1. Misleading or Deceptive Conduct
2. Unconscionable Conduct
3. Business Structures other than Companies
Section 18 of the ACL
Section 20-22 of the ACL
Partnership Act 1891 (SA)
Definition: A person should not, in trade or commerce,
engage in conduct that is misleading or deceptive or likely to
mislead or deceive
Definition: Conduct which is harsh that goes against good
conscience. Businesses must not engage in unconscionable
conduct when dealing with other businesses and their
customers
Definition: Partnership is the relation subsists
between persons carrying on a business in common
with a view of profit
Elements:
-A ‘person’ must not
-In ‘trade or commerce’
-Engage in ‘conduct’
-That is ‘misleading or deceptive’ or is likely to mislead
or deceive
Elements: (Requirements)
-The weaker party was under a special disadvantage in
comparison to the stronger party
-The stronger party was aware of the special
disadvantage
-The stronger party unfairly took advantage of the
weaker party’s special disability to obtain advantage
Commercial Bank of Australia v Amadio (1983) 151 CLR
447
Elements: (Partnership)
- ‘Carrying on a business’
- ‘In common’
- ‘With a view to profit’
Concrete Constructions Group Pty Ltd v Nelson (1990) 92
ALR 155
Common Law Principles: (any of these aspects
may indicate the existence of a partnership)
Intention, Agency, Sharing of profits and losses
Sole Trader Advantages: Formation, Control,
Profits, Taxation, Private, Dissolution
Sole Trader Disadvantages: Risk, Unlimited liability
for debts, Management, Expertise, Capital, Taxation,
Continuity of business
Statements that go beyound mere ‘puff’
(false statements)
Remidies for a breach of section 18:
-Injunctions
-Damages
A person may seek damages for loss or damage
suffered because of a breach of ACL
Remidies for a breach of section 20/22:
-Injunctions
-Damages
-Compensation
-Fiduciary Duty means partners must act in good
faith in the best interest of the partnership
Joint Venture Advantages: Formation, Privacy, No
agency relationship
Joint Venture Disadvantages: Not a separate legal
entity, Risk, Lack of trust
4. Company Law
5. Negligence
Corporations Act 2001 (Cth), Section 124 Corporations Act
Civil liability Act 2002
Definition: Company law is the body of law governing the right, relations, and
conduct of persons, companies, organisations and businesses.
When the veil can be lifted:
Gilford Motor Co Td v Horne [1933] Ch 935
-Section 588G – Director’s duty to prevent isolating trade
-Section 588FB – Uncommercial transactions
-Section 596AC – Directors are given liability and must compensate for loss
Salomon v A Salomon & Co Ltd [1897] AC 22
Proprietary Company Key Features:
-No more than 50 non-employee shareholders – section 133(1)
-Must not engage in public fundraising – section 133(3)
-Must have ‘Pty’ or ‘Proprietary in its name – section 148(2)
-Must have at least one member/shareholder (owner) – section 114
-Must have at least one director - section 201A
Small Proprietary criteria:
-Revenue for each financial year must be less than $50 million
-Consolidated gross assets at the end of financial year must be less than $25 million
-It employees less than 100 full time employees
Large Proprietary
-Revenue for each financial year must be more than $50 million
-Consolidated gross assets at the end of financial year must be more than $25 million
-It employees more than 100 full time employees
Public Company Key features:
-May seek capital directly from the public
-May be incorporated with only one member/shareholder (owner) – no maximum
-Must have a minimum of three directors (two must be in Australia
Definition: The type of a behaviour by an individual, in the form of an act
or omission not authorised by law, that causes loss, damage or injury to
another individual, their property, business or economic interests
When would tort happen in business?
- A loss-making event
-Damage happens
E.g., Liebeck v McDonalds
Lochgelly Iron and Coal v M’Mullan [1934]
Types of tort actions
Liability for the breach of duty to take responsible care (negligence)
-Liability arising of occupation or possession of property (nuisance)
-Direct interferences with the person property or goods of another
(trespass)
Tort Law v Criminal Law
Remoteness (the scope of liability)
-Were the actions of the defendant real (and not far-fetched) and effective
causes of the loss
- Damage suffered fell in the scope of foreseeability or was it too remote
General Rule: A company’s debts are its own and no one else.
Damage (did the plaintiff suffer harm?) e.g. Economic (loss of sales), to
property, to the person (physical injury, mental/psychological)
Defences: Section 46 if the injured person was intoxicated.
‘Veil of incorporation’ The veil separates the company from its members and
directors of other companies. Once incorporated courts don’t usually look behind the
veil to inquire who controls it.
Breach: (What standard of care is required by the defendant?
-Civil Liability Act 1936 (SA): Section 31-Standard of Care
1. A person is not negligent in failing to take precautions against a risk of
harm unless…
a. The risk was foreseeable
b. The risk was not significant
c. In the circumstances, a reasonable person in the person’s position
would have taken those precautions.