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Sample assignment HI6027 Business and corporation law

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Table of Contents

HI6027 BUSINESS & CORPORATIONS LAW

Table of Contents

1     Part 1. 4

1.1      Liability of the swimming pool 4

1.1.1      Issue identified. 4

1.1.2      Rule applicable to the given scenario. 4

1.1.3      Application of the law and principles identified. 4

1.1.4      Conclusion. 5

1.2      Scope of Non-Liability of the company. 5

1.2.1      Issue identified. 5

1.2.2      Rules applicable to the scenario. 5

1.2.3      Application to the case scenario. 5

1.2.4      Conclusion. 6

1.3      Liability of the employee for his act in relation with the employer. 6

1.3.1      Issues identified. 6

1.3.2      Rules applicable to the scenario. 6

1.3.3      Application of the rule to the scenario. 6

1.4      Breach of law in the act of Martin to set up his own business. 7

1.4.1      Issue identified. 7

1.4.2      Rules applicable to the case. 7

1.4.3      Application of the rules. 7

1.4.4      Conclusion: 7

2      Part – 2. 7

2.1      Introduction. 7

2.2      Issue identified. 7

2.3      Rules applicable to the scenario. 8

2.3.1      Care and Diligence. 8

2.3.2      Duty of Act in Good Faith. 8

2.3.3      Justified use of Position. 8

2.3.4      Justified use of information. 8

2.3.5      Disclosure of Interest 8

2.4      Application of the rule to the give case. 9

2.5      Conclusion. 9

3      References. 10

1           Part 1

1.1         Liability of the swimming pool

1.1.1        Issue identified

Can the company responsible for the swimming pool be held liable for the act of Martin?

1.1.2        Rule applicable to the given scenario

In order to identify the liability of the company, it is seen that the Law of Tort can be used. As per this Law which has been explored by Abraham (2017), it is identified that an employer may be held responsible for the act of an employee. However, there are certain terms and conditions which are to be applied to the same. Hence, when this law is applied, it is seen that the employer may be held responsible for the act of an employee in case the act of the employee causes harm to a third party or the customers in any form of damage. On the other hand, as per the given case, another principle which guides the legality of the case is “Qui facit Per Alium Facit Per Se” (Levine et al. 2016).

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1.1.3        Application of the law and principles identified.

As per the application of the Tort Law and as evident from the case study which has been conducted, it is identified that when the employee was able to contribute to the revenue, a portion of the earnings also went to the company/ employer. As per the given case study, Martin is an employee of the company. Therefore, based on the employment status which has been established, it is identified that the employment status is the relationship of subordinate as far as Martin is concerned. However, the case study also establishes that action of the employee caused harm to the customers and as per the Tort Law it is seen that that the company needs to be held accountable for the actions of the employee (Abraham 2017). While this may include, developing internal processes and control mechanisms it would also refer to the quality checks to be conducted to ensure that all work protocols are being followed. This can also be based on the principle of Vicarious Liability as studied by Levine et al. (2016) who state that since responsibility of the customers was essentially a base for the company. Therefore, since the customers were attended by Martin, the company can be held liable for the acts of the employees. At the time of the encounter between the customers and the employee, Martin was representing the Swimming Pool company. Hence based on the principle of vicarious liability the company can therefore be held responsible.

1.1.4        Conclusion

Any contracts or deals signed by the customers would have engaged either the company or the employee. Hence the contract is formed between the company or the employee representing the employee owing to which, any breach through act of employee or company can be held against the employee and the company and therefore the accountability of the company is established.

1.2         Scope of Non-Liability of the company

1.2.1        Issue identified  

Can the company not be held liable for the act of the employee (Martin)?

1.2.2        Rules applicable to the scenario

One of the guiding principles for the which can eliminate the responsibility of the company for the act of the employee is the Civil Liability Act of 2002. As per this act presented in the clause 5Q of the act, the vicarious liability persists for the employer. 

1.2.3        Application to the case scenario

Keeping in view the case scenario presented above, and with reference made to the case of Lister VS Hesley hall Ltd, it is identified that a mere presence of the employee at the location of work may not be enough to hold the employer liable for the damage caused (Deakin 2018). As per this case law, it is identified that the presence of an employee does not mean that the employer is to be held liable for the case being held. It simply means that a company may allocate a certain task to the employee and if the act of the employee harms the customers, it may not be intended by the company and hence in such cases the company may not be held liable for the action of the employee.

1.2.4        Conclusion

Keeping in view the discussion which has been presented, it is identified that based on the Civil Liability Act, 2002, the company cannot be held liable for the case.

1.3         Liability of the employee for his act in relation with the employer.

1.3.1        Issues identified

As per the case study, the act of the employee can be considered to be a crime. Therefore, the liability of the employer needs to be ascertained.

1.3.2        Rules applicable to the scenario

As identified by Hazen (2017) each situation pertaining to crime at work can be gauged by a law of act which lends the direction to the case. However, in this case, it is identified that there is no certainty towards the identification of the damage which has been caused to the customers. While the past discussion sheds light on the vicarious liability of the employer, the employer may also have the scope of claiming damages, based on the negligent work attitude of the employee.

1.3.3        Application of the rule to the scenario

There are different perspectives which can be applied to the said scenario. One of the major issues identified is the fact that Martin, as an employee for the company, was found to be providing misleading information to the customers. Therefore, the first legal issue is identified. As per the views of Luntz et al. (2017) this falls under the segment of Negligence of Duty.

Secondly, the case study also establishes that the employee, was not involved actively with the construction of the swimming pool. This is based on the observation that Martin did not inspect the construction and did not follow up the construction process. It was due to this lack that the resultant pool constructed was different from the original plans proposed.

Thirdly, a complete case of fraud can be built on the fact that despite receiving the payment, from the customers, Martin did not deposit the payment into the company account. Keeping this fraud in view, the liability can be based on the two grounds namely, misleading the customers and cheating in terms of fraud.

Conclusion

It is therefore identified that Two accounts of Negligence of Duty and Crimes Act of 1990 can be applied to claim damages from Martin.

1.4         Breach of law in the act of Martin to set up his own business

1.4.1        Issue identified

Can Martin setting up his own business be considered a crime?

1.4.2        Rules applicable to the case

As identified from the case study, it is seen that Martin was an employee for a SwimmingPool company. However, through this employment he was interacting with the customers on behalf of the company. However, his idea of setting up the business, was also concurrent at this time. Keeping this observation in consideration, it is not ethical for an employee to construct his own business in the same domain as the current employer. Hence, a fraud in the case of Criminal Law can be established.

1.4.3        Application of the rules

The rules presented above can be applied to the scenario where in it is identified that an existing employee cannot open a new business while being employed and that too in the same business as the employer.

1.4.4        Conclusion:

Therefore, the Fidelity Act and the Crime Act of 1990 can be applied to the case

2            Part – 2

2.1         Introduction

This case pertains to the situation for Borsida Builder Pty Ltd which has five directors to the management of the company. It has also been identified through the case study that the two directors namely, Mikkhail and Zyaid are working directors where as Iilych is an accountant. Vesna is an MBA and an engineer where as the Sergey is a brother of Iilych and has a medical history due to which the participation in the meetings of the board is limited.

2.2         Issue identified

The first issue which is identified pertains to the Board of management of Borsida. It is seen that Vesna has been also participating in providing advice and business decisions to his brothers Design Company. One of the recent contracts formed by the company was with a designer named Doug and this contract was also managed by Borisda. It was identified that Doug’s quote was lesser than the other designers who had bid for the project. In fact, the cost quote by Doug was lesser than the cost of the work to be completed.

The second issue which is noteworthy is the manner in which the accountant who is also the Board member has proposed the idea which was rejected. Hence, he took the idea to another company which accepted the same, and has been receiving 10% of the sale made by the other company using his idea.

The third issue which is evident is the manner in which the Board of Management has permitted the company to trade irresponsibly keeping in view the financial risks and current situation in consideration.

2.3         Rules applicable to the scenario

Keeping in view the three scenarios and issues which have been presented above, it is identified that the different rules and regulations remains applicable to the scenario. Overall, in general the Corporate and Statutory Law can be applied and different sections from section 108 till section 191 can be applied to this case (Cadbury 2017).

A brief of the same is as given below:

2.3.1        Care and Diligence

When this rule is applied, it is seen that Borisda should be handled with care as far as the Board members and their responsibilities are concerned.

2.3.2        Duty of Act in Good Faith

As per this rule, the Second duty of Borisda is formed and it is mandatory for the Board to Act in the best interest of the company (Ittner and Keusch 2015).

2.3.3        Justified use of Position

According to this statute it is seen that the Board of the company cannot leverage their position and post for personal interests.

2.3.4        Justified use of information

The information available to the Board of Directors must not be used to gain undue advantage

2.3.5        Disclosure of Interest

In case a Director has a personal interest in a matter, sufficient notice for the same needs to be provided.

2.4         Application of the rule to the give case

When the rules presented above are applied to the case being evaluated the following observations can be made:

  • Vesna as a Board member has breached the duties, in terms of care and diligence. Also, the breach in terms of conflict of interest has been identified. The Duty to Act in good faith has also been violated.

This is justified based on the fact that despite maintaining a respectable and responsible position at the company, Vesna has also engaged with the brother’s company and has allowed the brother firm to benefit from the information held. Hence a clear indication of Conflict of Interest has been identified (Masli, Sherwood and Srivastava 2018).

  • Zyaid has used his power and position to the personal advantage. The Board of the company was use to seat his brother who has not been able to actively contribute to the business. While his brother is not present for the meetings, he has also not shown interest in records and decisions taken. Hence, he has leveraged the power of his position due to which the breach of Power of Position is identified.
  • Again, it is also seen that the financial strength of the company has been limited, and yet the company has decided to pay the 9C. Again, this shows the violation of Acting in Good Faith.
  • Iilych accepted the offer of profits from the other company. And therefore, a clear violation of duties has been identified.

2.5         Conclusion

It is therefore concluded that the Board members have breached their rules and duties, and while Vesna depicts a conflict of interest and lack of Care and Negligence, Vesna is also showing Non-Justified use of information and position. Zyiad has exploited his position and the duty to act in Good Faith. Iilych has also breached the duty to act in good faith and Misused the information held by him.

3           References

Abraham, K., 2017. The forms and functions of tort law. West Academic.

Cadbury, A., 2015. The Financial Aspects of Corporate Governance.

Deakin, S., 2018. ORGANISATIONAL TORTS: VICARIOUS LIABILITY VERSUS NON-DELEGABLE DUTY. The Cambridge Law Journal77(1), pp.15-18.

Hazen, T., 2017. Broker-dealer Regulation in a Nutshell. West Academic.

Ittner, C.D. and Keusch, T., 2015. The Influence of Board of Directors’ Risk Oversight on Risk Management Maturity and Firm Risk-Taking.

Levine, L.C., Vetri, D., Vogel, J. and Gassama, I.J., 2016. Tort law and practice. Carolina Academic Press.

Luntz, H., Hambly, D., Burns, K., Dietrich, J., Foster, N., Grant, G. and Harder, S., 2017. Torts: cases and commentary. LexisNexis Butterworths.

Masli, A., Sherwood, M.G. and Srivastava, R.P., 2018. Attributes and Structure of an Effective Board of Directors: A Theoretical Investigation. Abacus.

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