BSB6003
Business Law
Assessment 2
WS 9
Group 3
Yasmin Sebah
Group report done by:
Student Name
Student ID
Safa Adel Haji Husain
201000097
Amal Shaikh
201001063
Zahra AlQatan
201000388
Marwa Malik
201000472
Zainab Ahmed Mansori
201101069
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Table of Contents
1.0 Introduction ........................................................................................................... 3
2.0 Task 1 .................................................................................................................... 3
2.1 Company's types ................................................................................................. 3
2.2 Free Trade Agreement ......................................................................................... 5
2.2.1 The general benefits for the countries (office of the US trade representative,
2004) ................................................................................................................... 5
2.2.2 The benefits of the FTA for OT ........................................................................ 6
3.0 Task 2 .................................................................................................................... 6
3.1 IP infringement related to the photograph ............................................................. 6
3.2 IP infringement related to the software development .............................................. 6
4.0 Task 3 .................................................................................................................... 8
5.0 References ........................................................................................................... 11
6.0 Appendix .............................................................................................................. 12
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1.0 Introduction
This report was requested by Outlandish Travels management to provide the
company with legal advice for the most suitable type of company, general information about
Free Trade Agreement, Intellectual property and give them an appropriate advice to their
legal cases.
2.0 Task 1
2.1 Company types
Issue: which company form is the most suitable for OT'S expansion plan?
Rule: There are 8 company forms according to the commercial company law incorporated in
the State of Bahrain 2001, Article (2):
1)
General partnership company
2)
Limited partnership company
3)
Association in participation
4)
Joint stock company
5)
Limited partnership By shares
6)
Limited liability company
7)
Single person company
8)
Holding company
Application:
1)
Limited Partnership Company (Adrin, 2010)
A partnership establishes between two or more parties (general parties and sleeping
parties).
-
Advantages:
a)
Limited losses as the “sleeping partners” will be liable to loss only
the money they invested in.
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b)
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The government excludes the Limited Partnerships from the taxes
but the individuals are responsible for their own income.
-
Disadvantages:
a)
Disagreements because each member would like to apply what he
thinks is the best and it may cause a lot of arguments.
b)
The profit will be distributed equally and that may cause conflicts as
some members may work harder than others and at the end they get the
same reward.
2) Limited partnership by shares Company (Business Belgium be, 2010)
A limited partnership by shares has two partners’ categories:

Liable partners for the company’s obligations according to their properties.

Sleeping partners which they are only liable to the amount of the shares that
they own in the capital.
-
Advantages:
a) Partners are only labile to the extent of their shares only.
b) The shares ownership could be transferred to others; this is suitable for
parents that are looking for long term investment and something to inherent their
children.
-
Disadvantages:
a) Management partners are fully liable towards the liabilities of the company,
in case of any loss partners may lose any personal belongings as well.
b) A high amount has to be raised for the capital because the capital for these
businesses is high.
3)
Limited liability Company (Adrin, 2010)
The number of partners in Limited Liability Company is between "2-50" and each of
them shall only be liable to the extent of his share in the capital.
-
Advantages:
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a)
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The company has Separate Entity from the owner. As a result, the
company will carry on and exist beyond the life of the members which gives
the employees the feeling of security that they will have their job.
b)
Shareholders will be only liable to the company according to their
investment.
a)
Disadvantages:
Complex and restrictive rules that the company should follow. For example,
they should provide their balance sheet to the Government. This will be time
consuming and expensive.
b)
Setting up a limited liability company costs a lot and there are restricted
rules regarding the capital.
Conclusion: It is recommended that OT forms as a limited partnership by shares, it
will be divided into sleeping partners that have limited liabilities (parents), and
general partners that are holding the management of the OT (son and daughter) the
general partners have unlimited liabilities, it was suggested because the general
partners are making all the decisions for the company, and as the company is a
family business they might need partners to invest the money with them but do not
interfere in the management of the company. Moreover, these forms of companies
are covered by the FTA which OT will benefit from if it is thinking of operating in
USA.
2.2 Free Trade Agreement
The Free Trade Agreement is a contract between United States and Kingdom of
Bahrain to allow both parties to trade with no barriers. Furthermore, this agreement was in
forced in 2006, the aim of this agreement is to get economic and political advantages.
(Ministry of Finance and National Economy, 2011)
2.2.1 The general benefits for the countries (office of the US trade representative,
2004)

Duty free to the market, the US gives the Bahraini market to access the US market
with 100% duty free access, while the US has 98% duty free access to the Bahraini
market.
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It also provides the security of any intellectual property, and does not allow any
space for infringements. In addition it has set of punishment for any criminal act that
has been taken towards these actions.

It engorges to work toward environment protection; both countries signed
Memorandum of Understanding on Environmental Cooperation, which explains the
rules and regulations.
2.2.2 The benefits of the FTA for OT
OT will benefit from this agreement as it allows the company to expand and have
multi branches, as well as an easy access to the US market. Moreover, it protects the right of
the company such as its trade mark and any creative process and steps to their way of work.
In addition, it protects the company from any criminal acts.
3.0 Task 2
3.1 IP infringement related to the photograph
Issue: Is the freelance photographer Hasan allowed to sell photos of celebrities who have
attended the OT’s event?
Rule: Art 70 (2006).
Application: According to Art.70 the photographer is permitted to publish photos taken in
public events if it doesn’t damage people's reputation. However, if there is an agreement
between the parties to not publish the photos then the photographer is not allowed. In this
case, the photographs weren’t infringe the honor, reputation or standing of the person
concerned and it was a public event were photographs can be published, but both parties
signed a contract stating that these photographs must not be shared elsewhere.
Conclusion: Hasan has breached the contract by selling the photos of the celebrities who
attended the OT’s event to a magazine because they have agreed on not to publish the
photos. So, Hasan is recommended to not publish photos taken in public events if there is a
contract or to refuse signing contracts containing this provision so he becomes free to
publish photos taken in public events.
3.2 IP infringement related to the software development
Issue: Adding a logo to the App start up page which is similar to Apple's logo
Rule:
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1.
(Art. 3. A. a contrario).
2.
(Art. 3, K, L, M, N).
3.
(Art. 46.1).
4.
(Art. 17).
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Application: According to (Art. 3. A. a contrario) the trade mark must be sufficiently
distinctive and not confuse the product with others. Also, according to (art. 3, K, L, M, N) a
trade mark must not be identical/very similar to a previous registered trademark and in this
case Mandi the App designer has used a very similar logo to Apple's logo and not sufficiently
distinctive as people will be confused and might think that this is related to Apple. According
to article (art. 46.1) Apple can sue OT if they are injured from the infringement in order to
cover their losses and gain OT's profit earned after using this similar logo because Apple is a
registered trade mark and it is renewing its registration every 10 years which means that this
logo is owned by Apple (Art.17).
Conclusion: OT is not able to register this logo because it is very similar to Apple's logo and
causes confusion because it is not sufficiently distinctive. As a result, they might be sued by
Apple for a compensation which is similar to the case "Adidas America V Payless Shoesource
(2002) U.S". So, OT is recommended to change their logo and create their own sufficiently
distinctive one which is not similar to other logos and doesn’t cause any confusion.
Issue: Copying computer software by Mandi, one of Science in Synergy ex-employees (firm
specializing in App designs) during 2011 to OT without his ex-employers permission.
Rule:
1.
Art.1 (2004).
2.
Art.8 (2004).
3.
Art. 11.b.1 (2004).
4.
Art. 14 (2006).
Application: According to Art.1.2004 patent protects every invention that is new,
involves an inventive steps and is industrially applicable which is the software designed
by Mandi in his previous position/company in order to market and sell the products and
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according to Art.8.2004 the patent is transferred to the employer (Science in Synergy)
because the invention was made during his course of employment during 2011.
According to (Art. 11.b.1) (2004) the patentee (Science in Synergy) has the right to
prohibit others (Mandi) from using the patented product for sale unless he has
license/permission from the patentee.
Conclusion: Mandi is not allowed to copy his ex-employer's software because the patent
is transferred to (Science in Synergy) and the patentee is entitled the right to prohibitive
him from using it for sale. Also, the patent period is 20 years which proves that the
patent is still valid because the patent was made in 2011. It is recommended that Mandi
design new software which is new, industrial applicable and involves inventive steps or
he can ask for permission from his ex-employer (license).
4.0 Task 3
Issue: Can the wife sue OT for the damages caused by the hair stylist?
Rule: Article 172.
Duty of care: It occurs when there is not a contract and someone has done a negligence act
and caused damages/injuries (1). It was introduced by Lord Atkin "Donoghue v Stevenson,
1932". (2)
Vicarious Liability: Article 172, an employer is responsible for the Tortious act committed by
his employee. (3)
Application:
Duty of care:

Foreseeable: yes because the hair stylist was aware that the product was in
experimental stages and might cause damages.

Proximity: there is a relation between the wife and the stylist as the stylist is
the one who colored the wife’s hair.

Fair: it is fair because the hairstylist knew that the product was still not fit
for use and kept using it.
Duty of care was breached as it was risky to use the product, it caused serious harm and the
stylist was told not to use it. The breach was the reason for the wife's injuries with her scalp.
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Also, the damages were direct consequences of the stylist using an experimental product.
Therefore, the stylist owes the wife duty of care.
However, OT might be liable.
Vicarious liability:

Tort or crime: the stylist did not intend to harm the wife. Therefore, it’s a
tort.

Employee of OT or not: the hair stylist is not an independent contractor but
an employee of OT. Only specialist instructors are independent contractors.

During course of employment: the hair stylist colored the wife’s hair after
the wife had booked for a hair dye at the resort’s saloon. The hair stylist was doing
her obligations as an employee at the saloon. Therefore, it was during course of
employment.
Conclusion: Though duty of care was owed to the wife by the hair stylist, OT would be liable
for the hair stylist tort as she is their employee. She was doing her job and had no intention
to harm the wife. Thus, OT is vicariously liable for the hair stylist and the wife will be able to
sue OT for a compensation of BD250, 000.
Issue: Can the Husband sue OT for his injuries during his free style diving courses where he
was encouraged to dive deeper than the usual by the specialist instructor?
Rule:
Duty of care: when a negligence act caused injury to others. (1)
Vicarious liability: article (172), the master is responsible for any tort committed by his
servant. (3)
Application:
Duty of care

Foreseeable: encouraging the husband to dive 25 meters requires the husband to
hold is breath more than usual. This means that oxygen won’t reach the brain for a
longer period. Therefore, it is foreseeable that it might causes complications.
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Proximity: there is proximity as the specialist instructor was the one who
encouraged the husband to dive deeper.

Fair: it is fair because he encouraged the husband into something that can
have implications on the human body.
There was a breach of duty of care as the risk was foreseeable and it caused vision problems
to the husband. After visiting a consultant, the husband was told that the blackout has
caused irreparable brain damage. Lastly, the injury was not too remote, it could have been
reasonable foreseen and was a direct consequence of the blackout. Thus, the husband is
owed duty of care by the specialist instructor.
Vicarious liability:

Tort or crime: it is a tort as there was no intention to harm the husband

Employee of OT or not: the specialist instructor is an independent contractor
for service. So he is not an employee of the OT.

During course of employment: it doesn’t matter as he is an independent
contractor and not an employee of OT.
Therefore, OT is not liable for the specialist instructor.
Conclusion: Due to the specialist instructor being and independent contractor, OT cannot be
held vicariously liable and cannot be sued by the couple. If the instructor was an employee
of OT, OT would have been liable but could raise the defense of consent. This is because the
husband was aware that the usual dive is 15 meters not 25 meters. On the other hand, the
couple can sue the specialist instructor under duty of care.
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5.0 References
Adrian. (2010). Advantages and Disadvantages of Partnership. Retrieved from
http://blog.thecompanywarehouse.co.uk/2010/03/01/advantages-anddisadvantages-of-partnership/
Adrin. (2010). Advantages and Disadvantages of a Limited Company. Retrieved from
http://blog.thecompanywarehouse.co.uk/2010/02/03/advantages-anddisadvantages-of-a-limited-company/
Business.belgium.be. (2010). Partnership limited by shares (SCA/CVA). Retrieved from
http://business.belgium.be/en/managing_your_business/setting_up_your_business
/comany_types/partnership_limited_by_shares/
Ministry of Finance and National Economy. (2011). Bahrain United States Free Trade
Agreement Retrieved from
http://www.fta.gov.bh/images/UploadFiles/AboutFTA%20_2_.pdf
Office of the United States Trade Representative. (2004).Bahrain Free Trade Agreement Fact
Sheet. Retrieved from
http://www.ustr.gov/webfm_send/2630
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6.0 Appendix
Task 1
1)
Limited Partnership Company (Adrin, 2010):
A partnership establishes between two or more parties. The partners are liable for
the company’s obligation to all extent of their properties. Moreover, this type of
companies can have a sleeping partner which they only have shares in the company
and have no authority to the company’s management. Additionally, based on the
extent of the capital of the sleeping partners in the company they become liable.
2)
Limited partnership by shares Company (Business Belgium be, 2010):
A limited shares company has two partners’ categories, the first where the partners
are liable for the company’s obligations according to their properties. The second
type is the sleeping partners which they are only liable to the amount of the shares
that they own in the capital.
3)
Limited liability Company (Adrin, 2010):
A limited liability company that could not have more than fifty partners, where each
one of them is liable to their extent shares in capital. By the force of law the
company might turn to a single company in case the partners become less than two.
Despite that the company can turn into a limited company again if they completed
the number of partners within 30 days starting from the date that the shares
become in the management of one partner.
Task 2
1) Art 70 (2006):” Anyone taking a photograph of a third party has no right to publish,
exhibit or distribute the original, or reproductions thereof, without the permission of
the party portrayed in the photograph, unless written agreement exists to the
contrary. Nonetheless, photographs may be published if they relate to events that
take place in public, official or public figures of local or international renown, or if the
public authorities have authorized such publication to serve the public good, on
condition that the display or circulation of the photographs does not infringe the
honour, reputation or standing of the person concerned. The party portrayed in the
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photograph may authorise its publication in newspapers or other media, even
without the photographer's permission, unless written agreement exists to the
contrary.”
2) Art. 3. A. a contrario: "A trade mark must be sufficiently distinctive to enable the
public clearly to identify the origin of the product and not confuse it with others".
3) Art. 3, K, L, M, N: "A trademark must not be identical or very similar to an earlier
registered trademark".
4) Art. 46.1: "If the right holder has suffered direct injury because of an infringement of
any of his rights, he may file a case to order the payment of damages adequate to
compensate for the injury he has suffered because of the infringement".
5) Art. 17: "A trade mark registration is valid for ten years from the date of filing the
application. Thereafter, a trademark registration is renewable for periods of ten
years each".
6) Adidas America V Payless Shoesource (2002) U.S: In Nov 2001, Adidas sued Payless
for a trademark infringement because the defendant (Payless) is selling a shoe that
has THREE STRIPES which is similar to Adidas's trademark which misleads people and
cause them believing that this is an original Adidas shoes because Adidas is famous
for its three stripes. The defendants argued that everyone is using the strips in
different colors and designs and Adidas can't control the stripes uses. The jury sated
that the styles and colors of Payless shoes are very similar to Adidas’ trademarks.
They awarded Adidas $304.6 million in total.
7) Art.1 (2004): "A patent shall be given for every invention that is new, involves an
inventive step and is industrially applicable whether it is related to new industrial
products – imported or locally produced -, industrial methods or a new application of
already known industrial methods".
8) Art. 8 (2004): " Without prejudice to the provisions of Article (631) of the Civil Law,
the ownership of the patent shall be assigned to the employer provided the invention
was the result of a contract or a commitment for exertion of inventive faculty, and
that the name of the inventor shall be mentioned in the patent ".
9) Art. 11.b.1 (2004): "The patentee is entitled by virtue of the subject patent the right
to prohibit others from any of the following actions without prior permission:
Manufacturing, exploiting, using, offering for sale or selling the patented product or
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importing the same for any of the aforementioned purposes, should the subject
patent be a product".
10) Art.14 (2006): "The term of a patent shall be twenty years as of the date of filing the
application thereof in the Kingdom, or date of priority as the case may be" Renewal
fees are payable annually.
Task 3
1) Duty of care is established through three stages. It should be reasonably foreseeable,
there should be proximity or relation between the defendant and claimant and it should be
fair, just and reasonable.
Then a breach of duty of care should be established and that depends on:
•
Magnitude of risk
•
Seriousness of harm
•
Practicability of precautions
•
Standard practice but not obvious folly
Then did the breach result in the injury and finally is it too remote or it was a direct
consequences or a reasonable foreseeable damage.
When all these are established, one can be said to owe the claimant duty of care.
2) The issue was that Mrs. Donoghue was invited by her friend for a treat at a café. She had
ordered ginger beer and when the waiter brought her drink she found a snail in it. Back then
if you didn’t have a contract such as paying the bill, you wouldn’t be able to sue the
manufacturer of the ginger beer. However, Mrs. Donoghue insisted on suing the
manufacturer and that’s when the Duty of care was introduced by lord Atkin.
Neighbour principle: “You must take reasonable care to avoid acts or omissions which you
can reasonably foresee are likely to injure your neighbour. Who, then, in law is my
neighbour? The answer seems to be- persons who are to closely and directly affected by my
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act that I ought reasonably to have them in contemplation as being so affected when I am
directing my mind to the acts or omissions which are called into question”- Lord Atkin in
Donoghue v Stevenson, 1932.
3) Article 172:
(a) A master is liable towards an injured person for the damage caused by an unlawful act of
his servant when the act was performed by the servant in the course, or as a result, of his
employment.
(b) The relationship between master and servant exists even when the master has not been
free to choose his servant, provided he has actual powers of supervision and control over his
servant.
To establish vicarious liability at workplace:
•
Was a tort committed?
•
Was the tortfeasor an employee?
•
Was the employee acting in the course of employment when the
tort was committed?
When all three are established, the employer will be responsible for tort committed by his
employee.
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