ASSESSMENT 2: CASE STUDY (PART 2)
SUBJECT NAME, SUBJECT CODE AND TERM
SUBJECT NAME Enterprise Law
SUBJECT NO. LAWS1002 YEAR/
TERM 2023.2
DETAILS OF ASSESSMENT TASK
WEIGHTING 35% WORD LIMIT 1,100 words (excluding references)
MAXIMUM MARKS 35 DUE DATES: ONLINE (VIA TURNITIN):
Week 8 (Friday 1 September 2023)
(A College cover sheet is NOT needed and no other form of submission is required)
OUTCOMES ASSESSED 1,2,3,4
LEARNING OUTCOMES:
1. Demonstrate an understanding of the features of the Australian legal system including the impact of this system upon Aboriginal and Torres Strait Islander peoples
2. Demonstrate an understanding of legal concepts in business
3. Apply understanding of legal concepts to analysing and solving practical problems
4. Demonstrate effective and appropriate written communication skills
TASK DESCRIPTION
Purpose
Case studies are analyses of situations or problems to be solved. They are used to communicate challenges and recommendations, in order to drive change. In this assessment, you will apply theories taught in class to a real world business scenario, helping you develop your analysis, problem-solving, and writing skills.
In Law Case Study scenarios, we use the IRAC method to analyse and structure our answer to the question. In Part 1 you were guided step by step on how to do IRAC. In this part of Assessment 2, you are ready to implement the IRAC method to 2 different Case Study Scenarios (below).
Recall you have had some practice with IRAC in Part 1 of this Assessment.
• The first Case Study relates to Contract Law, namely, the topic of Formation of Contract
• The second Case Study relates to the law of Business Structures.
CASE STUDY SCENARIOS & QUESTIONS
Case Study Scenario 1
Q1 (20 Marks)
Tim receives a catalogue in his email from GREAT GUYS store advertising laptops. The catalogue shows the various products on sale and their respective prices.
He visits the store and selects Premium RZ1 laptop displayed on a shelf and approaches the counter. It has a marked price of $600.
He tells the salesperson he will definitely buy it provided he can purchase the laptop with the headphone set for $600. The salesperson informs him that the best price he can give the laptop and headphones for was $620. Tim thinks the headphone set is overpriced and says he will continue to browse, looking at other laptops.
He notices a Jell S1 laptop in a separate aisle and takes it to the counter asking whether the Jell S1 had the same functionalities and efficiency as the Premium RZ1. The salesperson advises him that the item is not for sale as it was the last one left and it was reserved for sale for another customer.
The salesperson advises him that a new line- Star SR9- is available with lots of stock at the back of the store. He is told Star SR9 is ‘top of the line as far as laptops go and does not have the technical problems that some of the other lines do.’ Impressed by this, Tim asks whether it comes with a 2 year warranty and the owner confirms this. Tim asks to have a look at the Star SR9 laptop and the shop Helpant responds that Tim has made a good choice, returning a few minutes later with the laptop.
However, on observing the price of Star SR9 being $800, Tim said he needed time to think about it. The owner advised him ‘I will keep this offer open for one week. Let me know. Let me have your email address.’ 3 days later, Tim received an email from the store informing him that the laptop had been sold to another buyer.
INSTRUCTIONS:
Tim is unhappy and insists that surely there must be a contract in existence between the store and him. Advise him using the IRAC method (Use IRAC TEMAPLATE – GUIDE TO ANSWERING CASE STUDY SCENARIOS 1 & 2 under RESORUCES (PART 2)). Please refer to relevant case-law in support of legal principles discussed.
Case Study Scenario 2
Q2 (15 Marks)
You are an experienced chartered accountant specialising in business structures. David contacts your office and makes an appointment with you. During your meeting with David, he advises you that he wants to set up a plumbing business. David anticipates that he and his wife Ruby will run the business jointly and are open to others joining their business as employees or to Help to manage their business as it grows. He wishes to be able to easily source capital in the future should the business expand. They want to keep their costs and tax burden low and want as minimal paperwork as possible in terms of running the business. They hope to use a low risk business structure where their liability if anything goes wrong with the business is kept minimal. David believes that he will need to invest $150,000 in the business and will do this by borrowing the money from his local bank.
INSTRUCTIONS:
David would like to understand the different ways his business can be structured. You should address at least 2 possible structures in your answer which might be suitable to him. In your advice please address the following concerns that David has.
• How to set up the structure.
• Is it a separate legal entity or not
• Potential liability issues
• Is the structure easily dissolved?
• Tax burden
• Reporting Burden
• Ease of raising capital
• Other pros and cons.
Advise him using the IRAC method (Use IRAC TEMAPLATE – GUIDE TO ANSWERING CASE STUDY SCENARIOS 1 & 2 under RESORUCES (PART 2). Please refer to relevant case-law in support of legal principles discussed.
CASE STUDY FORMATTING
1. The case study should have the following LAYOUT
o Title page (including word count)
o Responses to Question 1 & Question 2 using IRAC TEMAPLATE – GUIDE TO ANSWERING CASE STUDY SCENARIOS 1 & 2
o Bibliography/Reference List
2. The report must be written in formal Academic English with no dot point responses.
A 10-12 pt font should be used with at least 1.5 spacing.
3. The case study should address ALL the components outlined above.
4. The paper should display correct Harvard WesternSydU style referencing and in text referencing should be correctly used throughout the report.
All sources must be cited (including the Student Workbook and any online sources)
5. A guide to Harvard WesternSydU style referencing can be found on the WSU website at:
https://library.westernsydney.edu.au/__data/assets/pdf_file/0008/1943486/cite_Harvard.pdf
For more information about this task, please see the task description on the subject vUWS site.
ADDITIONAL RESOURCES
Checklist: How to Write an Effective IRAC Response
Step 1: Task Understanding
• Read the Instructions carefully
• Read the Marking Rubric
• Read the Case Study to identify the Key Facts in the question.
o Highlight the Key Facts
Step 2: Understand IRAC
• Watch the IRAC video to understand how IRAC works.
• Read the Intro to IRAC handout 1 and Intro to IRAC handout 2 to give you a more detailed understanding of how IRAC works.
• Review the ‘Identifying the IRAC Components link’ for a quick reminder of what IRAC is and where each of its component parts fits in.
Step 3: Complete Student Template (See IRAC TEMAPLATE – GUIDE TO ANSWERING CASE STUDY SCENARIOS 1 & 2) in RESOURCES (PART 2) on vUWS
• Each section of the template has purple text – this information is there to guide you in completing your IRAC response
• Delete any purple text prior to submission
Step 4: Seminar Discussion
• Engage in a discussion with your peers about your process, sharing valuable insights and ideas.
• More instructions will be provided in class
Step 5: Review
• When you have completed your Case Study, review your work carefully for spelling, grammar or other errors
• Check that citations and references match
• Make sure that you have deleted any purple text prior to submission
• Read the Marking Rubric again to check that you have met the criteria
__________________
Case Study Scenario 1
Question 1:
I. Issue: The main legal issue is whether there was a valid contract formed between Tim and the store for the sale of the Star SR9 laptop.
R. Rule of Law: For a valid contract to be formed, the key requirements that must be satisfied under Australian contract law are: offer, acceptance, and consideration (Hillas & Co Ltd v Arcos Ltd [1932] All ER 494). An offer is a clear, complete and unconditional statement of the terms on which the offeror is willing to contract (Byrne v Van Tienhoven [1880] 5 CPD 344). Acceptance is unconditional agreement to the terms of the offer (Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256). Consideration is something of value that both parties provide to support the contract (Thomas v Thomas [1842] 2 QB 851).
A. Analysis: In this case, the following indicates that a valid contract may have been formed:
Tim expressed interest in the Star SR9 laptop and asked questions about its specifications like warranty. This could be considered as indicating his intention to accept the store’s offer to sell the laptop (Carlill v Carbolic Smoke Ball Co).
The store owner confirmed details like the 2 year warranty in response to Tim’s questions, suggesting he was holding the laptop for Tim on those terms (Byrne v Van Tienhoven).
The agreed price of $800 also provides consideration from both sides to support the contract (Thomas v Thomas).
However, the following may suggest that no contract was formed:
Tim did not explicitly accept the offer and asked for time to think, so acceptance was not unconditional (Carlill v Carbolic Smoke Ball Co).
No deposit was paid, so the store could withdraw the offer at any time before acceptance (Hyde v Wrench [1840] 3 Beav 334).
C. Conclusion: On balance, while the discussions came close to forming a contract, Tim’s request for time to consider likely meant that a valid and complete contract was not finalized between the parties for the sale of the Star SR9 laptop. Tim would have a weak case in insisting that a contract existed.
Case Study Scenario 2
Question 2:
I. Issue: The main legal issues are determining the most suitable business structure for David’s plumbing business based on his requirements around liability, tax burden, capital raising ability, and ease of setup and dissolution.
R. Rule of Law: The main business structures under Australian law are sole trader, partnership, company (Pty Ltd), and trust. Each has different characteristics in terms of separate legal identity, ownership, control, liability, compliance obligations, and taxation (Income Tax Assessment Act 1997 (Cth)).
A. Analysis: Based on David’s requirements, two suitable options are:
Partnership:
Simple to set up via oral or written agreement between David and Ruby (Elder v A’Court & Co [1951] VLR 269).
They share ownership and management control.
David and Ruby have joint and several liability for business debts (Dairy Supplies Co (LC) v R [1960] HCA 57).
Tax reporting is via individual partner tax returns with profits distributed (Income Tax Assessment Act 1997 (Cth)).
Proprietary Limited Company (Pty Ltd):
Separate legal entity providing limited liability for shareholders (Salomon v Salomon & Co Ltd [1897] AC 22).
David and Ruby are shareholders/directors with limited liability for business debts.
Simple annual reporting to ASIC and tax return (Corporations Act 2001 (Cth)).
Easy to raise capital by issuing new shares (Income Tax Assessment Act 1997 (Cth)).
The Pty Ltd structure offers greater liability protection but higher setup and annual costs. A partnership is cheaper but David and Ruby have joint liability. Overall, a Pty Ltd suits David’s goals of liability protection and future capital raising.
C. Conclusion: Based on the above analysis, a Pty Ltd company structure or partnership would both be suitable options for David’s plumbing business needs, with a Pty Ltd likely better meeting his priority requirements around liability protection and future capital raising ability.
References:
Elder v A’Court & Co [1951] VLR 269
Dairy Supplies Co (LC) v R [1960] HCA 57
Salomon v Salomon & Co Ltd [1897] AC 22
Income Tax Assessment Act 1997 (Cth)
Corporations Act 2001 (Cth)
