Introduction to Business Law

Learning for Success:
A student who has completed this unit and achieved a passing grade should be able to:
1. Recognise the key features of the Australian legal system including its indigenous aspects;
2. Identify and recall key legal concepts;
3. Identify actual or potential legal issues in common business scenarios;
4. Use clear communication skills;
5. Apply knowledge of legal principles to identify legal issues and solve practical legal problems common to business scenarios.
A student should be able to demonstrate an understanding of the link between legal, ethical and managerial issues; apply the background knowledge that you have developed in this unit in a managerial decision making context; consider the cause and effect relationship between the quality of managerial decision making and the potential for legal consequences for the enterprise.
The aim of the tutorials is to support the textbook, lectures and online materials by providing practical exercises to assist the student in learning to link the law and business decisions. When planning the management of legal matters you need to focus your attention on both the current laws and the social underpinnings of those laws.
To get the most out of the tutorials, you should attempt to answer the questions yourself before each class, so you’ll be ready to check and compare your answers and discuss them with your tutorial group. Merely copying and memorising a tutorial answer is not going to help you understand the topic, and succeed in the unit.
Please note that we do not provide pro-forma answers to these questions – so you are strongly advised to attend tutorials for the purpose of checking your own, independently prepared, work. This approach has been shown to increase learning
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and retention of the concepts as it involves more ‘learning by doing’ and deeper thinking about the problems than simply being provided with answers.
Consultation:
You can see your lecturer/tutor before or after class or you can email to organise a mutually convenient time to meet. If you email you must use your Western Sydney student email address and remember to use appropriate language in your email correspondence. Emails from non-UWS sources will be ignored. My email address is [email protected].
1. Discuss the following quotation from Ellis: “Our law is separate from politics yet inherently political, different from morality yet broadly reflective of social concerns, a constraint on power yet an exercise of power, concerned with fair procedures yet often inaccessible and not always just.” Do you agree with this statement?
2. Distinguish between ‘statute law’, ‘common law’ and ‘equity law’. From where does the common law originate? Is it possible to say that equity law is part of the common law?
3. What are the main differences between the legal systems used in civil law and common law countries? Identify at least 2 countries which adopt each of these systems.
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Tutorial 2: Australian Legal System, 15th December 2015
1. Discuss the significance of the separation of powers doctrine? What is the division of powers doctrine?
2. What is meant by the Westminster system of government? How does it apply in Australia? Does the Westminster system differ from the US Presidential system? Explain your answer.
3. When did the Commonwealth of Australia become legally independent of England? When did the States become legally independent of England?
4. Explain the difference between concurrent and exclusive legislative powers of the Federal Parliament.
5. Distinguish between a binding precedent and a persuasive precedent.
6. To meet its Kyoto Protocol target of reducing greenhouse gas emissions, the Commonwealth government decides to draft legislation to ban land clearing. Gino, a farmer in New South Wales, is worried that he won’t be able to clear the forests on his land to extend his grazing land if the laws are enacted. He says he has read the Constitution and there’s nothing in it about land clearing or greenhouse gases. He also says even if the Commonwealth has the power it shouldn’t be able to stop him using his land as he chooses.
Can the Commonwealth stop Gino from using his land as he pleases? Consider the powers of the Commonwealth government and what you consider to be Gino’s rights over his land.
Please note a practice quiz on the Australian Legal System will be available on vUWS from Tuesday 16th December opening at 1 pm and closing at 1 pm on Wednesday 17th December. You may attempt the practice quiz twice, although they will be the same questions.
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Tutorial 3: Australian Legal System, 17th December 2015
How to approach the legal hypothetical:
Identify the legal issues from the problem. Be logical in expressing them.
Identify and explain the relevant law for each of the legal issues, giving legal support and authority where possible.
Apply the relevant law to the facts of your problem, exploring all reasonable arguments. Explain why the law you just stated is relevant to the facts of the problem. As far as possible use the actual words stated in the problem when explaining the law’s relevance.
Consider any relevant defences or remedies, if appropriate, and reach a conclusion, if possible, or at least state which view is more likely or stronger.
1. The Locali people, a group of indigenous Australians, lodged an application for determination of native title pursuant to the Native Title Act 1993 (Cth) over some 1500 hectares of land and waters around Barwon, a small coastal town in New South Wales. The group had traditionally used the land and waters for hunting, gathering food and fishing. They mostly moved across the land but during the wet months they established settlements near the mouth of the Barwon River, on the land.
In 1950, the people were removed from the land onto a settlement about 2kms north, except for a few who worked as stockmen in the pastoral industry. Even though removed from the land, the Locali people maintained a strong spiritual connection to the land through their dreamtime stories, which relate to many specific sites on the land.
Since 1990 a group of families have returned to the land where they live for most of the year while they attempt to continue their traditional activities over the land.
In 1898 50 hectares to the south was made subject to a land grant in fee simple to Alfred Drover.
In 1970, some 20 acres in the north was reserved for the Government to build a high technology industrial complex. This has not been built yet.
Advise the Locali people as to their rights regarding this land.
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2. The following statute is passed by the New South Wales Parliament:
Egg Act 1987
An Act to deal with the sale of eggs and other matters.
Whereas it is necessary to advance the poultry industry and to preserve public confidence in the produce of the industry and to this end to control the persons dealing therewith.
3. Any dealer who sells or possesses for sale any eggs or poultry which are not fresh or which are not fit for human consumption or any live poultry which are affected by any disease so to be unfit for human consumption commits an offence.
4. Every dealer shall within 10 days of the end of the month submit to the Poultry Board a return for that month of the number of dozens of eggs sold by him.
Jones is licensed under the Act. He keeps geese which he sells to breeders. He also sells eggs for hatching. Owing to their grazing conditions, his geese and their eggs are so strongly flavoured as to be unfit for human consumption. He commences business on 1st November, but has not filed his return of egg sales when an inspector calls on the 26th November. Jones is charged under both s 3 and s 4. Advise him.
Please note the mid-session test on the Australian Legal System will be available on vUWS from Thursday 17th December opening at 1 pm and closing at 1 pm on Friday 18th December. You may attempt the test twice with your higher score counting towards your final grade. The questions will be different.
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Tutorial 4: Negligence, 5th January 2016
1. Patty was working in her kitchen when she noticed a large and dangerous looking black spider in the sink. She managed to trap it in a jar, placed some aluminium foil over the jar to form a lid, then took the jar out to her car and placed it on the front passenger seat. She intended to take it to the nearest pharmacy for identification.
As she was driving along the Great Western Highway she had to brake suddenly as the car in front of her slowed down. The jar rolled off the seat onto the car floor. Patty grabbed a street directory from the glove box and tried to push the jar forward so she could see if the spider had escaped. Unfortunately whilst she was leaning over the passenger side to do this the car swerved into the left lane of the road and collided with a car driven by Doug travelling in that lane.
Doug was travelling in excess of the speed limit. He did not notice Patty’s car until it was too late to take evasive action as he was holding his mobile phone to his right ear, and this blocked his vision towards the right hand lane. Doug’s passenger, Jean, had taken off her seat belt just before the collision as it was rubbing on her sun burnt shoulder.
The cars are both extensively damaged and Doug and Patty have both suffered personal injuries. Because she was not restrained by a seat belt, Jean has very extensive injuries as she was thrown forward through the windscreen.
Advise Jean, Patty and Doug of any rights or liabilities they may have in the tort of negligence only and discuss the likelihood of success of each of these actions.
2. Justin and Harry are old school friends. One Friday evening Harry asked Justin, an accountant of some 8 years of practice, if he should invest in XYZ Learning Ltd. On Monday Justin looked at the accounts of that company and formed the view it was a good investment and phoned Harry and advised him to that effect. Unfortunately Justin misread the accounts. Harry invested some money but will now lose it.
Discuss whether Justin owes Harry a duty to exercise care.
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Tutorial 5: Negligence and formation of a contract, 7th January
1. The Screaming Crickets, were booked to play an open-air concert to a crowd of 75,000 fans. The concert stage was constructed by Electro Pty Ltd., which also connected the band’s sound and lighting systems to its electrical generator.
A few moments after the Screaming Crickets began to play, there was a massive power surge through all the electrical systems because Electro had used the wrong type of capacitors.
The band’s amplifiers exploded, as did the lights over the stage. The guitarist and bass player both received electric shocks from their instruments and collapsed on the stage. Neither was seriously hurt, but many members of the audience, including May, the guitarist’s pregnant wife, thought the two musicians had been killed. She is haunted by the image of her husband collapsing, and is neurotically fearful for his life.
May has sued Electro Pty Ltd in negligence and is complaining of a psychiatric disorder as a result of the incident. Advise her on her action.
2. Jennifer and Brent had worked for the same company in Sydney for more than twelve months. They had become close friends. Jennifer was offered an exciting new job in Brisbane provided that she can take up the position in seven days. She accepted the job offer and relocated within the week. Several days later Jennifer rang Brent from Brisbane in relation to her car which was parked at Brent’s apartment building car park. The following conversation took place between them:
Jennifer: “I have a company car in the new job so I am going to sell my car. If you want it you can have it for $3,000 even though it is worth twice as much as that, but I need to know by Friday”.
Brent: “I need a bit more time to think about this. Can I have until Sunday?” She replied “OK but not later”.
Brent seeks your advice on whether he has a contract in the following situation:
Jennifer sells the car for $10,000 to Clarence on Sunday morning. Brent rings Jennifer on Sunday afternoon to buy the car but before he can tell Jennifer he will
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take it she apologises to him for selling the car to Clarence as he made an offer “just too good to refuse”.
Please note the assignment is due by 5 pm Monday 11th January through Turnitin.
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Tutorial 6: Contract law, 12th January 2016
1. In return for her twenty years faithful service with the One Notion supermarket, Mr Colston, Pauline’s employer, offered her a free trip to Indonesia, which she happily accepted. Several months have passed since the promise was made, but no further mention has been made of the holiday. Pauline wants to demand her holiday. Advise Pauline.
2. Owen sold his photocopying and laminating business for $45,000 to Miriam. As Miriam did not have the money to pay cash, Owen agreed to an immediate payment of $15,000 with the balance payable out of future profits over the next three years.
In the first six months the business did swell and Miriam was able to pay Owen a further $5,000. A competitor then opened nearby. This competitor was part of a well known chain of photocopying shops and as such had access to cheap supplies of laminating and copying materials. Consequently, the competitor was able to undercut Miriam’s business. Miriam’s profits fell alarmingly.
Miriam advised Owen that financially she could no longer continue with the agreement and would have to close the business. Further, she accused Owen of knowing that the competitor was about to open up and therefore she was commencing legal action to rescind the contract based on fraudulent misrepresentation.
Owen contacted Miriam and made the following comments: “I absolutely deny your accusation. By my reckoning you still owe me $25,000. However, if you continue with the agreement I’ll reduce that amount to $15,000.” Miriam accepted the deal.
Six months later Miriam landed a huge contract laminating all the posters for a chain of tourist attractions along the north coast of New South Wales. Miriam’s profits have soared. Owen is now demanding that the original contract price be complied with (ie. Miriam pays the remaining $25,000).
Is Miriam liable to pay the original contract price? Explain your answer.
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Tutorial 7: Contract law and agency law, 14th January 2016
1. Laura was an elderly lady living in Westmead who had two nephews, in business together as accountants. She owned her home in Westmead and also a shop in a local shopping complex, which was occupied by her nephews at a rental of $200.00 per week. Each year the rent was reviewed, and every two years a new lease was signed.
By June when the lease was due for review and renewal the recession had affected most business and rental values had dropped. Laura’s nephews told her that she could not expect an increase, and that an appropriate step was to renew the lease for two more years at the current rent of $200.00. She was not particularly happy about this but in view of the recession decided to trust her nephews; after all, as she told them, one day they would inherit all her property.
Her solicitor was on holiday when it came time to prepare the lease documents, so the nephews suggested they could all save money by copying the old documents and just changing the dates. Due to a typing error, the weekly rent is listed as $20.00 instead of $200.00. Laura signed the lease without reading it.
Several weeks later, when Laura’s solicitor returns from skiing she hands him the documents. He points out to her that the rent figure is only $20.00.
Advise Laura of any points which can be argued for her, assuming she wants at least $200.00 per week rental.
2. Tracy goes skiing at Perisher Valley every year. In order to ski in the valley and to use the ski lift and locker room facilities, skiers are required to purchase a season ticket at the central office of Perisher Valley Enterprises Pty Ltd. The season ticket states in bold print on the front, ‘See conditions on reverse side.’
One of the conditions on the reverse side was in the following terms: “Perisher Valley Enterprises Pty Ltd will not be responsible for any loss or damage however caused. Under no circumstances shall the company be liable for any physical injury sustained on the company’s snowfields.’ There was a large sign in the office area to the same effect. All the snowfield operators in NSW impose similar conditions.
A ski attendant, who had been snubbed by Tracy at a party the night before, pushed a chair lift at her. The chair struck Tracy causing a fracture to her left leg. After two days hospitalisation, Tracy returned to the snowfields to collect the belongings she had left in the locker. She discovered that the locker in which she had left her watch, camera, wallet and some clothing was empty. The locker room staff knew nothing about the matter and could only suggest that the goods had been stolen.
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Tracy seeks compensation with respect to her personal injuries and the loss of her property. Perisher Valley Enterprises Pty Ltd refuses to pay and relies on the terms of the contract.
Advise Tracy.
3. Brian was moving to Cairns, so appointed ‘Thunder & Antlers, Real Estate’ to manage his house in Sydney. He discussed with them the weekly rent he desired, $600, and that no pets were to be allowed. He then authorized them to sign the appropriate lease documents on his behalf. Mr Lightning, a member of the real estate firm, found, after 3 months, a family willing to rent the property but who only offered $550 per week rent. He tried to contact Brian but was unable. As the house had been vacant for some time, he got back to the family and said “Yes, $550 is fine.” The lease was drawn up but Mr. Lightning innocently omitted reference to no pets as he had not read Brian’s full written instructions. The family moved in with 3 cats and 2 pet rats.
Has the agent acted with authority? Discuss.
Further does Brian have any action against Thunder and Antlers? Explain your answer referring to relevant law
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Tutorial 8: Life cycle of a business, 19th January 2016
1. Dave has had a really good idea for a marketing campaign for the business he works for. Unfortunately, he is been too busy to write down the idea but he tells his boss Mary about it all the same. Mary writes up the campaign in detail, including advertising copy, photos, and scripts for the advertisements, and takes all the credit for the campaign. Dave is very upset.
(a) Has Mary ‘stolen’ Dave’s copyright? Explain your answer.
(b) What aspects of the advertising campaign would be covered by copyright?
2. Liam is a brewer. He has started to sell his beer under the brand name ‘Duffa’. Liam has chosen this name for its resemblance to the name of the fictional beer ‘Duff’ in the television show The Simpsons. Liam has altered the name slightly to give it an Australian twist (‘duffa’ is Australian slang for a person who makes lots of mistakes). The design of the Duffa can is very similar to the Duff beer can seen on The Simpsons. Liam wants to register the name Duffa as a trade mark. Twentieth Century Fox (the producers of The Simpsons) already owns a registered trade mark ‘Duff’ for use as a beer or alcohol brand however, it has never used the mark since it was registered (in 1996).
(a) May Liam register the name Duffa? Explain your answer, considering the name only.
(b) Should Liam keep selling his beer under the name Duffa (whether or not he may register it as a trade mark)? Explain your answer.
3. Mrs Charlotte Collins was engaged as a sales manager and in promoting the sale of products manufactured by her employer, Rosings Garden Supplies Pty Ltd, she provided an after-sales service to the customers and distributors. As a result of these activities, Charlotte became aware of problems experienced in the field and she referred these issues to her employer with possible suggestions. Her suggestions were prompted more by a desire to ensure her employer was competitive in the market, by matching ranges of products made by their competitors, rather than an obligation to undertake any creative design activity on behalf of the employer.
Whilst Charlotte was on holidays she first thought of an idea to improve a product she was promoting. She refined the idea and product over a period of some two years following her employer’s initial lack of interest in manufacturing a new blade (a necessary component of this product). Charlotte was successful in making a useful product. She applied for a patent in her name and her employer has lodged an
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objection claiming, that whilst there is no clause in her employment contract which regulates the ownership of any invention made during the ordinary course of Charlotte’s employment, they are still entitled to the ownership of the patent.
4. Jane, 30 years of age, is interviewed for the position of head accountant at a medium-sized company. The interviewer (another woman) explains that the position is a very important one as the company has just taken over another organisation and is going through a period of restructuring. Consequently, the successful candidate will be required to work substantial periods of overtime and will not be able to take any leave (other than sick leave) for the first two years of their employment. A substantial salary (much higher than for similar positions) is being offered. Jane is asked whether she is married, to which she replies that she is. The interviewer then tells Jane that if she is offered the position, she must undertake not to become pregnant during the first two years of her employment.
(a) Was the company entitled to ask Jane whether she is married?
(b) If the company does employ Jane, may it insist that she not become pregnant for two years?
(c) Did any other aspect of the interview potentially breach the laws relating to recruitment? Give reasons for your answers.
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Tutorial 9: Life cycle of a business and consumer protection law, 21st January 2016
1. Paul and Mary have not yet registered their new company. However, each has already invested $25,000 into the business by depositing the money into Paul’s business account. Paul is negotiating a lease of a small factory in his own name, and is purchasing the necessary equipment to start manufacturing printed T-shirts. Mary has started spending 2 to 3 hours every evening writing a business plan and a marketing plan.
Have Paul and Mary formed a partnership? Explain your answer and discuss the legal consequences if a partnership had been formed.
Explain to Paul the nature of a company, including its key features and the differences between a partnership and a company.
2. Helen is a champion swimmer and at the recent World Championships she won three gold medals. As a result, she now has a new sponsor, Healthies, who manufacture muesli bars. According to the sponsorship contract, Helen is required to advertise the muesli bars on television. In the course of the ad Helen is scripted to say: ‘Healthies bars gave me the extra energy to win those races. I eat one bar every day for extra iron and it makes me feel great!’. The following message will appear in the lower part of the screen as Helen talks: ‘Recommended by the Health Food Council of Australia (HFCA)’. Helen is worried about making this ad because she’s never eaten a Healthies bar and has no intention of doing so. Helen has never heard of the HFCA though, and she can’t find any references to such body on Google. In addition, there is no scientific evidence to support the claim that the bars provide significant additional iron.
i. Is this advertisement in breach of the Australian Consumer Law (‘ACL’)? Explain your answer.
ii. What are the consequences of breaching the sections referred to in your answer above?
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NOTE THERE ARE NO CLASSES ON TUESDAY 26TH JANUARY.
Tutorial 10: Consumer protection law, 28th January 2016
1. Alexandra has recently moved to Australia from Argentina. Her spoken English is exceptional, but she does not read or write English very well, and she has no experience in the way business is conducted in Australia. Alexandra ran a successful catering business in Argentina and is now in the process of establishing a similar business here in Australia. She approaches Johnny to negotiate the supply of food for her business. During the negotiations, Johnny realises how little Alexandra understands Australian business practices, and convinces her to agree to pay much more for his food than he charges similar customers He tells her that it is unusual for Australian businesses negotiating such an arrangement to use legal representation. He also tells her that it is normal practice for a customer in her position to commit to a contract for at least ten years.
Alexandra explains that these arrangements would be extremely unusual in Argentina, but Johnny insists that that is the way things are usually done and that she has no choice but to agree to them, since any other suppler would insist upon the same thing.
Johnny draws up a contract using complicated and legalistic language. Alexandra signs the contract agreeing to all of Johnny’s requirements, and she does so without seeking legal advice or reading it herself. Can Alexandra take advantage of s 21 Australian Consumer Law?
2. Jules, a middle aged business executive, was told by his doctor that he spent far too much time in planes, hotel rooms and meetings and that he needed to start exercising before it was too late. He decided to join Jim’s Gym, near his home. He was presented with a contract which the gym used for all memberships and which he was told could not be changed. He did not read it as he “couldn’t see the point”. When he asked what it contained he was told “just the normal stuff—that we are not responsible for anything that happens to you and that you are committing to 2 years at $50 a week payable 3 monthly in advance”. Jules said that as he was overseas frequently this would not work for him and was told that if he let them know he was away for a week Jim’s would add these weeks already paid for but not used to the end of the contract. The
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sales person suggested that Jules “read the contract as it’s all in there in plain English and ask me if you have any questions”.
Jules signed the contract. He did not read it as he couldn’t see the point. From his experience in business you were stuck with the terms anyway and he had never changed terms just because the other party was not happy with them.
On 30 occasions during the two years of the contract Jules rang up Jim’s Gym to say he was going overseas for a week. On each occasion he was told “fine mate, have a good trip” or words to that effect. When at the end of the two years he sought to have the contract extended at no cost he was advised that he had not complied with the contractual requirement that notices of absence had to be given in writing. It was explained that this was because phone messages often did not get properly catalogued because the people on the desk were frequently distracted by customers. When Jules said, curtly, “why does any of this matter” he was told that it was important that Jim’s Gym knew the exact number of members who could be attending the gym in any week as the number impacted on licence conditions and staffing.
Using evidence to support your answer, advise Jules.
3. Book Fair Enterprises Pty Ltd (‘BFE’) is a telemarketing sales company that specialises in books. They advertised a ‘Once in a Lifetime Sale’ in which new subscribers can order three books from their current bestseller list for only 10c each provided they take up a minimum 12 month subscription which requires them to buy at least one full-priced book per month. BFE includes a list of the books they consider to be the current ‘bestsellers’ in their advertisement and new subscribers are to select their three discounted books from that list. However, BFE has made sure that it has only 10 copies of each of the books on the ‘bestsellers’ list in stock.
Verity saw the advertisement and took out a new subscription, ordering 3 books from the bestseller list. When those books weren’t available, she agreed to accepted 3 other less popular books instead. About a month later BFE sent Verity the full-priced book she had agreed to purchase under the subscription. With it they also sent another two books on related topics, along with a letter explaining that the extra books must be returned within two weeks or BF will debit Verity’s credit card for the full purchase price of the extra books.
To Verity’s surprise, she has also been placed on BFE’s ‘high rotation call list’. BFE’s operators now call her at least once a week about their ‘book of the week’ offer. Verity is getting annoyed at the number of phone calls, particularly since BFE has
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started calling her as late as 10 pm at night. She has asked BFE to stop calling her on several occasions but BFE has ignored this request.
Despite her annoyance with BFE, Verity did purchase a set of dictionaries when they called her on Monday of this week, because she thought she needed them, but she has since changed her mind and wants to cancel the purchase. BFE has told her she cannot go back on the sale.
i. Which prohibited selling method (or methods) has BFE engaged in?
ii. Can Verity cancel the purchase of the dictionaries?
iii. May Verity cancel her subscription?
Tutorial 11: Consumer protection and competition law, 2nd February 2016
1. In the front yard of a suburban house an explosion occurs. It was caused by a faulty fuel tank in a “Winner” brand lawn mower that Bruce, the owner of the house, was using to cut the grass. Bruce had recently purchased the mower from Top Hardware Pty Ltd. Bruce suffered severe burns. He was unable to work for 6 months and incurred considerable medical expenses. He had to replace the windows of his house and his front fence. A computer that was used in Bruce’s word processing business was also damaged.
Using evidence to support your answer, discuss what actions, under consumer law, Bruce could take on these facts.
2. Brooke and Stephanie are both in the clothing business and they’ve competed vigorously with each other for many years. They each have large wholesale warehouses from which they sell and distribute their clothing to retailers. However, following an unusual chain of events, they agree to set aside their differences and work more collaboratively. They think they could both improve their profit margins if they were to show each other their price lists before sending out each new season’s ‘line’ and agree to charge the same price for comparable items on those lists. They do not put the agreement into writing, but each of them sticks to it over the following months. Is this agreement between Brooke and Stephanie legal?
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Brooke and Stephanie both belong to the ‘Association of High Fashion Houses’. Most of the clothing manufacturers in their area belong to the Association. At a meeting of the Association it is decided that none of the manufacturers will deal with a particular fabric supplier, Fabulous Fabrics, anymore as they are the highest priced supplier. They consider that this will be a good way to drive down the prices charged by all their suppliers. Is this course of action legal?
Brooke is getting dissatisfied with the progress of her business and decides to take some additional measures to ensure its success. Her brand of clothing is quite popular, so she decides to get all the stores that stock her products to agree that they will only stock her products and not those of any other clothing manufacturers. Further she wants to introduce a system of minimum retail prices for her clothes and plans to cut off supply to any retailers who sell the product below that price. Should Brooke do either of these things?
Meanwhile, Stephanie has adopted a different approach to improving her business and has decided to cut her prices so low that other clothes manufacturers will not be able to compete with her, in the hope that they will eventually go out of business, leaving her company as the ‘survivor’. Stephanie’s business has a very large share of the market and she feels confident that although the lower prices will mean she will be trading at a loss for a period of time, she should be able to more than make up the difference when the other traders, including Brooke, have dropped out of the market. Should Stephanie proceed with this plan?
What are the maximum penalties that could be imposed on Brooke and/or Stephanie (or their businesses/companies) if they have infringed the Competition Laws?

Introduction to Business Law

Learning for Success:
A student who has completed this unit and achieved a passing grade should be able to:
1. Recognise the key features of the Australian legal system including its indigenous aspects;
2. Identify and recall key legal concepts;
3. Identify actual or potential legal issues in common business scenarios;
4. Use clear communication skills;
5. Apply knowledge of legal principles to identify legal issues and solve practical legal problems common to business scenarios.
A student should be able to demonstrate an understanding of the link between legal, ethical and managerial issues; apply the background knowledge that you have developed in this unit in a managerial decision making context; consider the cause and effect relationship between the quality of managerial decision making and the potential for legal consequences for the enterprise.
The aim of the tutorials is to support the textbook, lectures and online materials by providing practical exercises to assist the student in learning to link the law and business decisions. When planning the management of legal matters you need to focus your attention on both the current laws and the social underpinnings of those laws.
To get the most out of the tutorials, you should attempt to answer the questions yourself before each class, so you’ll be ready to check and compare your answers and discuss them with your tutorial group. Merely copying and memorising a tutorial answer is not going to help you understand the topic, and succeed in the unit.
Please note that we do not provide pro-forma answers to these questions – so you are strongly advised to attend tutorials for the purpose of checking your own, independently prepared, work. This approach has been shown to increase learning
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and retention of the concepts as it involves more ‘learning by doing’ and deeper thinking about the problems than simply being provided with answers.
Consultation:
You can see your lecturer/tutor before or after class or you can email to organise a mutually convenient time to meet. If you email you must use your Western Sydney student email address and remember to use appropriate language in your email correspondence. Emails from non-UWS sources will be ignored. My email address is [email protected].
1. Discuss the following quotation from Ellis: “Our law is separate from politics yet inherently political, different from morality yet broadly reflective of social concerns, a constraint on power yet an exercise of power, concerned with fair procedures yet often inaccessible and not always just.” Do you agree with this statement?
2. Distinguish between ‘statute law’, ‘common law’ and ‘equity law’. From where does the common law originate? Is it possible to say that equity law is part of the common law?
3. What are the main differences between the legal systems used in civil law and common law countries? Identify at least 2 countries which adopt each of these systems.
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Tutorial 2: Australian Legal System, 15th December 2015
1. Discuss the significance of the separation of powers doctrine? What is the division of powers doctrine?
2. What is meant by the Westminster system of government? How does it apply in Australia? Does the Westminster system differ from the US Presidential system? Explain your answer.
3. When did the Commonwealth of Australia become legally independent of England? When did the States become legally independent of England?
4. Explain the difference between concurrent and exclusive legislative powers of the Federal Parliament.
5. Distinguish between a binding precedent and a persuasive precedent.
6. To meet its Kyoto Protocol target of reducing greenhouse gas emissions, the Commonwealth government decides to draft legislation to ban land clearing. Gino, a farmer in New South Wales, is worried that he won’t be able to clear the forests on his land to extend his grazing land if the laws are enacted. He says he has read the Constitution and there’s nothing in it about land clearing or greenhouse gases. He also says even if the Commonwealth has the power it shouldn’t be able to stop him using his land as he chooses.
Can the Commonwealth stop Gino from using his land as he pleases? Consider the powers of the Commonwealth government and what you consider to be Gino’s rights over his land.
Please note a practice quiz on the Australian Legal System will be available on vUWS from Tuesday 16th December opening at 1 pm and closing at 1 pm on Wednesday 17th December. You may attempt the practice quiz twice, although they will be the same questions.
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Tutorial 3: Australian Legal System, 17th December 2015
How to approach the legal hypothetical:
Identify the legal issues from the problem. Be logical in expressing them.
Identify and explain the relevant law for each of the legal issues, giving legal support and authority where possible.
Apply the relevant law to the facts of your problem, exploring all reasonable arguments. Explain why the law you just stated is relevant to the facts of the problem. As far as possible use the actual words stated in the problem when explaining the law’s relevance.
Consider any relevant defences or remedies, if appropriate, and reach a conclusion, if possible, or at least state which view is more likely or stronger.
1. The Locali people, a group of indigenous Australians, lodged an application for determination of native title pursuant to the Native Title Act 1993 (Cth) over some 1500 hectares of land and waters around Barwon, a small coastal town in New South Wales. The group had traditionally used the land and waters for hunting, gathering food and fishing. They mostly moved across the land but during the wet months they established settlements near the mouth of the Barwon River, on the land.
In 1950, the people were removed from the land onto a settlement about 2kms north, except for a few who worked as stockmen in the pastoral industry. Even though removed from the land, the Locali people maintained a strong spiritual connection to the land through their dreamtime stories, which relate to many specific sites on the land.
Since 1990 a group of families have returned to the land where they live for most of the year while they attempt to continue their traditional activities over the land.
In 1898 50 hectares to the south was made subject to a land grant in fee simple to Alfred Drover.
In 1970, some 20 acres in the north was reserved for the Government to build a high technology industrial complex. This has not been built yet.
Advise the Locali people as to their rights regarding this land.
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2. The following statute is passed by the New South Wales Parliament:
Egg Act 1987
An Act to deal with the sale of eggs and other matters.
Whereas it is necessary to advance the poultry industry and to preserve public confidence in the produce of the industry and to this end to control the persons dealing therewith.
3. Any dealer who sells or possesses for sale any eggs or poultry which are not fresh or which are not fit for human consumption or any live poultry which are affected by any disease so to be unfit for human consumption commits an offence.
4. Every dealer shall within 10 days of the end of the month submit to the Poultry Board a return for that month of the number of dozens of eggs sold by him.
Jones is licensed under the Act. He keeps geese which he sells to breeders. He also sells eggs for hatching. Owing to their grazing conditions, his geese and their eggs are so strongly flavoured as to be unfit for human consumption. He commences business on 1st November, but has not filed his return of egg sales when an inspector calls on the 26th November. Jones is charged under both s 3 and s 4. Advise him.
Please note the mid-session test on the Australian Legal System will be available on vUWS from Thursday 17th December opening at 1 pm and closing at 1 pm on Friday 18th December. You may attempt the test twice with your higher score counting towards your final grade. The questions will be different.
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Tutorial 4: Negligence, 5th January 2016
1. Patty was working in her kitchen when she noticed a large and dangerous looking black spider in the sink. She managed to trap it in a jar, placed some aluminium foil over the jar to form a lid, then took the jar out to her car and placed it on the front passenger seat. She intended to take it to the nearest pharmacy for identification.
As she was driving along the Great Western Highway she had to brake suddenly as the car in front of her slowed down. The jar rolled off the seat onto the car floor. Patty grabbed a street directory from the glove box and tried to push the jar forward so she could see if the spider had escaped. Unfortunately whilst she was leaning over the passenger side to do this the car swerved into the left lane of the road and collided with a car driven by Doug travelling in that lane.
Doug was travelling in excess of the speed limit. He did not notice Patty’s car until it was too late to take evasive action as he was holding his mobile phone to his right ear, and this blocked his vision towards the right hand lane. Doug’s passenger, Jean, had taken off her seat belt just before the collision as it was rubbing on her sun burnt shoulder.
The cars are both extensively damaged and Doug and Patty have both suffered personal injuries. Because she was not restrained by a seat belt, Jean has very extensive injuries as she was thrown forward through the windscreen.
Advise Jean, Patty and Doug of any rights or liabilities they may have in the tort of negligence only and discuss the likelihood of success of each of these actions.
2. Justin and Harry are old school friends. One Friday evening Harry asked Justin, an accountant of some 8 years of practice, if he should invest in XYZ Learning Ltd. On Monday Justin looked at the accounts of that company and formed the view it was a good investment and phoned Harry and advised him to that effect. Unfortunately Justin misread the accounts. Harry invested some money but will now lose it.
Discuss whether Justin owes Harry a duty to exercise care.
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Tutorial 5: Negligence and formation of a contract, 7th January
1. The Screaming Crickets, were booked to play an open-air concert to a crowd of 75,000 fans. The concert stage was constructed by Electro Pty Ltd., which also connected the band’s sound and lighting systems to its electrical generator.
A few moments after the Screaming Crickets began to play, there was a massive power surge through all the electrical systems because Electro had used the wrong type of capacitors.
The band’s amplifiers exploded, as did the lights over the stage. The guitarist and bass player both received electric shocks from their instruments and collapsed on the stage. Neither was seriously hurt, but many members of the audience, including May, the guitarist’s pregnant wife, thought the two musicians had been killed. She is haunted by the image of her husband collapsing, and is neurotically fearful for his life.
May has sued Electro Pty Ltd in negligence and is complaining of a psychiatric disorder as a result of the incident. Advise her on her action.
2. Jennifer and Brent had worked for the same company in Sydney for more than twelve months. They had become close friends. Jennifer was offered an exciting new job in Brisbane provided that she can take up the position in seven days. She accepted the job offer and relocated within the week. Several days later Jennifer rang Brent from Brisbane in relation to her car which was parked at Brent’s apartment building car park. The following conversation took place between them:
Jennifer: “I have a company car in the new job so I am going to sell my car. If you want it you can have it for $3,000 even though it is worth twice as much as that, but I need to know by Friday”.
Brent: “I need a bit more time to think about this. Can I have until Sunday?” She replied “OK but not later”.
Brent seeks your advice on whether he has a contract in the following situation:
Jennifer sells the car for $10,000 to Clarence on Sunday morning. Brent rings Jennifer on Sunday afternoon to buy the car but before he can tell Jennifer he will
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take it she apologises to him for selling the car to Clarence as he made an offer “just too good to refuse”.
Please note the assignment is due by 5 pm Monday 11th January through Turnitin.
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Tutorial 6: Contract law, 12th January 2016
1. In return for her twenty years faithful service with the One Notion supermarket, Mr Colston, Pauline’s employer, offered her a free trip to Indonesia, which she happily accepted. Several months have passed since the promise was made, but no further mention has been made of the holiday. Pauline wants to demand her holiday. Advise Pauline.
2. Owen sold his photocopying and laminating business for $45,000 to Miriam. As Miriam did not have the money to pay cash, Owen agreed to an immediate payment of $15,000 with the balance payable out of future profits over the next three years.
In the first six months the business did swell and Miriam was able to pay Owen a further $5,000. A competitor then opened nearby. This competitor was part of a well known chain of photocopying shops and as such had access to cheap supplies of laminating and copying materials. Consequently, the competitor was able to undercut Miriam’s business. Miriam’s profits fell alarmingly.
Miriam advised Owen that financially she could no longer continue with the agreement and would have to close the business. Further, she accused Owen of knowing that the competitor was about to open up and therefore she was commencing legal action to rescind the contract based on fraudulent misrepresentation.
Owen contacted Miriam and made the following comments: “I absolutely deny your accusation. By my reckoning you still owe me $25,000. However, if you continue with the agreement I’ll reduce that amount to $15,000.” Miriam accepted the deal.
Six months later Miriam landed a huge contract laminating all the posters for a chain of tourist attractions along the north coast of New South Wales. Miriam’s profits have soared. Owen is now demanding that the original contract price be complied with (ie. Miriam pays the remaining $25,000).
Is Miriam liable to pay the original contract price? Explain your answer.
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Tutorial 7: Contract law and agency law, 14th January 2016
1. Laura was an elderly lady living in Westmead who had two nephews, in business together as accountants. She owned her home in Westmead and also a shop in a local shopping complex, which was occupied by her nephews at a rental of $200.00 per week. Each year the rent was reviewed, and every two years a new lease was signed.
By June when the lease was due for review and renewal the recession had affected most business and rental values had dropped. Laura’s nephews told her that she could not expect an increase, and that an appropriate step was to renew the lease for two more years at the current rent of $200.00. She was not particularly happy about this but in view of the recession decided to trust her nephews; after all, as she told them, one day they would inherit all her property.
Her solicitor was on holiday when it came time to prepare the lease documents, so the nephews suggested they could all save money by copying the old documents and just changing the dates. Due to a typing error, the weekly rent is listed as $20.00 instead of $200.00. Laura signed the lease without reading it.
Several weeks later, when Laura’s solicitor returns from skiing she hands him the documents. He points out to her that the rent figure is only $20.00.
Advise Laura of any points which can be argued for her, assuming she wants at least $200.00 per week rental.
2. Tracy goes skiing at Perisher Valley every year. In order to ski in the valley and to use the ski lift and locker room facilities, skiers are required to purchase a season ticket at the central office of Perisher Valley Enterprises Pty Ltd. The season ticket states in bold print on the front, ‘See conditions on reverse side.’
One of the conditions on the reverse side was in the following terms: “Perisher Valley Enterprises Pty Ltd will not be responsible for any loss or damage however caused. Under no circumstances shall the company be liable for any physical injury sustained on the company’s snowfields.’ There was a large sign in the office area to the same effect. All the snowfield operators in NSW impose similar conditions.
A ski attendant, who had been snubbed by Tracy at a party the night before, pushed a chair lift at her. The chair struck Tracy causing a fracture to her left leg. After two days hospitalisation, Tracy returned to the snowfields to collect the belongings she had left in the locker. She discovered that the locker in which she had left her watch, camera, wallet and some clothing was empty. The locker room staff knew nothing about the matter and could only suggest that the goods had been stolen.
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Tracy seeks compensation with respect to her personal injuries and the loss of her property. Perisher Valley Enterprises Pty Ltd refuses to pay and relies on the terms of the contract.
Advise Tracy.
3. Brian was moving to Cairns, so appointed ‘Thunder & Antlers, Real Estate’ to manage his house in Sydney. He discussed with them the weekly rent he desired, $600, and that no pets were to be allowed. He then authorized them to sign the appropriate lease documents on his behalf. Mr Lightning, a member of the real estate firm, found, after 3 months, a family willing to rent the property but who only offered $550 per week rent. He tried to contact Brian but was unable. As the house had been vacant for some time, he got back to the family and said “Yes, $550 is fine.” The lease was drawn up but Mr. Lightning innocently omitted reference to no pets as he had not read Brian’s full written instructions. The family moved in with 3 cats and 2 pet rats.
Has the agent acted with authority? Discuss.
Further does Brian have any action against Thunder and Antlers? Explain your answer referring to relevant law
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Tutorial 8: Life cycle of a business, 19th January 2016
1. Dave has had a really good idea for a marketing campaign for the business he works for. Unfortunately, he is been too busy to write down the idea but he tells his boss Mary about it all the same. Mary writes up the campaign in detail, including advertising copy, photos, and scripts for the advertisements, and takes all the credit for the campaign. Dave is very upset.
(a) Has Mary ‘stolen’ Dave’s copyright? Explain your answer.
(b) What aspects of the advertising campaign would be covered by copyright?
2. Liam is a brewer. He has started to sell his beer under the brand name ‘Duffa’. Liam has chosen this name for its resemblance to the name of the fictional beer ‘Duff’ in the television show The Simpsons. Liam has altered the name slightly to give it an Australian twist (‘duffa’ is Australian slang for a person who makes lots of mistakes). The design of the Duffa can is very similar to the Duff beer can seen on The Simpsons. Liam wants to register the name Duffa as a trade mark. Twentieth Century Fox (the producers of The Simpsons) already owns a registered trade mark ‘Duff’ for use as a beer or alcohol brand however, it has never used the mark since it was registered (in 1996).
(a) May Liam register the name Duffa? Explain your answer, considering the name only.
(b) Should Liam keep selling his beer under the name Duffa (whether or not he may register it as a trade mark)? Explain your answer.
3. Mrs Charlotte Collins was engaged as a sales manager and in promoting the sale of products manufactured by her employer, Rosings Garden Supplies Pty Ltd, she provided an after-sales service to the customers and distributors. As a result of these activities, Charlotte became aware of problems experienced in the field and she referred these issues to her employer with possible suggestions. Her suggestions were prompted more by a desire to ensure her employer was competitive in the market, by matching ranges of products made by their competitors, rather than an obligation to undertake any creative design activity on behalf of the employer.
Whilst Charlotte was on holidays she first thought of an idea to improve a product she was promoting. She refined the idea and product over a period of some two years following her employer’s initial lack of interest in manufacturing a new blade (a necessary component of this product). Charlotte was successful in making a useful product. She applied for a patent in her name and her employer has lodged an
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objection claiming, that whilst there is no clause in her employment contract which regulates the ownership of any invention made during the ordinary course of Charlotte’s employment, they are still entitled to the ownership of the patent.
4. Jane, 30 years of age, is interviewed for the position of head accountant at a medium-sized company. The interviewer (another woman) explains that the position is a very important one as the company has just taken over another organisation and is going through a period of restructuring. Consequently, the successful candidate will be required to work substantial periods of overtime and will not be able to take any leave (other than sick leave) for the first two years of their employment. A substantial salary (much higher than for similar positions) is being offered. Jane is asked whether she is married, to which she replies that she is. The interviewer then tells Jane that if she is offered the position, she must undertake not to become pregnant during the first two years of her employment.
(a) Was the company entitled to ask Jane whether she is married?
(b) If the company does employ Jane, may it insist that she not become pregnant for two years?
(c) Did any other aspect of the interview potentially breach the laws relating to recruitment? Give reasons for your answers.
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Tutorial 9: Life cycle of a business and consumer protection law, 21st January 2016
1. Paul and Mary have not yet registered their new company. However, each has already invested $25,000 into the business by depositing the money into Paul’s business account. Paul is negotiating a lease of a small factory in his own name, and is purchasing the necessary equipment to start manufacturing printed T-shirts. Mary has started spending 2 to 3 hours every evening writing a business plan and a marketing plan.
Have Paul and Mary formed a partnership? Explain your answer and discuss the legal consequences if a partnership had been formed.
Explain to Paul the nature of a company, including its key features and the differences between a partnership and a company.
2. Helen is a champion swimmer and at the recent World Championships she won three gold medals. As a result, she now has a new sponsor, Healthies, who manufacture muesli bars. According to the sponsorship contract, Helen is required to advertise the muesli bars on television. In the course of the ad Helen is scripted to say: ‘Healthies bars gave me the extra energy to win those races. I eat one bar every day for extra iron and it makes me feel great!’. The following message will appear in the lower part of the screen as Helen talks: ‘Recommended by the Health Food Council of Australia (HFCA)’. Helen is worried about making this ad because she’s never eaten a Healthies bar and has no intention of doing so. Helen has never heard of the HFCA though, and she can’t find any references to such body on Google. In addition, there is no scientific evidence to support the claim that the bars provide significant additional iron.
i. Is this advertisement in breach of the Australian Consumer Law (‘ACL’)? Explain your answer.
ii. What are the consequences of breaching the sections referred to in your answer above?
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NOTE THERE ARE NO CLASSES ON TUESDAY 26TH JANUARY.
Tutorial 10: Consumer protection law, 28th January 2016
1. Alexandra has recently moved to Australia from Argentina. Her spoken English is exceptional, but she does not read or write English very well, and she has no experience in the way business is conducted in Australia. Alexandra ran a successful catering business in Argentina and is now in the process of establishing a similar business here in Australia. She approaches Johnny to negotiate the supply of food for her business. During the negotiations, Johnny realises how little Alexandra understands Australian business practices, and convinces her to agree to pay much more for his food than he charges similar customers He tells her that it is unusual for Australian businesses negotiating such an arrangement to use legal representation. He also tells her that it is normal practice for a customer in her position to commit to a contract for at least ten years.
Alexandra explains that these arrangements would be extremely unusual in Argentina, but Johnny insists that that is the way things are usually done and that she has no choice but to agree to them, since any other suppler would insist upon the same thing.
Johnny draws up a contract using complicated and legalistic language. Alexandra signs the contract agreeing to all of Johnny’s requirements, and she does so without seeking legal advice or reading it herself. Can Alexandra take advantage of s 21 Australian Consumer Law?
2. Jules, a middle aged business executive, was told by his doctor that he spent far too much time in planes, hotel rooms and meetings and that he needed to start exercising before it was too late. He decided to join Jim’s Gym, near his home. He was presented with a contract which the gym used for all memberships and which he was told could not be changed. He did not read it as he “couldn’t see the point”. When he asked what it contained he was told “just the normal stuff—that we are not responsible for anything that happens to you and that you are committing to 2 years at $50 a week payable 3 monthly in advance”. Jules said that as he was overseas frequently this would not work for him and was told that if he let them know he was away for a week Jim’s would add these weeks already paid for but not used to the end of the contract. The
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sales person suggested that Jules “read the contract as it’s all in there in plain English and ask me if you have any questions”.
Jules signed the contract. He did not read it as he couldn’t see the point. From his experience in business you were stuck with the terms anyway and he had never changed terms just because the other party was not happy with them.
On 30 occasions during the two years of the contract Jules rang up Jim’s Gym to say he was going overseas for a week. On each occasion he was told “fine mate, have a good trip” or words to that effect. When at the end of the two years he sought to have the contract extended at no cost he was advised that he had not complied with the contractual requirement that notices of absence had to be given in writing. It was explained that this was because phone messages often did not get properly catalogued because the people on the desk were frequently distracted by customers. When Jules said, curtly, “why does any of this matter” he was told that it was important that Jim’s Gym knew the exact number of members who could be attending the gym in any week as the number impacted on licence conditions and staffing.
Using evidence to support your answer, advise Jules.
3. Book Fair Enterprises Pty Ltd (‘BFE’) is a telemarketing sales company that specialises in books. They advertised a ‘Once in a Lifetime Sale’ in which new subscribers can order three books from their current bestseller list for only 10c each provided they take up a minimum 12 month subscription which requires them to buy at least one full-priced book per month. BFE includes a list of the books they consider to be the current ‘bestsellers’ in their advertisement and new subscribers are to select their three discounted books from that list. However, BFE has made sure that it has only 10 copies of each of the books on the ‘bestsellers’ list in stock.
Verity saw the advertisement and took out a new subscription, ordering 3 books from the bestseller list. When those books weren’t available, she agreed to accepted 3 other less popular books instead. About a month later BFE sent Verity the full-priced book she had agreed to purchase under the subscription. With it they also sent another two books on related topics, along with a letter explaining that the extra books must be returned within two weeks or BF will debit Verity’s credit card for the full purchase price of the extra books.
To Verity’s surprise, she has also been placed on BFE’s ‘high rotation call list’. BFE’s operators now call her at least once a week about their ‘book of the week’ offer. Verity is getting annoyed at the number of phone calls, particularly since BFE has
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started calling her as late as 10 pm at night. She has asked BFE to stop calling her on several occasions but BFE has ignored this request.
Despite her annoyance with BFE, Verity did purchase a set of dictionaries when they called her on Monday of this week, because she thought she needed them, but she has since changed her mind and wants to cancel the purchase. BFE has told her she cannot go back on the sale.
i. Which prohibited selling method (or methods) has BFE engaged in?
ii. Can Verity cancel the purchase of the dictionaries?
iii. May Verity cancel her subscription?
Tutorial 11: Consumer protection and competition law, 2nd February 2016
1. In the front yard of a suburban house an explosion occurs. It was caused by a faulty fuel tank in a “Winner” brand lawn mower that Bruce, the owner of the house, was using to cut the grass. Bruce had recently purchased the mower from Top Hardware Pty Ltd. Bruce suffered severe burns. He was unable to work for 6 months and incurred considerable medical expenses. He had to replace the windows of his house and his front fence. A computer that was used in Bruce’s word processing business was also damaged.
Using evidence to support your answer, discuss what actions, under consumer law, Bruce could take on these facts.
2. Brooke and Stephanie are both in the clothing business and they’ve competed vigorously with each other for many years. They each have large wholesale warehouses from which they sell and distribute their clothing to retailers. However, following an unusual chain of events, they agree to set aside their differences and work more collaboratively. They think they could both improve their profit margins if they were to show each other their price lists before sending out each new season’s ‘line’ and agree to charge the same price for comparable items on those lists. They do not put the agreement into writing, but each of them sticks to it over the following months. Is this agreement between Brooke and Stephanie legal?
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Brooke and Stephanie both belong to the ‘Association of High Fashion Houses’. Most of the clothing manufacturers in their area belong to the Association. At a meeting of the Association it is decided that none of the manufacturers will deal with a particular fabric supplier, Fabulous Fabrics, anymore as they are the highest priced supplier. They consider that this will be a good way to drive down the prices charged by all their suppliers. Is this course of action legal?
Brooke is getting dissatisfied with the progress of her business and decides to take some additional measures to ensure its success. Her brand of clothing is quite popular, so she decides to get all the stores that stock her products to agree that they will only stock her products and not those of any other clothing manufacturers. Further she wants to introduce a system of minimum retail prices for her clothes and plans to cut off supply to any retailers who sell the product below that price. Should Brooke do either of these things?
Meanwhile, Stephanie has adopted a different approach to improving her business and has decided to cut her prices so low that other clothes manufacturers will not be able to compete with her, in the hope that they will eventually go out of business, leaving her company as the ‘survivor’. Stephanie’s business has a very large share of the market and she feels confident that although the lower prices will mean she will be trading at a loss for a period of time, she should be able to more than make up the difference when the other traders, including Brooke, have dropped out of the market. Should Stephanie proceed with this plan?
What are the maximum penalties that could be imposed on Brooke and/or Stephanie (or their businesses/companies) if they have infringed the Competition Laws?