circumstances. If something exceptional arises that you believe requires an extension you should contact me (preferably by e-mail) before the due date. Reasons which are insufficient to warrant an extension include computer failures, car failures or other transportation difficulties, work conflicts and other study commitments
Referencing your assignment
You can use either AGLC 3, Chicago or APA referencing in your assignment. If you use Chicago or APA referencing please also note the below advice on how to cite cases and legislation.
Cases decided by courts and tribunals have a name, a year of decision, report title, report volume, and report page number. All of these details should be included in the first citation of the case. E.g. Stevens v Brodribb Sawmilling (1986) 95 CLR 523. After that the case can be referred by name only. Where you have found out the details of the case from a summary or other source and not from the case report itself, your sentence should conclude with that source. E.g. In Stevens v Brodribb……(van der Waarden 2010, p18). Note, this example is appropriate for Chicago style referencing; the end of sentence reference will be denoted differently depending on the reference style.
Legislation should be named with the year of parliamentary approval and jurisdiction listed as part of its name. E.g. Fair Work Act 2009 (Cth). Cth is an abbreviation for Commonwealth. WA is the abbreviation used for Western Australia. If you are referring to a particular section of an Act, you should name the act first and then add the section. E.g. Fair Work Act 2009 (Cth) s. 117.
Once you have cited cases and legislation appropriately in the text of your paper, you should NOT list them again in your list of references. Nb. Reference lists include books, articles, internet documents, etc.
See the Library guides at http://library.murdoch.edu.au/Students/Referencing for further information on Chicago or APA style referencing. You can find information on AGLC 3 referencing at http://www.law.unimelb.edu.au/mulr/submissions/quick-aglc
1. Jim and Bob decided that they wanted to run a corner store. They had been looking around for a number of months before they finally found the store they wanted to buy. It was on the corner of Black and Block Streets, and specialised in bait.
Jim had saved up $30,000, and Bob had saved $40,000 while their friend Steve lent them $20,000 to cover the cost of setting up the business, which they purchased in their (Jim and Bob’s) joint names.
Steve is to receive a percentage of any profit made by the business each year until his loan is repaid. Jim and Bob agreed that any profits they managed to earn beyond that would be split 50:50. Jim would spend the most time in the shop, partly because he hadn’t contributed the same amount of money and partly because Bob had another job as a factory hand.
Not long after they had taken over the business, Jim purchased a motor boat worth $3,000 from Jill in the firm’s name, although he only paid a deposit of $500. Bob was initially furious but accepted the purchase after Jim painted a rosy picture of the good time the two of them could have using the boat for recreational purposes.
One Saturday Jim went out fishing in the motor boat. While he was trying to untangle a knot in his fishing line he lost concentration and directed the boat into a “swimming only” area. He struck and injured a swimmer, John
Now John wants compensation for his injuries, while Jill is getting concerned that she hasn’t been paid. Jim can’t be contacted. Is either Bob or Steve liable to John and Jill. Why or why not? You can assume that Jim is liable in tort (negligence) for the injury done to John. (20 marks)
2. A and B are partners in a firm of veterinary surgeons. A has not been happy with B’s contribution to the firm’s business and would like the profits to be divided according to the hours worked and the kilometres traveled. Alternatively he would like to be paid a salary on top of his share of the profits. B rejects the idea of a salary for A and insists on receiving half the profits to reflect the equal investment of capital each has made in the business. Advise A (6 marks)
3. A and B are partners in an accounting firm. A discovers that B has set up a practice as a sole trader tax agent working from an office at home. Is A entitled to a share of the profits? Why or why not? Would your answer be different if B had been working as a travel agent from home? (4 marks)
(Source of questions: Latimer, Australian Business Law Workbook)
This question is drawn from BUS206 Finance Law. It relates to a corporate takeover. You will probably not be familiar with the law but it will give you an idea of how an answer prepared using the IRAC method might look.
Incidentally, the IRAC approach is only a suggested approach to answering law problem questions. Any approach which shows clearly that you understand what the law is and how it applies to the facts of the case will earn you good marks.
If you do use the IRAC approach, you will normally need to go through its steps several times (or more) in the course of an answer – that is identify a legal issue, set out the relevant law, apply the law to the facts of the question before concluding on that issue and then going on to the next issue (just as we do in tutorials). In other words, you should not have one section of your answer setting out all the legal issues raised by the question, followed by one section setting out all the relevant law and so on – that will be very difficult for the marker to follow and consequently may lose you marks.
Q2 Assume that Predator does proceed to make a bid for Target. The Directors of Target, all but one of whom are opposed to the bid, are considering whether to include an independent expert’s report in the Target’s Statement.
The Directors are concerned that any such report should support their opposition to the bid. One option might be to have the report prepared by a Director of one of Target’s subsidiary companies, Prey Pty Ltd (“Prey”), who is also a Chartered Accountant. (Naturally there would be no mention of his Directorship of Prey in the report). Another might be to commission several reports and include the one which is most supportive of their position. Alternatively, they might simply choose to issue the Target’s Statement without an expert’s report. Advise the Directors of Target as to the legality or otherwise of the different courses of action which they are contemplating.
(i) Can the Directors issue the Target’s Statement without an expert’s report?
Section 640 of the Corporations Act (‘the Act’) requires a Target’s Statement to include or be accompanied by an expert’s report if the Bidder (B) has more than 30% voting power in the Target company (T) or B and T have common directors, at the time of the bid.
It is not clear from the question whether either of these conditions are satisfied.
However, we are told in Q1 that Predator (together with its associate Tiger), had approximately 18% voting power in T at the time it first sought advice on a possible takeover of T. Assuming its shareholding was unchanged at the time of making the bid, then it follows that T can issue the Target’s Statement without an expert’s report, so long as it did not share common directors with B at this time. However, the fact that one of Target’s directors in not opposed to the bid, leaves open the possibility that the two companies have common directors.
(ii) If the Target’s Statement is to include an expert’s report, can the report be prepared by a Director of Prey?
I will first assume that the Act requires the Target’s Statement to include an Expert’s Report (see (i) above). In these circumstances, Section 648A of the Act provides that the Expert must not be an associate of either B or T. In turn, the definition of Associate in s12 of the Act includes Directors of subsidiary companies. It follows that, as a Director of one of T’s subsidiaries, the Director of Prey is an Associate of T and therefore cannot prepare the report if its inclusion in the Target’s Statement is required by the Act.
If my earlier assumption is incorrect and the inclusion of the report in the Target’s Statement is not required by the Act, then s648A will no longer apply. However, s670A of the Act provides, in part, that a person must not include a misleading or deceptive statement in a Target’s Statement or in any document that accompanies a Target’s Statement.
If B were to describe an expert’s report prepared by one of its associates as an “independent expert’s” report, it would likely amount to misleading and deceptive conduct on B’s part. This would certainly be the case if the report did not disclose the expert’s relationship with B.
(iii) If the Director of Prey were to prepare the report need it mention his directorship of Prey?
I will again assume that the Act requires the Target’s Statement to include an expert’s report. In these circumstances, Section 648A of the Act requires, in part, that the expert must set out in the report “details of any relationship between the expert and … the target or an associate of the target and … any financial or other interest of the expert that could reasonably be regarded as being capable of affecting the expert’s ability to give an unbiased opinion”. In turn the definition of Associate in s12 of the Act includes subsidiary companies.
It follows that if, contrary to the Act (see (ii) above), the Director were to prepare the expert’s report then he must disclose his directorship of Prey both to detail his relationship with an associate of T and as an interest which could reasonably be regarded as being capable of affecting his ability to give an unbiased opinion
If my earlier assumption is incorrect and the inclusion of the report in Target’s Statement is not required by Act, then s648A will no longer apply. However, as argued in (ii) above, if B were to describe an expert’s report prepared by one of its associates as an “independent expert’s report” without the report disclosing the expert’s relationship with B, then this would amount to a clear case of misleading and deceptive conduct on the part of B in breach of s670A of Act
In this question, the relevant principles of law were contained in a statute. In a different question you might instead refer to a case eg:
Byrne v Van Tienhoven establishes that revocation of an offer is only effective when communicated
Revocation of an offer is only effective when communicated – Byrne v Van Tienhoven’
For a discussion of the IRAC approach, see the last pages of the Learning Guide. I strongly recommend that you also read: “Answering Examination Questions in Law” by Michael Powell (available from the library’s EReserve for BSL165)