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LAW8500 Australian Commercial and Corporations Law Assignment Help

Question 1

Research question

Can First National Bank Ltd sue Dave and take the legal action against FirstRate Accounting?

Question 2

Research question 

Is Crystal Motor Company Pty Ltd liable of paying the debt?

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Answer 1

Relevant law

According to the Australian Law Reform Commission, a tort is considered to be the legal wrong which is done by an entity or person against another entity or person. A tort can cause severe harm or loss to an individual. In tort, the claimant can sue for the damages and can get remedies as per the law. There are two forms of tort liability: vicarious liability and personal liability. Personal liability is referred to an individual who is responsible for omission or act committed by her or him as per the law (Alrc, 2019). Vicarious liability is considered to be the liability of an employer for an omission or act carried out by its employee during the course and scope of its employment. The plaintiff can establish tort liability by proving three main elements in a court. The elements are the duty of care, loss, damage or injury and breach of duty of care.  

A duty of care is considered to be the legal obligation for an individual to take the reasonable care in order to avoid the harm that can be caused to another person. The duty of care generally exists because of the establishment of the relationship between the parties. Some examples of relationship are between student and teacher, patient and doctor, client and lawyer and employee and employer. It arises because of the nature of the relationship between the parties such as a party has a degree of reliance or control over the actions of another party (Lawhandbook, 2019).  A duty of care can be breached when an individual is injured or harmed because of the action of another individual. The breach of duty of care is examined on the basis of the standard care that was needed on that particular circumstance. If a duty of care is being owed by a person to another then it is important to determine what duties are being owed. A professional is responsible for providing standard care to his or her clients as per the civil liability act 2002. An accountant or doctor will be held responsible to provide standard care to his or her clients. The standard of care assists to create a balance between the rights and needs of the parties by taking into account what care should be provided. Thus, if an individual is not able to provide a standard of care then there would be an occurrence of a breach of duty.  

Damages done by a party to another can lead to loss of property or money and pain or sufferings. In tort matters, the plaintiffs can seek remedies for the damages done to him or her. The remedies for the damages are the sum of money which is received because of the loss of property, personal injuries or other sufferings (Dahlstrom, 2019). However, the plaintiff has to prove that she or he has an injury or suffered loss because of the tort. It can involve tendering financial records, medical records, and other evidence. Loss can be any detriment, suffering or damage that result from the occurrence of tort. The loss in case of personal injury can be the inability to carry out work because of the result of the injury. Injury can be a psychological or physical injury. A psychological injury should be examined on the basis of the psychiatric condition and the level of damages occurred.         

The case “Boyd v Ackley” shows Mr. And Mrs. Sherdahl were shareholders of a company and they were in partnership with Pierce. They rented a beer parlour to the company. The income and expenses were equally shared by both of them which were settled annually. A few days later, the couple sold all their shares of the company. Pierce argued that the sum which he receives was not sufficient (Awbrisbanelawyers, 2019). The accountant released a statement showing that the couple has to pay more money to pierce. The couple took legal action against the accountant for negligence and breaching of duty.  Contractual relationship, trust between parties, and the duty of an accountant to clear out every little thing to the owners were the major issues of this case. After the defendant statement, it was clear that the couple were right in their claim and the accountant did not provide clear statements to the plaintiffs. 

The case “Swynson v Lowick Rose” shows the director of a company alleged an accountant for breaching the duty of care in respect to due diligence services. The court determined that it was necessary to establish whether the accountants had the responsibility to give advice to the director. The court held that the knowledge of the advisor and the director would have depended on his advice was not being adequate on the basis of showing the assumption of duty (Perry, 2016). The decision was made on the basis of whether the duty was carried out in an appropriate manner by the accountant. It was being found that there was a negligence act carried out by the accountant that leads to loss to the director. The company suffered because of the breach of duty of care.   

Research methodology

The research was carried out in order to collect significant information that assisted to support the legal arguments. The information was collected on the basis of an issue that occurred in the given case study. The information was gathered from secondary sources such as websites on tort law. The method is considered to be very easy and also saves both money and time (Thomson Reuters, 2019). The information is considered to be descriptive providing detailed explanation. Qualitative research was carried out which means collecting detailed theoretical explanation of the legal rules and cases. The electronic databases were used appropriately in order to enhance the quality of the research.  

Analysis

In the given case, Dave works for FirstRate Accounting as an accountant. The financial statements were prepared by Dave for Excel Group Company Ltd. FirstRate Accounting submits the financial statements to First National Bank Ltd in order to obtain loan for the Excel Group Company Ltd that assists to expand the business overseas. A negligent omission was done in the financial statements by Dave that results in a huge loss for First National Bank Ltd. The loss was not able to claim the unpaid loan. 

The case shows negligence omission carried out by Dave that caused huge loss to First Bank Ltd. Negligence shows not taking reasonable care by a party in order to avoid damage or harm to another party. Dave was responsible to take reasonable care and ensure the standard of care that should have provided to FirstRate Accounting. Negligence shows breach of the duty to care that result in huge damage to the plaintiff (Etheringtons, 2019). The standard of care can be determined by the responsibilities given to Dave and the loss occurred because of his negligence. Thus, Dave seen to be not taking the reasonable care while carrying out his jobs, breached the duty of care and caused losses to First National Bank Ltd. However, First National Bank Ltd will not be able to sue Dave because the financial statement was submitted by FirstRate Accounting and Dave is an employee of that company. Vicarious liability shows that an individual is held liable for the negligent actions carried causing loss or damage to another person. It is relied commonly on the negligence part carried out by the employee in her or his duty. The employer in most of the cases is vicariously liable for the negligence of the employee. Thus, FirstRate Accounting is responsible for the negligent act carried out by Dave. 

First National Bank Ltd can take legal actions against the First Rate Accounting as per the rule of vicarious liability. FirstRate Accounting was providing services to First National Bank Ltd which depicts a relationship between both the parties. Thus, FirstRate Accounting had the duty to provide a standard of care to the First National Bank Ltd (Legislation, 2019). The loss of First National Bank Ltd shows the breach of duty done by FirstRate Accounting. First National Bank Ltd can take legal actions because the duty of care was being breached by FirstRate Accounting. First National Bank can claim remedies for the losses caused due to inappropriate representation of financial statements. 

If Dave has the knowledge about the fact that the financial statement will also be submitted to First National Bank Ltd for obtaining a loan then legal actions can be taken against Dave by First National Bank Ltd. First National Bank Ltd would have proved that loss was incurred because of the negligent act carried out by Dave. Both FirstRate Accounting and First National Bank Ltd would have sued Dave for not providing reasonable care and breaching the duty of care. The three main elements that are the duty of care, loss or damage and breach of duty of care can be proved in the court by the firms.    

Answer 2 :

Relevant law

According to agency law, the agency is considered to be a legal relationship that can take different forms. An agency relationship is referred to a contract between the principal and agent in which the agent is being authorized of acting and undertaking jobs on behalf of the principal. The parties are able to engage others to negotiate or represent on their behalf. The authority with which the actions carried out by the agent on behalf of principal depicts the extent of the liability of the principal. The agency relationships can be established through implied or expressed agreement between the parties, principle to prove the acts can be done on her or his behalf and operation of law (Lexisweb, 2019). The duties of the agents arise from the nature of the contractual relationship and fiduciary obligations that are implied in the trust and confidence that the principal is being entitled to have the agent. The main duties consisted of following the instruction of the principal, act in person, exercise skill, diligence, and due care, act in good faith, keep separate accounts and maintain confidentiality. There are also common law rights that are available for the agents. 

The agency relationship gives rise to liabilities for both the principal and agent in relation to the third parties. The agents can be liable to the third party in some cases who enters into an agreement with the agent’s principal. The agent can be liable to the principal were terms of the contract where breached. In many situations, the agents can also be liable to the third party. The principal can take legal action if the contract is breached by an agent. One of the most significant parts of the agency relationship is the extent of the authority of the agent (Arts Law, 2019). An agent should act or carry out works within its authority. An agent will not be able to act outside the scope of its authority. An agent cannot enter into an agreement on behalf of principal with the third party that is not within the scope of authority and the agreement would not be enforceable against that principal. The agent’s authority consisted of implied actual authority, express actual authority, and ostensible authority. 

Actual authority is referred to specific powers which are conferred expressly by the principal to an agent for acting on behalf of the principle. The principle actually grants the authority to the agent and it shows the scope of authority. Thus, express authority is considered to be the authority that has given or expressed by a principal to an agent in the form of either written or oral. The implied authority is referred to the authority of an agent to carry out his or her acts that are necessary for enhancing the performance of the duties (Dundas Lawyers, 2019). The agent would have the authority to intro the agreement on behalf of principal. The ostensible authority of the agent is that the third party will understand that the agent is being authorized to carry out actions on behalf of principal. The ostensible authority establishes when the principal provides an explanation or sign that the agent has authority in entering into the contract with the third party.     

Partnership Act 1891 (QLD) consisted of the rules and regulations in relation to the partnerships. The act provides establishment and formation of Incorporated Limited Partnerships, Limited Liability Partnerships, and other related matters. It consists of provisions in respect to the relationship of partners while dealing with a person, the relationship of partners with each other, partnership dissolution and its consequences and rules to determine the partnership existence (Ablis, 2019).   

The high court of Australia found that the Flight Centre Travel Group Ltd had been in competition with the airlines as per the case of ACCC v Flight Centre Travel Group Ltd (2016) 339 ALR 242 for supplying international airline tickets. The Australian competition regulator, Australian Competition and Consumer Commission brought this case against Flight Centre. Flight Centre is one of the leading travel agency of Australia. It was allowed to sell various airline tickets under the agreement of Passenger Sales Agency (PSAA) (Nortonrosefulbright, 2019). As per the PSAA, the travel agency was allowed to sell tickets of the international airline by paying a net amount to the airline deliberated by reference to the published amount which had covered an allowance for travel agent. However, the travel agents were not limited to sell tickets at the published rates. During that time, Flight Centre gave an offer where the agency will be at the cost of a ticket provided by another party even cheaper than the airline's price listed on their website. The issue arises when Singapore, Emirates and Malaysian Airline sold tickets to its customers at less than the net amount. It was claimed by ACC that such behaviour had challenged agency law and section 45(2)(a))(ii) of Trade Practices Act 1974(Cth). The provisions show the impact of controlling, maintaining and fixing the prices for providing services which the airlines and Flight Centre were selling with each other. 

The Federal Court had given its decision on the case Consolo v Bennett [2012] FCAFC 120. There were two holding companies Consolo and Pearson involved in the case. They have entered in an independent joint scheme for a project of property development named Noosa Development. The owner of Elysium Pty Ltd was Consolo and also he was the owner of under-developed land. The administrative support was provided by Consolo and it was responsible for gaining finance for the development (Kwm, 2013). On the other hand, the role of Persons was marketing and advertising of the development. Mr. Person was appointed as a project manager with the project manager of Consolo. Dr. Bennett and Elysoium signed a contract for buying a piece of the under-developed land. The community center has never been constructed on that land.  Dr. Bennett attempted for recovering compensations for the reduced value of the land. Consolo and Person held liable for the contract of PRD Consulting Services Pty Ltd. It was found by the primary judge that both Pearson and Consolo were responsible for the deceptive representations completed by PRD Consulting Services Pty Ltd to Dr. Bennett.

Research methodology

The use of different techniques assisted to enhance the quality of the research. The secondary sources are used for collecting legal rules, laws, and cases. Online sources are being used for collecting description information about the legal legislations. Qualitative information was collected and integrated with the given case in an appropriate manner (Thomson Reuters, 2019).  

Analysis 

The case shows John and Sam are seen to be partners in the Crystal Motor Pty Ltd carrying out the business to purchase and sell a used car. The partners agreed that they are authorized to carry out business deals not exceeding $20,000 on behalf of Crystal Motor Pty Ltd. A sports car was purchased from Elite Car Sale by Sam without getting permission from John which amounted to $40,000. Elite Car Sale Ltd ask to make the payment to Crystal Motor Company Pty Ltd and the company did not paid because it was more than the limit as per the agreement between the partners. 

Elite Car Sale Company has the right to take legal actions against the Crystal Motor Company Pty Ltd for not paying the debt. Sam purchased the car on behalf of Crystal Motor Company Pty Ltd. Thus, Crystal Motor Company Pty Ltd is liable for paying the debt. Sam has the authority to carry out his duties on behalf of the organization. However, there was a limit of $20,000 for conducting the business deals but it is not known to Crystal Motor Company Pty Ltd (Law Quarter, 2019). The agency relationship gives rise to liabilities for both the principal and agent in relation to the third parties. It means if Sam has purchased the car then Crystal Motor Company Pty Ltd is liable of paying the amount. Implied authority can be applied in this situation where Sam carried out his act on behalf of the organization. The ostensible authority shows that Elite Car Sale Company knew that Sam has the necessary authority to act on behalf of organization Crystal Motor Company Pty Ltd. Thus, Crystal Motor Company Pty Ltd has to pay the debt. 

Crystal Motor Company Pty Ltd can defense for not paying its debt. Partnership Act 1891 (QLD) shows there is a partnership between Sam and John carrying the business of selling and purchasing a used car. The partnership contract depicts that the business deals should not exceed $20,000 and Sam purchased the car which was about $40,000 (Thomas, 2010). Thus, Crystal Motor Company Pty Ltd can show that Sam does not have authority to carry out this business deal as per the agency law and partnership act. There were limits on the authorization given to both the partners.     

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