Fundamentals of Business Law Notes
This is a foundation Law subject. It covers a broad range of core LLB topics drawn
from the traditional areas such as legal history, contracts, corporation law, tort law
and consumer protection law. This subject imparts a risk management or proactive
approach to law. This differs from the reactive and crisis management approach
which used to be taught in the olden days (e.g. two decades ago). This subject is
designed for law and business students.
Risk management is the process of reducing foreseeable harm to stakeholders.
Legal liability is the state of being responsible or accountable for something within
the legal framework.
Proactive- controlling or managing a risk rather than responding to it afterwards. This
approach helps get the right outcomes.
How do you read a law textbook/ make notes?
I read the chapter summary for each chapter. Then I skim read the introduction/ topic
sentences, key buzz words (definitions), read the chapter summary again, read the
textbook/ tutorial questions and highlight the key points.
Then I read the textbook's highlighted points and chapter summary. I write the chapter
summary into my notebook and use the textbook/ tutorial questions as the framework
for forming my notes.
I got HD in a law subject the way I did it was:
Aim to do all the textbook, tutorial, online and past paper questions
-go to all the lectures and tutorials
-make notes
-Aim to read the textbook and cases
-do the law assignment
- share notes/ network with other students
-work eight weeks ahead of the class
-have plenty of times for revision before the exams and consistently revise throughout
the semester.
- I did one subject each semester, for my weekly schedule I would do 3 days of
reading the textbook/ making notes and 4 days of doing questions.
-aim to get 100 per cent (I got 85 per cent in Business Law and Ethics).
Law is hard. You have to work hard and you have to work smart. There are a select
few in each cohort that are made for the law and the law is made for them. Generally,
those that are 'suited', if there's such a thing, to the law possess acute analytical skills,
think quickly, respond well to stress, and have a comprehensive conceptual
framework of law.(they model themselves on the best) Those are some of the
characteristics of those that I've met who are excellent in the law.
Chapter One: Law and Ethics
Terminology: Understanding the language (vocabulary) of the legal system.
Accused- A person formally charged with having committed a criminal offence.
Bicameral- consisting of two houses.
Bill- a document that if approved by parliament, will become an Act of Parliament.
Common law- law that is made by the courts via decisions of judges.
Constitution- an Act of Parliament that created our federal system.
Defendant- the person against whom legal action is brought.
Delegated legislation- legislation made by a body that has been given law making
powers by parliament.
Equity
Government- the political party (such as the Australian Labor Party or the Coalition
for the Federal Parliament; the New South Wales Labor Party or the New South
Wales Coalition for the NSW state Parliament) which has the majority of the seats in
the lower house.
1.Define regulation.
Regulation- rule of conduct.
2. Give two explanations of law.
Law is the rules for the condition of society brought about by their observance. The
study of such rules- jurisprudence.
3. Distinguish rules from laws.
Rules are code of conduct established by an organisation or institution. For example
in cricket if the bowler bowls out the batsmen then the batsmen has to leave the field
of play. The above statement is a rule and not a law because it is not set by the
government but is set by the sporting organisation. However, if a company director
commits insider trading or insolvent trading then they are punished under the
Corporations Act 2001 (Commonwealth) with criminal sanctions. Laws are
regulations emanating from government and applicable to people via legislation,
custom and policies recognised and enforced by judicial decision. There are three
questions that determine laws from rules.
-
Where does the rule come from?
Who enforces the rule?
What is the punishment for breaking the rule?
Laws are derived from Acts of Parliament (statute law) or common law (judge made
law). Business Law end users are those engaged in the world of business, the quality
of life of which is aided by primary sources of law e.g. employer, employee,
consumer, agent or principal.
The legal system comprises a number of institutions such as courts, correctional
services and Parliament.
Why do we need law?
We need law to provide a complex system of social control, regulating conduct,
source of protection, provides rules for governing relationships and provides the glue
for a civilised society. If we didn’t have law in Australia we would be living under
anarchy, social instability and total chaos, tantamount to Somalia.
Civil Law
- disputes between individuals (private law)
- Plaintiff sues defendant e.g. Rabin v Abbott
- Balance of probabilities
- Damages, injunction, specific performance and rescission
- Contract, tort, property, trust
Criminal Law
- offences against the state
- Prosecutor prosecutes the defendant
- R (crown) v Butler
- Beyond reasonable doubt
- Imprisonment, fine, community order
- Murder, manslaughter, theft, tax evasion, money laundering and terrorism.
Public law (relationships between the state and its citizens i.e. constitutional,
administrative and criminal) and private law (rights and duties of individuals to each
other i.e. contract, tort, property and trust.
The rule of law as prescribed by Dicey is a society where there was no one above the
law and there was punishment only for conduct which the law made illegal.
The schools of jurisprudence include:
1. Natural law
2. The Positivists
3. Pure Theory of Law
4. Neo Analytical
5. American Realists
6. Feminist Legal Theory
The premise of natural law is that there enduring principles to which any law made
by humankind must be subject i.e. to survive and procreate.
Plato in Republic set out a mould for a perfect society. The building block of this
society was a law state where rulers administer justice impartially as servants of the
law.
In Summa Theologica St Thomas Aquinas divided law into four categories which he
called eternal, natural, divine and human.
Thomas Hobbes in Leviathan stated that in his natural state man lived in anarchy in
which life was solitary and nasty. Thus some sort of order was necessary to ensure
mans self preservation and it was the law and government which guaranteed this.
John Locke believed that man had not lived in anarchy, but in idyllic existence.
However, the problem was that property was insecure. In order to secure this property
man gave up his idyllic existence and entered into a contract with a sovereign to
protect it.
In the Social Contract Jean Jacques Roseau pointed out that “man is born free but
every where he is in chains.” The pre existing state of man whilst idyllic did not
enable man to reach his potential while contemporary society also denied this
opportunity. As a result the only way this potential could be realised was by the
surrender of the individual to the community as a whole- the “general will.”
In Natural Law and Natural Rights Finnis returns to the ideas expressed by Aristotle
namely man’s aspirations stem from nature and this nature leads him to desire what is
good. A) Life- capacity for man to use his potential. B) Knowledge- which is good in
itself but acts as an aid to life. C) Practical reasonableness- ability to conduct oneself
by a reasonable thought process.
Positivists
‘Jurisprudence is concerned with positive laws strictly so called without regard to
their goodness or badness’
Every positive law is set by a supreme ruler to people in a state of subjection to its
author. The reason is that it is only the supreme ruler who can issue a command which
can be subject to a sanction for disobedience.
Pure Theory
Pure Theory of Law is exclusively concerned with the accurate definition of its
subject matter. It seeks to answer the question what is law? But not the question what
ought it to be? It is a science and not a politics of law.
Neo- Analytical
The most prominent general feature of the law at all times and places are that its
existence means that certain types of conduct are no longer optional but mandatory.
American Realists
The life of the law has not been logic, it has been experience. The prevalent moral and
political theories, intuitions of public policy, even the prejudices which judges share
with their fellow humans has a great deal more to do than the syllogism in
determining the rules by which society is governed.
Karl Lewin- law had to be shaped to fit the needs of society.
Roscoe Pound- Law was a mechanism for balancing conflicting interests with the
maximum of existing wants relative to the minimum friction.
Feminist Legal Theory
Liberal Feminism- women are as rational as men and are entitled to make the same
choices because liberal philosophy holds that rights are gender neutral e.g. Mary
Wollstonecraft. Thus it is vital rid the law of all barriers that prevent women from
enjoying those rights on an equal basis with men.
Radical Feminism- men dominate women and this has contributed to the notion of
female inequality. A particular result of this domination is the depersonalisation of
women to mere objects.
Cultural Feminism- Carol Gilligan said there is a difference between men and women
and that women have a particular moral voice arising from their role as carers and
nurturers and that equality would recognise the difference between men and women.
Post-modern Feminism- Drusilla Cornell argues that there is no unitary women’s
point of view, but rather a multitude of possibilities applicable to women in certain
circumstances.
Law and Justice
Justice is the fitness of the purpose of society i.e. to live with fairness, economic
prosperity and with security. John Rawls in a Theory of Justice argues that justice
contains two cardinal principles:
1) Each person has equal right to basic liberties that are compatible with liberties of
others.
2) Social and economic inequalities should be arranged so that they are advantageous
as possible to the most disadvantaged.
Robert Nozik in Anarchy, State and Utopia develops a theory of entitlements
(acquisition, transfer, transaction and rectification) and states that there is no role for
promoting social welfare.
Ethical Dimensions of Business
What is Ethics?
Ethics is a system encapsulating geo-political moral values, beliefs and acting in the
best interests of the society that sustains us.
Geo-political Liberalism effects on ethical development.
What is Liberalism?
Liberalism is the theory that states that rational beings will pursue the good life to
maximise pleasure.
Economic Neo-Liberalism
The free market model is an economic system that upholds the autonomous nature of
economic order, believing that the government should interfere as little as possible in
the direction of economic affairs. It extols the virtue of money and markets as the
most efficient and thus rational organising principle for organising society.
What is Welfare Liberalism?
Welfare Liberalism is a middle ground version that hovers between free market theory
and socialism. It seeks to ameliorate the harsh offshoots of capitalism e.g.
unemployment, inflation, economic poverty of the kind created by mismanaged
economic institutions. The invisible hand i.e. market mechanism has a number of
flaws that cannot be corrected by the minimal regulatory role proposed by Adam
Smith.
What is Utilitarianism?
The purest form of individualism stating that the happiness, usefulness and
satisfaction conduct should be directed to promoting the greatest happiness to the
greatest number of persons.
Chapter two: Australian Sources of Law
English Legal History
The Common law originated in 1066, with the Norman Conquest of England. In order
to consolidate his position, William appointed a number of judges and sent them to
hold courts around the country in uniform system of Law.
In 1258, the Provisions of Oxford resulted in the common law losing much of its
flexibility by providing among other things, if the facts in issue did not fit a standard
form of writ, the action could fail.
Australian Legal History
As a convict settlement in what was considered unoccupied land, English law was to
apply under the Doctrine of Reception. The high court decision in Mabo resulted in
the high court deciding that Aust had been acquired by settlement and that Australia
wasn’t Terra Nullius at the time of settlement. This meant that Indigenous people had
rights to native title under the common law.
The Colonial Laws Validity Act 1865 (UK) established the right of colonies to:
-amend their constitutions
-enact law without applying English law to Australian law.
The Australia Act 1986 repealed the Colonial Laws Validity Act and removed the
right of appeal of state courts to the Privy Council.
The Australian Constitution
The Commonwealth of Australia Constitution Act 1900 (UK) transformed the
colonies into states creating bi-cameral federal and state system of government based
on the Westminster model and making Australia a dominion.
Specific powers were granted exclusively to the federal Parliament under the
Constitution with the bulk of powers shared between the Commonwealth and states
concurrently (s 51) and the remaining powers vested with the states (residual powers).
The Act also established High Court of Australia. Under the constitution three powers
could be identified:
-Exclusive- only the Commonwealth can legislation e.g. defence and customs.
-Concurrent- forming the bulk of federal powers, with both the Commonwealth and
states having the power to legislation in these areas e.g. education and health.
-Residual- powers exclusive to the states as the Constitution is silent on particular
areas e.g. transport.
The doctrine of separation of powers prevents each constitutional institution from
encroaching on the powers of the other:
-Legislative- enactment of law (Queen, House of Reps and Senate)
-Executive- formulation of policy and its administration in cabinet (Governor
General and State Governor)
Judicial- interpretation and enforcement of the law (High Court and Federal Courts).
Chapter three: Legal Literacy for the lawyer /
business professional
Terminology: Understanding the language (vocabulary) of the legal system.
House of Representatives- lower house of Parliament in Australian federal political
system.
Senate- the upper house (house of review) of Parliament in Australian federal political
system.
Minister- the Member of Parliament (MP) or Senator responsible for a key
government portfolio e.g. Minister for Education and Workplace Relations, Minister
for Finance, Minister for Immigration, Minister for Environment, Minister for Health,
Minister for Transport, Minister for Foreign Affairs, Minister for Home Affairs,
Attorney General and Treasurer.
The court system at both federal and state levels is hierarchical in form. The High
Court of Australia is Australia’s highest court with both original and appellate
jurisdiction under the federal system and is the final court for the states. In the federal
system, below the High Court is the Full Court of the Federal Court (which has
appellate jurisdiction only and hears from both the Federal Court and from state
Supreme Courts). The hierarchy of courts provides a system of appeals via which
disgruntled litigants may appeal a decision of a lower court to a higher court to have
the matter reconsidered, allows different of hearing due to the gravity of the case and
is instrumental in the building up of precedent.
There are four processes for Alternative Dispute Resolution:
- Negotiation- voluntary/ confidential discussion between the parties with or
without a third party.
-
-
Mediation- voluntary confidential negotiation process with a mediator.
Conciliation- similar to mediation but the conciliator plays a more active role
in getting an outcome) and expert determination (an independent witness to
assist the parties on some disputed issue of fact / law).
-Adjudication- who can force an outcome or commercial arbitration (where
and arbitrator is chosen by the parties to settle a dispute by making an award.
Solicitors’ conveyance/ draft documents and give advice on commercial matters.
Barristers give opinions to clients on facts presented to them, setting out the relevant
law and indicating the likely result of any action, represent clients in court.
Ratio decidendi – reason for the decision. Obiter dictum (sayings) statements which a
judge may make in the course of judgement that don’t form part of the matters at issue
The doctrine of precedent – an established legal principle in a case will be upheld in
future cases with similar facts. The reasoning in reported decisions within the same
court hierarchy must be followed where the facts are similar (binding precedent).
Decisions outside their court hierarchy may be followed if the court can be persuaded
that it represents a better/ more modern development of the law (persuasive
precedent).
How a Bill becomes an Act of Parliament.
Presentation for first reading in the House of Representatives, second reading
(Parliamentary Minister outlines purpose of the debate adjourned on a motion to
enable Members to study the provisions of the Bill, and when debate is resumed, is on
broad principles involved), Committee (Second reading), third reading (usually
passed without further discussion), transmission to the Senate (Bill passes same stages
as the lower house), Royal Assent by the Governor General.
Chapter four: Structuring your business
Companies are regulated by the Corporations Act 2001 (Cwlth), which includes
codified common law principles. The Corporation law is administered by the
Australian Securities and Investments Commission (ASIC) to investigate enforce and
survey.
A company is a distinct legal entity separate from its shareholders.
It has:
-Limited liability- shareholders liability for the debts of the company is limited to the
amount invested on those shares (Salomon v Salomon and Co Ltd {1897}).
-Perpetual succession- company continues to exist and retains character, rights and
duties
-Right to sue and be sued- institute and defend legal proceedings in its own name.
- Right to hold property- avoid issues in a partnership as to who owns what assets
Courts may lift the ‘veil of incorporation’ and give rights and duties to parties who
would not otherwise have jurisdiction to do so e.g. a company which had been created
to facilitate a fraud e.g. Green v Bestobell Industries Pty Ltd.
Directors – a director is a manager of a company. The shareholders elect directors.
Directors’ duties:
-Contractual- expressed and implied terms relating to their duties including duty of
care.
-Equity- good faith, proper purpose, exercise discretion and conflicts of interest
-Tortious- liable in negligence for breach of duty of care and diligence to the
company.
-Statutory-the Corporations Act 2001 (Commonwealth) adopted the common law
fiduciary duties of directors (s180-184) including:
- Exercise due care and diligence s 180 (1)
- Business Judgement Rule s 180(2) - act in the best interests of the company.
- Act in good faith (s181) – (act in loyalty, trust and mutual obligation)
- Not to make improper use of their position (s 182)
- Not to make improper use of company information to gain advantage for themselves
or someone else.
- Not to act recklessly and intentionally dishonest (Criminal liability s 184).
Case Studies
ASIC v Gallagher:
-Non Executive Directors had a duty to inform themselves so that they can make
independent judgements.
-Inquiries they were expected to make depend on the extent they were put on inquiry.
- An ordinary person with the knowledge and experience of a director might have
been expected to do if acting on that behalf.
The test for a large proprietary company is one which satisfies any two of the
following:
-has gross operating revenue of more than $25 million for the financial year
-has gross assets of more than $12.5 million at the end of the financial year.
- 50 or more full time employees at the end of the financial year.
A partnership involves carrying on a business (trade, occupation or profession) in
common (on behalf) with a view to profit (excludes social organisations).
A partnership includes:
-intention
-agency
-sharing of profits and losses
-management of the business
Duties in a partnership include:
-Render true account- accurate account of all their dealings on behalf of the firm.
-Account for private profits
Joint venture
Chapter Five: Contract Law Part 1 (the Keystone of
Business Relationships)
A contract is a legally binding agreement. An agreement is not binding because it
lacks one or more of the six prerequisites for a legally binding contract. A simple
contract has intention, agreement and consideration; legal capacity genuine consent
and legality of objects. A formal contract is signed, sealed and delivered and gets its
validity from form alone (doesn’t need consideration). A simple contract requires no
formalities but the presence of all six elements (including consideration) which may
be oral or written.
Certain simple contracts, to be valid and enforceable are required to be wholly in
writing. If they are not they are void, for example bills of exchange, cheques, hire
purchase contracts, real estate (conveyancing) contracts.
Classification of Contracts (PEPF)
-Promise –bilateral (promise for a promise) or unilateral (a promise for an act).
-Enforceability- voidable (only the injured party can enforce the contract/ rescind),
void (the contract never got a life).
-Performance- executed (performed at the time of making), executory (both parties
still have duties to perform)
- Formation- expressly (oral or in writing), impliedly (conduct or actions of the
parties, quasi contracts (an agreement imposed by law), formal (special form that
doesn’t require consideration to be valid), simple (no special form but must have
consideration present).
There are to parties to a contract; the offeror (makes offer) and the offeree (accepts
offer).
New Circumstance Contingency for Contract Law
The decision in Ermogenous shows that simply applying the presumptions is no
longer the appropriate test for determining intention. Now intention is determined by
considering the relevant conduct, context and relationships between the parties in an
objective test.
Old and traditional assumptions for Contract Law
A commercial agreement is where the courts assume that unless the contrary can be
shown the parties usually intend to create legal relations.
Letter of comfort- an undertaking to maintain the financial commitment of a
subsidiary meets its debts or an acknowledgement by the parent company that a
subsidiary has entered into a contract. Letters of comfort don’t always create legally
binding duties and are to be judged on its merit. In Kleinwort the English Court of
Appeal held that the letter of comfort that the parties entered into was not a promise to
pay but in Banque Brussels Lambert SA v Australian National Industries, the NSW
Supreme Court held a letter containing a similar clause was legally binding.
Balfour v Balfour- the agreement was a domestic agreement because the parties
decided that the parties should not be attended by legal consequences.
Teen Ranch v Brown- there was no intention to create legal relations by the parties
and so no contract of employment existed. Brown’s work was voluntary and thus was
not entitled to workers compensation.
Masters v Cameron- the agreement was not in its final form as it had to be accepted
by Cameron’s solicitor. Thus there was no intention to be bound.
Trevey v Grubb- the nature of the agreement between the parties was such that they
might contemplate enforcement in the event of them winning.
The agreement goes to the heart of contract because unless there is an agreement there
is no contract. Agreement is the culmination of the negotiation process between the
parties. Traditionally agreement arises when there is an offer and acceptance between
at least two parties. The other method that a court may use is a global approach of
correspondence between the parties via their conduct on all vital terms (e.g. Gibson v
Manchester City Council as well as Clarke v Earl of Dunraven -the Satanita case).
The Satanita [1897] is an English contract law case, in the Court of Appeal, which
concerned the formation of a contract. It is notable because it stands as an example of
a case which does not fit the typical pattern of offer and acceptance that English law
purports to require to find agreement.
The Court of Appeal held that there was a contract for the owner of The Satanita to
pay Lord Dunraven compensation. Lord Esher MR held that a contract had been
formed, since "one of the conditions is, that if you do sail for one of such prizes you
must enter into an obligation with the owners of the yachts who are competing, which
they at the same time enter into similarly with you… If that is so, then when they do
sail, and not till then, that relation is immediately formed between the yacht owners".
Lopes LJ agreed that there was a contract.
“
Probably a contract with the committee in certain cases, but also a
contract between the owners of the competing yachts amongst themselves,
and that contract was an undertaking that the owners of one competing
yacht would pay the owner of any other competing yacht injured by his
yacht all the damages arising from any infringement or disobedience of
the rules.
”
Rigby LJ said that,
“
all that is necessary to constitute a contract between the yacht owners is to bring
home to each of them the knowledge that the race is to be run under the Yacht
Racing Association rules, and that they, the one and the other, deliberately enter
for the race upon those terms… The contract did not arise with any one, other
than the managing committee, at the moment that the yacht owner signed the
document, which it was necessary to sign in order to be a competitor. But when
the owner of the Satanita on the one hand, and the owner of the Valkyrie on the
other, actually came forward and beceame competitors upon those terms, I think
it would be idle to say there was not then, and thereby, a contract between them,
provided always that there is something in the rule which points to a bargain
between the owners of yachts.
Promisor- making the promise.
One who makes a promise. The promisor is bound to fulfill his promise, unless when it
is contrary to law, as a promise to steal or to commit an assault and battery; when the
fulfilment is prevented by the act of God, as where one has agreed to teach another
drawing and he loses his sight, so that he cannot teach it; when the promisee prevents
the promisor from doing what he agreed to do; when the promisor has been
discharged from his promise by the promisee, when the promise, has been made
without a sufficient consideration; and, perhaps, in some other cases, the duties of the
promisor are at an end.
Promisee- receiving the promise.
Chapter six: Contract Law Part 2 (3 C’s and L)
Consideration- something each party gives in exchange for the return promise or
performance by the other party. It is the price you pay to buy the other person’s
promise. The rules of consideration are:
- should be present or future but not past ( Roscorla v Thomas)
- Must move from the promisee- it need not move to the promisor eg. Agent
such as the eldest son.
- Must be valuable- question of adequacy not concern for the courts (Chappel v
Nestle).
- Must be something more than the promise of an existing duty- e.g. subpoena
compelling a person to give evidence in court. (Glasbrook v Glamorgan) (Stilk
v Myrick) (Hartley v Ponsonby) (Will v Roffey).
-
Must be possible of performance
Must be definite.
Must be legal i.e. not moral (Eastwood v Kenyon).
The Minors (Property and Contracts) Act 1970 (New South Wales) makes infants
liable in contract, provided they have the ability to understand what they are getting
themselves into and at the time of contracting it was for their benefit. Under the Act a
contract is either valid or void. The courts are empowered to ensure equity between
the parties in relation to all civil acts by infants. This includes returning the parties to
their original positions where possible and where this is not possible, making
appropriate orders for restitution of benefits.
-
Necessaries- essential for the reasonable comfort of an infant, as well as food,
clothing and shelter.
Contracts for service.
Civil act- relating to the contractual/ proprietary rights or duties and include both
contract and property. The civil act of minors is assessed by whether:
- For the benefit of the infant determined by age, type of transaction and
fairness of the bargain.
- Infant understands the nature of the act.
An act is presumptively binding if:
- For the infants benefit
- Acquisition of property where consideration received was not excessive.
- Consideration was not exceeding $10, 000 in Local Court, 100, 000 in District
Court or any amount in the Supreme Court if the court is satisfied is for the
infant’s benefit.
- Supreme Court has granted infant legal capacity.
- A ‘reasonable gift.’
A person who is mentally ill/ intoxicated can establish they did not understand what
they were doing at the time of contracting and that the other person was aware of their
disability, the contract can be set aside at the option of the mentally ill/ intoxicated
person.
A company is an artificial legal person. The contractual capacity of a corporation is
exercised through the individuals who have the company’s express/ implied authority
and are acting on behalf of the company -Corporations Act 2001 (Commonwealth)
Section 126.
As a general rule bankrupts can still contract, but their contractual capacity is
restricted under the Bankruptcy Act 1966 (Commonwealth):
- Property can only be acquired if it is for the benefit of creditors.
- Company directorship/ management roles are not allowed.
-
A $3000 or more acquisition in credit must be disclosed by the fact that the
bankrupt is undischarged.
If a party has entered into a contract based on a mistake, misrepresentation, duress and
undue influence, or there is unconscionable conduct by one party as a result of their
superior bargaining position, there is no genuine consent.
The courts are reluctant to strike down a contract just because of mistake, but if
mistake is established, the contact is void in the case of common and mutual mistake,
but in the case of unilateral mistake depending on circumstances the contract may be
declared void or voidable. Common mistake involves agreement that there is common
error as to the existence/ identity of the subject matter e.g. a contract to sell goods
which unknown to the parties have been destroyed prior to the contract being made.
Mutual mistake
Chapter seven: Contract Law Part 3 (Content and
Catastrophe)
Chapter eight: Consumer and Competition Law
Chapter Nine: Tort Law
Negligence- a person is liable for harm that is a foreseeable consequence of their
actions i.e. a failure to exercise due care/ skill. It is the omission to do something
which a reasonable person would do. The injured party establish on the balance of
probabilities that the defendant owed a duty of care, breach of the duty of care and as
a result they suffered actual loss/ damage. The duty owed by the defendant to the
plaintiff is on the relationship between them i.e. foreseeable risk of injury is
established by the satisfaction of the judge in a foreseeability test which looks at if
there was a vulnerability/ dependency relationship between the defendant/ plaintiff
and policy considerations. Determining duty of care involves a two step test- it was
foreseeable (s 5B (1) Civil Liability Act 2002 (NSW))
Damages may to be property, person and economic interests. Furthermore, a two step
test of actual damages- to the plaintiff ‘directly caused’ by the defendant’s breach of
care (causation) and the defendant reasonably predicted that kind of loss (remoteness).
Chapter ten: Fairness and Ethics in Business
Relationships
Chapter eleven: Insurance and Agency Law (Risk
Management)
Chapter twelve: International Business LAW
The international legal system consists of civil legal system and common legal
system. The civil legal system is the legal regime that operates in Europe and
countries colonised by European powers (except England) and reforming states (e.g.
Turkey, Indonesia, Thailand and Iraq). This system stems from Roman law and the
twelve tables of 450 BC. The French Civil Code is easy to read e.g. tort is described
in five articles in the civil code. Every act of man and damage must be rectified by
that person. The German Civil Code (BGB) is addressed to the professional lawyer, it
eschews comprehensibility adopts abstract conceptual language.
Islamic Law (Sharia) applies in the Islamic world and has four sources:
-Koran (holy book)
-Sunna (scholars C19th)
-Ijma (C10th)
-Kiyas- judges must apply the above three
International Contracts and Torts- can the party be sued in Australian courts
(Jurisdiction), what rules will the court apply to resolve the dispute (choice of law
rules), can foreign courts decision be enforced in Australia (recognition and
enforcement). Relevant legislation e.g. Carriage of Goods by Sea Act 1991 (Cth) and
International Sale of Goods outlined in the Sale of Goods (Vienna Convention) Act
1986 (NSW). China New Zealand and the United States of America have signed the
Convention; whilst the UK, Japan, Indonesia and Malaysia. The convention says a
contact is formed when the mechanism to buy or sell goods is accepted (Article 23)
and does not need consideration. An offer is a proposal addressed to specific persons
indicating or intention to be bound (Article 14 (i)).
Chapter thirteen: Fundamentals of Business Law
Revision