Issue: The issue in the scene is in respect of a Company which deals in installing swimming pools. The concern is “Whether the Company is liable for the for Martin’s actions”.
Rule: Here two laws are applicable. One is Law of Agency and the other is Contract Review Act 1980. Under the law of agency, there is a principal and an agent and agent make the contract on behalf of his or her principal. In the present case, the principle is the Company and the agent is Martin.The agent is responsible for making a contract in the name of the principle with the third party. The principle of “Privity of Contract” also plays a significant role in the given taste scenario. Privity of Contract means any contract cannot form any obligation or liability if such individual is not the party to the contract.
Analysis: In the given case, it is evident that the Martin is underemployment as manager of the Tasmanian sales division of Swimming pool Co Pty Ltd. Martin has a responsibility to quote the potential customers to install the pools that fit in the cost of the Company (Quinlan et.al, 2016). The contract needs to be executed in the name of the Company. It is clear that the company has provided him the responsibility to enter into a contract with the customers on behalf of the company’s name. Furthermore, the swimming pool constructed by Martin is different from the design specified in the contract. Moreover, the construction of the swimming pool is not done properly due to which pools are leaking in the ground. Repairing of which will be done by the company’s cost. Martin also didn’t deposit part of the contract money in the account of the company. Therefore, it can be analyzed that the losses suffered by the customers or the third parties will be handled by the company, Swimming Co and the company will consider liable for the acts of Martin. It is based on the Privity of contract that other party to the contract i.e. Martin cannot be considered liable for the contract between Swimming Co and its customers.
Conclusion: As authority was provided to Martin by the company, Swimming Co and the contracts were also developed in the name of the company, therefore, Swimming Co will liable for the damages or losses sustained by the customers (Fitzpatrick et.al, 2017).
Issue: The issue in this part of the given case scenario is whether a claim can be made by the company that Martin is liable for such actions.
Rule: Here, the rule is the Law of Agency.
Analysis: Law of agency means a principal can appoint an agent to work in the capacity of a principal. The agent can get into contractual relationships with the third party in the name of the principal (Bailey, et. al., 2018). The law states that an agent needs to perform certain duties in the capacity of the principal. The duties are mentioned by the principaland the agent needs to fulfill them with skill, care,and diligence. The principal expects that agent will do the work in good faith. The law states that the agent is responsible or liable if he doesn’t abide by the rules. The general rule is that the principal is responsible for the acts of the agents. But the agent is himself liable for some acts in some cases. In the present scenario, Martin is liable for the act committed by him as he has violated the law. Martin has also done fraud by not depositing the full amount of money in the bank. Such funds are kept by Martin for his own benefit as he wanted to establish a business of his own. As a general rule, a person who is employed in an organization cannot start of business with the same object. It can be stated by Martin had the authority to deal with the third party and deposit the funds to the account of the company. However, Martin violated the terms of the contract by not depositing the funds and not providing appropriate services to third parties.
Conclusion: It is concluded that Swimming Co did not authorise Martin for constructing damaged pools and his employment’s terms did not provide him a right to do such an act.
Issue: The issue in this part is whether Martin is under an obligation towards the company for his actions.
Rule: Law of Agency is applicable in the given case scenario as Martin is under employment of Swimming Co which makes Martin an agent of Swimming Co (The Principal).
Analysis: Law of agency is applicable where there is a relationship of the “Principal” and “Agent” between two or more individuals. Such legal arrangement provides the agent various rights, one of which is gettinginto a contract with third parties on behalf of the principal (Bailey, et. al., 2018). However, as per Vicarious Liability, it is stated that for the performance or actions of the employees, the employer will be considered liable.The law also states that an agent needs to perform certain duties in the capacity of the principal and the terms and conditions of the employment contract must be followed in a true and fair manner. The principal expects that agent will do the work in good faith. If the agent does some act beyond his powers and violates the terms and conditions of the contract, then he is liable for his acts.
In the present case, the Swimming pool Company has appointed the manager, Martin to quote the potential customers to install the pools that fit in the cost of the Company. The contract needs to be executed in the name of the Company. All the procedures were done in the same way as written in the contracts. Here Martin has not performed anything which was not written in the contract. In this case, the principal’s liability was not known by the third party.
Issue: The issue in this part is whether Martin has breached any law if he is establishing a business.
Rule: Here two laws are applicable. One is Law of Agency and the other is Contract Review Act 1980. Law of agency is applicable as Swimming Co has employed Martin as its employee which makes him the company’s agent whereas Contract Review Act, 1980 is applicable due to the employment contract between Martin and Swimming Co.
Establishment of business while being in employment with other company is considered as an offense. As stated in the case, Martin wanted to establish his own business and be a competitor of the company, Swimming Co. Moreover, being a full-time employee of the organisation, Martin must not establish his own business as such act is considered asa breach of terms of employment contract (Fitzpatrick, et.al, 2017). It can also be stated that such acts are fraudulent as Martin wanted to set up his own business. The money to be deposited in the account of the company was not deposited in it. A suit can be filed against Martin for breaching the terms and acting in a fraudulent manner.
Conclusion: A suit can be filed against Martin by the company, Swimming Co for the breach of employment contract. It is expected that performances will be the made by the employees in good faith, however, Martin failed to do so.
Issue: The issue involved in the given case scenario is whether a company can be established with the name of “Anzac Coffee” and get it register with authority, ASIC.
Rule: For the case, the Corporation Act of 2001 and its subsections, namely Section 147 and 148 should be applied. The Act is concerned with the companies of Australia and regulation, formation and other provisions related to companies (Meier, et. al., 2015).
Application: There are provisions regarding the selection of the name of the Company and its registration. According to the law (Section 147), a Company can only use a word in the name of the Company when-
The word in not identical to any other name which is already registered or even reserved
The word should be acceptable for registration.
Section 148 says that when a Company is registered, the Company needs to put ‘Proprietary’ or ‘Limited’ after the name. A Company needs to be registered with the Australian Securities and Investment Commission (ASIC) and should attain an Australian Company Number (ACN) to get it incorporated in Australia.
There are two types of companies. One is Proprietary Company and the other is public company. A public company can sell its shares to the Public to raise the fund of the Company whereas a Proprietary can only offer its shares to the existing shareholders and employees to raise its funds. According to Australian Corporation laws, it’s not mandatory for the shareholders to be the existing members or shareholders of the Company. Therefore, in a proprietary company, the shareholders or the members are connected to the promoter in some or the other way.
In the present case, ‘Anzac Coffee’ is the proposed name which the promoter wants to keep as the Company’s name. But in Australia, Anzac is a word which falls under the category of restricted words. According to Protection of word ‘Anzac’ Regulations, it is restricted to use the word Anzac or any related term by any entity or a person unless the Ministry of Veteran Affairs gives the permission to use this word in the name of the Company.
Another aspect in the scenario is related to the type of the Company. Here, the promoters want only his family members to be as the members of the Company. He can definitely do so by incorporating the Company under the category of proprietary company to market his discovery. But with this, he cannot enjoy the benefits of the public company to raise the funds by selling the shares to outside members and shareholders (Fitzpatrick, et.al, 2017).
There are basically two types of Proprietary companies registered in Australia. One is Small Proprietary Company and the other is big proprietary company. To decide the type for a new Proprietary Company, a test is conducted. The parameters for the test are employees, asset value and revenue. When there are fifty or more employees employed by the Company, gross assets have a value equal to or more than $12.5 million or the value of gross revenue is equal to or more than $25 million, then the Company is said to be large proprietary company. Any of two tests have to be cleared to get into the category of large proprietary company. Therefore, in the present case, the promoter’s Company falls under the class of the small proprietary company as at the end of the financial year as it had $10 million as gross revenue, $5 million as Company’s total gross asset and total 20 employees. It is important for the company to increase its scale by hiring more employees according to the growth rate of the company (Lindsay, 2016). In addition to this, the company needs to put focus on its revenue line in order to achieve the status of large proprietary company.
Lastly, with the given trends, if the Company achieves to attain the revenue of $25 million, gross assets of $15 million and more than 50 employees, the Company will become a large proprietary company as it will pass the test to fall under this category. This Company will remain to be a proprietary company after the end of five years also (Lindsay, 2016).
Conclusion: it can be concluded that a Company can be a small proprietary company which can later be converted into Large Proprietary Company after five years when the Company passes at least two tests. As far as the name of the Company is concerned, the promoter cannot use the word Anzac as the name of the Company because it falls under the category of restricted names.
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