Final Assignment – Business Law total words counts 1800
Question 1. – word counts -300
Skyloft is a property developer that specialized in expensive, inner city, high-rise apartments. The COVID19 pandemic has prompted many inner city residents to relocate from high-rise, inner city apartments to housing with more green space and fresh air. Skyloft decided to change with the market and comes up with a design for a low-density residential development on the outskirts of the city designed for young professionals who work from home. Skyloft’s advertising material includes pictures highlighting the green outdoor spaces, especially a garden with a pond described as “relaxing”, a BBQ and seating area, and communal vegetable garden beds. Digital images created by the architects give people an impression of the apartment interiors once the building is completed, and show work-related features such as built in desks and bookshelves. Skyloft’s material also reproduces a statement by the Minister for Communications about the government’s intention to lay underground 5G cables to the suburb to enable super-fast broadband for all local residents. Sven bought a residence off the plan. Now that construction is complete and he has moved in he is unhappy and has a list of complaints, including:
• The garden and pond is not really relaxing
• There are no communal garden beds
• There are no bookshelves
• The state government did not proceed with 5G cables and so the only internet signal available is 3G, which is too slow to allow Sven to work from home at all. Advise Sven about his prospects for success in an action for misleading or deceptive conduct under Australian Consumer Law against:
- a) Skyloft in regards to the garden and pond, garden beds, and bookshelves
- b) the Minister for Communications in regards to the 5G broadband. Ensure you include relevant section numbers and explain how the elements of the legislation apply to the facts.
Question 2. – Word counts 300
Mina is employed by Business Finance P/L as the Manager of Business Loans. Her job involves completing and processing the application forms when customers apply for Business Loans. Business Finance P/L’s policy and procedures manual states that before any customer is given a business loan, the loan application must be approved and signed off by the Head of Lending. The current Head of Lending is Shereen. The policy and procedures manual also says that the Manager of Business Loans does not have authority to sign loan applications on behalf of Business Finance P/L. Victor applies to Business Finance P/L for a business loan to buy more equipment for his factory, and Mina reviews his application and says “Looks like you have a well run business there Victor” and then signs and approves his application. When Shereen reviews Victor’s financial position she thinks he would be a high-risk loan and does not want to lend Victor the money.
Advise Business Finance P/L whether Mina has created a binding contract between Business Finance P/L and Victor. Explain what, if any, authority Mina had. Refer to relevant cases in your analysis.
Question 3. – word counts 300
Discount Groceries (DG) is a national chain of retail supermarkets. It is involved in strong competition with Fresh Food (FF), also a national chain of supermarkets. Shop Properties (SP) builds and manages major retail shopping complexes throughout Australia, and SP is currently completing a major shopping complex in the western suburbs of Sydney. DG and SP have negotiated about DG leasing a large retail space in the complex for a supermarket. In August, the sales manager for SP and the new stores manager for DG set out key issues, such as rent and floor space, in a terms sheet. They agreed that the lawyers will draft an appropriate lease agreement using the agreed figures from the terms sheet, and each party will then review the lease terms to see if it agrees the lease terms prior to signing the lease. As soon as the terms sheet was finalized, DG purchased fridges and freezers for the supermarket costing approximately $500,000 in anticipation of the lease being signed. In September, FF approaches SP and the parties discuss FF taking the shop that DG wanted to lease. FF offers SP a higher rental and SP decides to lease the premises to FF. SP writes to DG and
advises DG that it will not proceed with the lease. Advise DG whether it will be able to establish the doctrine of promissory estoppel.
Question 4. – Word counts 300
Frank and Glen are qualified accountants and partners in the firm, FG Accountants and Business Advisers. Frank advised an important client of the firm, William Ho, about investing in a business. William decided to go ahead with the investment and he transferred the investment funds into the firm’s trust account so that Frank could make the investment for him. Unknown to Glen, Frank has developed a gambling problem. Instead of making the investment for William, Frank takes the money from the firm’s trust account and gambles the money at High Roller Casinos. Unfortunately Frank lost all the money. William wants to recover his money, however Frank is not able to repay the money as he has accumulated large gambling debts.
Advise William whether he can recover the money from Glen.
Question 5. – word counts 300
Kling Investments Ltd (Kling) is a large company that has the majority of its capital invested in the financial services sector, mainly insurance businesses. The accounts department of Kling produced the current annual balance sheet and profit and loss figures for the financial year. The accounts department also produced a draft report to shareholders explaining the balance sheet and profit projections for the coming year. Both reports were considered and approved at the board of directors meeting. Most of the work for the reports was done by Melissa, who is in the final year of her commerce degree. The profit projections prove to be inaccurate as the insurance businesses that Kling has invested in suffer large losses due to huge payouts for property damage insurance due to floods and fires. Melissa was unaware of the profit downgrades in the insurance businesses because this was not her job. Melissa was also unaware that a large sum of money, approximately $4,000,000 due to the Australian Tax Office should be included as a current liability. This resulted in the current profit and the current balance sheet being overstated. Shareholders are grumbling and the board of directors are concerned about potential liability for approving the financial statements. Advise the board on the following matters:
- a) Would the board be in breach of s 180 of the Corporations Act?
- b) Would the board be able to successfully rely on s 189 of the Corporations Act as a defence?
- c) Would the board be able to successfully rely on s 190 of the Corporations Act as a defence?
Question 6. – word counts 300
Noah owns a construction business specializing in residential developments and has bought a block of land to build about 5 houses on. Noah has some funds however he will need to borrow a substantial amount, $3,000,000. Noah approaches a finance company, King Finance Limited (King), and discusses finance. King advises Noah that it will need the last two years’ profit and loss statements, balance sheets, as well as cash flow projection for the residential development project, in order to decide about the loan to Noah. Noah calls his accountants, Lovejoys and says “I need this financial information super quick so King can approve the finance for the build. I am ready to go as soon as they approve the finance.” Lovejoys cost the construction of the 5 houses and complete the cash flow projection. King approves the finance, and Noah starts construction. Approximately six months later construction has come to a standstill because Noah has run out of funds to pay suppliers and tradespeople. Unfortunately Lovejoys missed including some key costs (bricks, architects’ fees, and GST) and so the costs are vastly underestimated. Noah has no other funds and King will not loan Noah any more funds. The land with the partially completed houses is sold at a loss and Noah is unable to pay the loan he owes King.
Advise King about whether it can recover its losses from Lovejoys under negligence. Use relevant cases to support your analysis.