FNSTPB503: APPLY LEGAL PRINCIPLES IN CONTRACT AND CONSUMER LAW - Accounting And Finance Assignment Help

Case Study 1

Rebecca is a young entrepreneur who designs and sells jewellery under the name ‘Snazzy Fox’. Her business is growing very quickly and she has recently become a client of the firm seeking business advice. Please answer her questions below, explaining the law to her and giving reasons for you conclusions.

QUESTION 1

• If a contract is expressed in writing can verbal terms also be enforced?

QUESTION 2

• Are you bound to a contract if you sign it without understanding or even reading it?

QUESTION 3

• Rebecca has entered into a contract to provide a retail shop with 200 pieces of jewellery by close of business on 15th October for $10 000. Unfortunately, the raw material she uses to manufacture the jewellery has increased in price by 45%, which means she will make no profit on the contract. Rebecca considers the contract is now void for frustration. Is she correct?

QUESTION 4

Rebecca has also entered into a contract with Trending Now Pty Ltd (Trending Now) a marketing

company. The terms of the contract to which she agreed were that in return for the payment of

$75,000:

1. her work would be showcased together with that of other designers in a travelling design and fashion expo, complete within 3 months

2. Trending Now would run the expo for a two week period in all capital cities, mount a multimedia and social media campaign and sell her jewellery on consignment and take orders on her behalf.

The firm had previously advised her that such exposure should conservatively attract approximately $200,000 in business and would increase her public profile. Rebecca now reveals that after one successful show in Perth from which she received $20,000, Trending Now has stopped operating. No more showcases have taken place and no advertising outside Perth. Rebecca thinks there has been a breach of contract and cannot afford to lose the $75,000 she has paid.

She knows some of the other designers are talking of suing, but she wonders if it is a commercially sound idea.

a) Advise Rebecca of the matters to be considered in bringing a commercially successful breach of contract action.

b) If the court decided to award Rebecca damages, what matters would the court take into consideration in assessing the amount she should be awarded?

Case Study 2

Fair Shake Sauce Pty Ltd (Fair Shake) is a client of the firm who has recently sought to increase the operational finances of its business. 

Fair Shake is a wholly owned subsidiary of Big Red Ltd.

Fair Shake has approached Global Domination Bank (the Bank) for a loan to modernise its plant. The Bank requests a guarantee from both Fair Shake and Big Red Ltd for the loan monies.

Fair Shake provides the guarantee, but Big Red does not, instead providing them with a letter containing the following paragraph:

“It is our policy to ensure that the business of Fair Shake Sauce Pty Ltd is at all times in a position to meet its liabilities to you under the loan arrangements”.

QUESTION 1

If Fair Shake were to default on both the loan and the guarantee, would the Bank be successful in holding Big Red liable for the debt? Why or why not?

Use case law to help explain your answer.

Case Study 3

Brett, Daniel and Cathy are about to start up a retail business called ‘Future-Trons’ (FT) selling electronic products both from a retail store and online. They have all worked in the electronics industry for some time, but have never run their own business before and have come to your firm seeking financial and business advice to facilitate their success and ensure that they comply with any necessary legal requirements.

REQUIREMENTS

Your supervisor has asked you to draft responses to the following matters, in preparation for a report to be presented to FT.

In your report ensure that you identify the relevant legislation and the relevant sections of that legislation.

QUESTION 1

Brett, Daniel and Cathy have noted that during their employment in the retail industry they have had to comply with various consumer laws, but as traders and employers, they will now bear prime responsibility for compliance. They have the following queries.

a) Who must comply with the Australian Consumer Law?

What regulatory body are they answerable to?

b) Who is protected by the Consumer Guarantees under the Australian Consumer Law (ACL)? In your answer identify who is not protected

c) Would FT be complying with the ACL if it exhibits signs at point of sale and on its website which state ‘Choose carefully, we do not refund or exchange’?

Explain your answer identifying relevant sections of the legislation, if any

d) Would FT be complying with the ACL if a customer ordered goods after seeing them displayed on the FT website, but the goods provided were a little different than those displayed, (e.g. a different model or size)?

Explain your answer identifying relevant sections of the legislation, if any

e) Cathy is very impressed by a famous singer and thinks it would be good for business if customers thought there was an association between FT and the singer. So far, the singer has not replied to any of Cathy’s emails and so she has decided she will simply add pictures of the singer to promotional material for FT, and a testimonial supposedly by the singer to the FT website.

Would this conduct comply with the ACL?

Explain your answer identifying relevant sections of the legislation, if any.

f) Can the manufacturer of a product refuse to supply FT if they charge less than the recommended retail price?

Explain your answer identifying relevant sections of the legislation, if any.

g) Can FT join together with other retail suppliers of electronic goods and agree to supplygoods to consumers for no less than a certain price?

Explain your answer identifying relevant sections of the legislation, if any.

h) Brett is concerned that as FT, in dealing with its customers via electronic communications, will have some transactions that will not be considered valid.

Identify for Brett the key requirements to form a valid electronic contract.

In your answer consider the Electronic Transactions Act 1999 (Cwlth)

QUESTION 2

Brett, Daniel and Cathy are aware that negligence actions against businesses can cause both financial loss and loss of reputation.

Daniel is a computer and IT specialist and it is expected that in addition to the ‘shopping centre’ consumer business, he will contribute to the business by providing expert, professional advice to business clients regarding their workplace and business IT needs.

a) Would FT or Daniel be held liable under the tort of negligence if this line of business was to be pursued?

In your answer identify and briefly explain the prerequisites to establish negligence

b) Explain two kinds of insurance policy that it would be advisable for FT and/or Daniel to take out to indemnify themselves against this risk of the negligence claims?

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