Required Text

Gibson, A. (2017) Business Law, 10th edition, Pearson, ISBN: 9781488611803

This text will be supplemented by the current Law & Management materials.

For information on textbook prices and online ordering, please refer to the Co-Op Bookshop webpage at  http://www.coop.com.au  

Additional references

Listed in the Session Topics and Readings have been provided for students who wish to extend their research on particular seminar topics.

MGSM iLearn

The web page for this unit can be found at: https://ilearn.mq.edu.au/login/MGSM

SESSION TOPICS AND READINGS

SESSION 1: THE AUSTRALIAN LEGAL SYSTEM

The first class will outline the course and assessment requirements, and provide a general overview of the Australian legal system –

Legal institutions and sources of law:

•              Courts and the common law

•              Parliaments and statutes

•              Regulatory authorities and tribunals; rule-making and administrative discretion

Aspects of the legal system:

•              Civil vs. Criminal law

•              Private vs. Public regulation

The Australian Constitution:

•              The division of legislative power between the Commonwealth and the States

•              The Federal court system

Workshop topic: Legislation

There will be a consideration of pieces of legislation and discussion as to their meaning.

Discussion questions:

•              In this “Age of Statutes”, what role do judges of the courts of common law and equity play in our legal system?

•              The Australian Constitution limits the Commonwealth government’s law making powers. Have these limits created inconvenience or inefficiency in the Australian legal system? And if so, how?

Reading:

Gibson & Fraser Chapters 1, 2 & 3

Additional reference:

Parkinson, P. (2001) Tradition and Change in Australian Law 2nd Edition, LBC Information Services, Sydney

SESSION 2: CONTRACT LAW - DO WE HAVE A DEAL?

This class examines the “classical” principles of contract law that distinguish a legally enforceable bargain from a non-binding promise. We will cover –

•              Consent as the basis for the enforcement of obligations

•              The Offer and Acceptance Model of contracting

•              The requirement of consideration (and the estoppel exception)

•              Distinguishing legal from non-legal (and unenforceable) relationships

•              Writing requirements

Workshop topic: Commercial negotiations: At what point do we have a done deal?

Preparation: Read Austotel. Come prepared to identify:

•              The legal principles at issue

•              The source of those legal principles

•              The facts of the case

•              The reasons of the court in reaching its decision (including any dissenting opinion)

•              Your own view on how the problem (and this litigation) could have been avoided

Hypothetical:

(The following facts are entirely fictional)

Vera owns a shop in Talavera Road near the MGSM. The MGSM’s facilities manager, Carl, has been negotiating with Vera to lease the shop for the purpose of establishing a new MGSM cafeteria. Vera sent Carl a document headed “Draft agreement”, which set out the terms on which she would lease the shop to MGSM. It stipulated a proposed term of five years, with an option to renew for five years. It also stipulated rent at $5,000 per calendar month, with rent to be reviewed annually. The document did not set out any formula or method for reviewing the rent.

Carl decided that he would accept these terms so he rang Vera and said “I think we can proceed on this basis. Could you please send lease documentation to MGSM’s solicitors?” Then he walked to the existing cafeteria and dismissed all the staff with six months’ pay in lieu of notice. He also rang Bob the Builder and signed a contract to pay Bob $50,000 for a refit of the old cafeteria, to create a new internet café for students.

No lease documentation arrived from Vera. When Carl rang Vera, she said she had changed her mind about leasing the shop to MGSM. She said she was going to set up a fast food outlet of her own and she was pleased to hear she might get some business from MGSM students.

Carl wants to know whether he can force Vera to lease the shop to MGSM. Can he?

Reading:

Gibson & Fraser Chapters 6, 7, 8 & 9

Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 [BRING A HARD COPY OF THIS CASE TO CLASS Session 2]

Graw, S. (2000) “Puff, Pepsi and ‘That Plane’ – The John Leonard Saga” Journal of Contract Law [BRING A HARD COPY OF THIS CASE TO CLASS Session 2]

Additional references:

Carter, J. (1994) Outline of Contract Law in Australia, 2nd Edition, Butterworths, Sydney

Carter & Harland (2002) Contract Law in Australia, 4th Edition, Butterworths, Sydney

Seddon & Ellinghaus (1997) Cheshire and Fifoot’s Law of Contract, 7th Edition, Butterworths  

SESSIONS 3 & 4: CONTRACT LAW: WHAT ARE THE TERMS OF OUR DEAL?

                                                              WHAT ARE THE CONSEQUENCES OF BREAKING THE DEAL?

This session examines the principles for determining what the deal means:

•              What statements form part of the contract?

•              Express terms, and terms implied in fact, by law or by custom

•              Exclusion clauses

We also consider:

•              the doctrine of privity (who is bound by the deal?)

•              ending contracts

•              remedies for breach of contract

Workshop topic: The traps of sloppy drafting: CFMEU v Amcor

Preparation: Read the Amcor decisions

Consider:

•              Why did a restructuring of Amcor’s corporate group change the employment contracts of the employees?

•              How would you have drafted the terms of the employees’ new contract to avoid the result in this case?

Hypothetical:

Rural TV offered Yvonne a job as a media sales consultant.

Rural TV’s media sales manager said to Yvonne: “We have a vacancy selling in the Illawarra district. Our highest commission earner, Samantha, is leaving to go to New Zealand. You can have her territory. She earns on average $10,000 a month commission in addition to her retainer of $2,000 per month.”

Yvonne agreed to join TWT and left her job at City TV, where she was earning a fixed salary of $80,000 per year.

Rural asked Yvonne to sign a letter of appointment. The letter stated:

Dear Yvonne,

We are so pleased that you have decided to join our sales team. The terms of your employment will be that you will be paid a fixed salary of $24,000 per year, and you will be entitled to a commission of 10% of any sales you make, payable at the end of each month. (Commission will be paid only after payment has been received from customers.)

Your employment with Rural may be terminated, by you or by us, on giving three months’ notice.

Yours sincerely,

[Signed CEO]

When Yvonne started at Rural, Samantha was still there. She had changed her plans and Rural agreed to allow her to keep her job and her territory. Yvonne was given a different territory instead. While Samantha continued to average $10,000 per month in commissions, Yvonne averaged only $1,000 per month.

Does Yvonne have any claim against Rural for breach of contract? If so, assess damages.

Reading:

Gibson & Fraser Chapters 11, 12, 13, 14 & 15

CFMEU v Amcor Ltd [2002] FCA 610 (13 May 2002), [2003] [BRING A HARD COPY OF THIS CASE TO Sessions 3 and 4]

Additional references:

Carter, J. (1994) Outline of Contract Law in Australia, 2nd Edition, Butterworths, Sydney

Carter & Harland (2002) Contract Law in Australia, 4th Edition, Butterworths, Sydney

Seddon & Ellinghaus (1997) Cheshire and Fifoot’s Law of Contract, 7th Edition, Butterworths  

SESSION 5: UNFAIR DEALING

We examine a range of legal controls on unfair business practices.

•              Common law doctrines (against duress)

•              Equitable doctrines (against undue influence and unconscionable dealing)

•              Statutory controls (Australian Consumer Law, Australian Competition and Consumer Act 2010)

Workshop topic: The Amadio doctrine

Real life case study:

Michael Canizales had been employed with the Microsoft Corporation in the United States since 1989. In 1997 he was offered a 24 month assignment to work with a joint venture between Microsoft and Publishing and Broadcasting Ltd in Sydney. He took this on the basis that at the end of the term he would either transfer completely to employment with ninemsn, the new company formed by the joint venture, or he would find a new position in Microsoft. He was concerned about redundancy at the end of the contract, but was assured that “Microsoft would do the right thing by its senior executives in event of a redundancy”. In particular, Mr Canizales relied on assurances that he would be entitled to remain an employee, in some capacity or other, until his entitlement to a valuable tranche of share options vested in July 1999. During his employment, Mr Canizales bid at auction on an expensive house in Double Bay. Before committing himself to this purchase, he specifically asked for assurances that he would be able to exercise the share options. Otherwise, he said, he was uncomfortable with taking on such a high level of debt. A Microsoft executive assured his that there were “no issues which would prevent [him] from getting the options . . . go ahead and bid on the house”.

Unfortunately Mr Canizales’ experience in Sydney was not a happy one and he was retrenched, two months short of the vesting period for the share options. The person who chose his termination date took care to ensure that it was before July 1999, so that he could not exercise the options. He was offered a severance package, but only on the condition that he sign a deed of release relinquishing any further claim against the company. Mr Canizales refused to sign this and left empty-handed.

Despite the original negotiations for a two year fixed term, the written contract of employment which Mr Canizales signed included a one month notice period. In any case, he was ultimately given no notice, and he was denied the usual Microsoft practice of allowing an assisted job search for another position within the Microsoft organisation before dismissal. His dismissal had been left in the hands of a person known to be antipathetic towards him. Most significantly, the share option scheme made no provision for what should happen in the event that a person was made redundant prior to vesting.

Mr Canizales claimed that he had been unfairly denied the opportunity to exercise share options worth $14 million.

What was Mr Canizales’ solution?

Reading:

Gibson & Fraser Chapters 11, 12, 13, 14 & 15

ACCC vs. Simply No-Knead (Franchising) [BRING A HARD COPY OF THIS CASE TO Session 5]

Contracts Review Act 1980 (NSW) (Extracts in Materials)

Parkinson, P. (ed) (1996) The Principles of Equity LBC Information Services, Sydney, Chapter 10 “Fiduciary obligations”

Additional references:

Parkinson, P. (ed) (1996) The Principles of Equity LBC Information Services, Sydney

Dal Pont & Chalmers (2000) Equity and Trusts in Australia and New Zealand, 2nd Edition, LBC Information Services, Sydney

Evans, M. (1993) Outline of Equity and Trusts, 2nd Edition, Butterworths, Sydney  

SESSION 6: INTRODUCTION TO AUSTRALIAN CONSUMER LAW

This topic deals with the manner and extent to which trade practices are governed and restricted under the Australian Consumer Law. In particular, this review contemplates the nature and operation of Section 18 of the Australian Competition and Consumer Act 2010 (previously section 52 of the Trade Practices Act (Cth) 1974) – which prohibits misleading or deceptive conduct by corporations.

The role of the ACCC will be examined.

Reading:

Gibson & Fraser Chapters 16 & 17

Pengilley (2005) “When silence in negotiations is misleading”, Law Society Journal, July, page 183 [BRING A HARD COPY OF THIS CASE TO Session 6]

Pengilley (2005) “How Not to be Misleading or Deceptive in pre-contractual Negotiations”, Law Society Journal, September, page 187 [BRING A HARD COPY OF THIS CASE TO Session 6]

Terry & Gamertsfelder (2003) “When a Computerisation Project goes wrong”, Commercial Law Quarterly 3, page 191 [BRING A HARD COPY OF THIS CASE TO Session 6]   

SESSIONS 7 & 8: CIVIL LIABILITY – NEGLIGENCE

This seminar examines the tort of negligence and in particular addresses the questions:

•              What is a tort?

•              What is the legal meaning of the term ‘negligence’?

•              What factors will give rise to the conclusion that a negligent act or omission has occurred?

Workshop topics:

1.             Reasonable foreseeability

                Tarzan in the nightclub (read Downunder Rock Café)

2.             Causation – common-sense or not? (Read Chappel v Hart)

Reading:

Gibson & Fraser Chapters 4 & 5

McDonald, B. (2003) “The Common Law of Negligence 17”, Commercial Law Quarterly 12 (Materials)

Downunder Rock Café Pty Ltd vs. Roberts [1998] VICSC 101 (28 May 1998) [BRING A HARD COPY OF THIS CASE TO Sessions 7 and 8]

Chappel vs. Hart [1998] 195 CLR 232 [BRING A HARD COPY OF THIS CASE TO Sessions 7 and 8]

These seminars examine tortious liability:

•              Types of damage will be examined

•              Is actual physical injury resulting from another’s negligence necessarily a basis for the recovery of damages? and

•              Pure Economic Loss

Workshop topics:

1.             Economic loss, Caltex Oil case; and

2.             You were careless now I can’t sell my potatoes (Perre v Apand)

Reading:

Perre vs. Apand Pty Ltd [1999] 198 CLR 180 [BRING A HARD COPY OF THIS CASE TO Session 8]   

SESSION 9: BUSINESS STRUCTURES

We now understand the essential legal concepts to undertake a legal analysis of alternative business structures.

We shall examine:

•              Partnership

•              Corporations

•              Joint ventures

•              Franchising

•              Trading trusts

We shall consider each of these forms of business organisation in terms of:

•              Who owns the assets of the business?

•              Who bears the risks?

•              How are profits distributed?

•              What legal obligations bind the participants?

•              What reasons (other than tax planning) influence the choice of business structure?

We shall also consider business relationships:

•              Agency

•              Employee/Contractor

Workshop questions:

1. Beau and Dave decide to set up in business together as second hand car dealers. How many ways could they structure their business? What factors would influence their choice of structure?

Discussion question:

James Hardie case, and

Corporate Social Responsibility

Reading:

Gibson & Fraser Chapters 21, 29 & 20

Redmond, P. (2000) Companies and Securities Law Commentary and Materials 3rd Edition, Chapter 1, Partnership pp. 1 – 27 (Materials)

Lipton & Herzberg (2001) Understanding Company Law 10th Edition, Chapter 2, pp. 25 – 60 (Materials)

Dal Pont & Chalmers (2000) Equity and Trusts in Australia and New Zealand 2nd Edition, LBC Information Services, Sydney, Chapter 15 “The Nature of A Trust”

RWG Management Ltd v CAC (1984) 9 ACLR 739 (Materials)

Alternative Dispute Resolution

Students will also consider ADR and its importance in business   

SESSION 10: CORPORATE GOVERNANCE

This seminar outlines the system of federal regulation of corporate activity, and focuses on the duties and responsibilities imposed on directors of Australian corporations by both common law and legislation. The discussion in this seminar will focus on cases of corporate misconduct.

Workshop question:

You are a director of Cyberspace Ltd, a company which develops and markets business and educational software. Cyberspace is a public company. You hold a 2% shareholding and you are one of five executive directors. Because of your industry expertise you have been invited onto the Board of directors of a newly formed company, Intelligence Pty Ltd, which is planning to develop and market recreational computer games. Intelligence is not related in any way to Cyberspace.

Can you accept this directorship? If not, why not? If so, what legal risks should you be aware of?

Reading:

Gibson & Fraser Chapters 31, 30 & 18

Tomasic, Bottomley & McQueen (2002) Corporations Law in Australia, 2th Edition, Federation, Chapter 14

Additional references:

Lipton & Herzberg (2001) Understanding Company Law, 10th Editon, Lawbook Co

Leadership: The unit develops skills required of leaders with respect to the synthesis of a wide array of legal information in order to make well-informed, legally compliant and strategic decisions.

Global mindset: The unit enhances the ability to assess the implications of legal and managerial decisions from a whole of entity perspective, across a wide spectrum of stakeholders, and recognition of the variation in legal systems globally.

Citizenship: The unit outlines the hidden linkages between issues such as personal ethical choice and legal consequences, economic efficiency and community perception, and the links through the legal system between collective moral perception and the impact of law on business.

Creating sustainable value: The unit encourages the adoption of a forward-looking perspective on the impact of managerial decisions on the financial position, performance and legal obligations of the entity.

The interactive environment of the classroom is central to the MGSM experience. Students are required to attend the full duration of all classes for the units in which they are enrolled. We recognise that exceptional circumstances may occur, such as unavoidable travel on behalf of your organization or the serious illness or injury of you or a close family member. Special consideration may be given for a maximum of 20% non-attendance for such circumstances as long as lecturers are contacted in advance, and supporting documentation provided, to request exemption from attendance. Failure to abide by these conditions may result in automatic withdrawal, with academic and/or financial penalty. The full Student Attendance Requirement is published in the MGSM Student Handbook at https://students.mgsm.edu.au/handbook

The content of this unit is provided for educational purposes only and no decision should be made based on the material without obtaining independent professional advice relating to the particular circumstances involved.