BUSINESS LAW

Question 1 is weighted at 20% **The IRAC method is not required for Q1

Question 2 and 3 are weighted equally. **You must use the IRAC problem-solving method to answer Q2 and Q3 (see James, pp 143-148 for guidance).

STAR TREK THEMED CAFÉ

QUESTION 1

You and three friends (Adam, Ben and Charlie) have decided to open a Star Trek themed cafe. It will be named "Enterprise Café." You have all decided it will be a company that is limited by shares (a proprietary limited company).

Only Adam and you will be directors, but all four of you will hold equal shares in the company. Explain the steps to do the following:

A. Register as a Pty Ltd company with ASIC.
B. Register the business name.

QUESTION 2

You and Ben decide to attend Comic Con to promote "Enterprise Cafe". You have purchased a stand for your displays, and both you and Ben are manning it wearing your favourite Star Trek uniforms. On the back you have had printed "Enterprise Cafe" and the location of the cafe. Both of you have been purchasing different merchandise for the café. You purchased Star Trek themed dishes for $250.00. Ben purchased Star Trek cutlery for $150.00.

Eddie is a fanatical Star Trek fan and makes Star Trek replicas of the spaceship Enterprise. He has the display stand next to you, and you and Ben have been interacting with him during the first two days of Comic Con. You have both talked to him in detail about "Enterprise Café" and the plans you have for the café. On Day 3 of Comic Con you are unable to attend and Ben looks after the stand on his own. Eddie says to Ben, "I have a great business deal for you. I know you have been buying things for your café. You can buy one of my replica space ship Enterprises for the café for $5,000, a saving of $2,000." Ben loves the idea of having a replica Enterprise and agrees that "Enterprise Pty Ltd" will purchase a replica. Ben and Eddie sign an agreement for $5,000 to be paid when Eddie delivers the Enterprise to "Enterprise Café" the next weekend. Under Ben's signature are the words "Director of Enterprise Café Pty Ltd."

The next day Ben meets with you and Adam and tells you of his agreement to purchase the replica at the bargain price. Adam is upset and states that Ben had no authority to purchase something that expensive. "We cannot afford it," he says. Adam and you both agree that "Enterprise Cafe" will not pay for the replica.

Using relevant legal principles, explain who is liable for the payment of the replica - is it "Enterprise Cafe" or Ben?

QUESTION 3

"Enterprise Café" is very, very busy and you have a high turnover of customers in the café.

You have now received a letter from the ACCC asking you to respond to two matters that have been brought to their attention:

1. You have a special savoury bun in the shape of an alien, called "The Delightful Borg". The bun has been crafted in accordance with a special recipe, but it looks very similar to a savoury finger bun that Bakers Delight sells. Bakers Delight has complained to the ACCC saying that that is misleading and deceptive.

2. You advertise that "a contribution from every sale goes to charity" but, in fact, there is no record of any such collection being made nor sent.

Please discuss the legal obligations.