FNSSS00005 Commercial Law for Tax Agents Skill Set Assignment – AU

Subject Code & Title :- FNSSS00005 Commercial Law for Tax Agents Skill Set
Assessment Type :- Assignment
Marking Guide 1
Question 1 : Learners need only answer any FIVE out of the ten questions.
(a) Learners should outline i) requires full and ii) truthful disclosure of relevant information before and during the policy by the insured and the insurer.
(b) Learners should include the following elements: i) the relations between persons ( ie need more than two persons) (ii) carrying on a business in common (iii)with a view to making profit.
(c) A trademark is any distinctive mark or symbol that is used to identify the origin of goods and services and distinguish them from competing goods and services. It can be registered.Where as a copyright is an automatic protection of creative works such as musical literary and dramatic works and no registration scheme.
(d) Real Property is land and anything affixed to the land. Personal property is everything other than real property ie chattels real and chattels personal
(e) Public company must have at least one member (with no upper limit) and 3 directors, need not have a share capital, can raise funds from the public and may be listed on the ASX.
(f) Allows electronic documents to be substituted for written and signed paper documents. It allows parties in a wide range of business dealings to enter into a wide range of legally binding electronic contracts and agreements ie parties can use electronic means to make valid and binding agts.
(g) A trust is an arrangement whereby the trustee holds the legal title over the trust property on behalf of the beneficiaries who only has equitable interests over the trust property.To earn full marks learners should also state that it is not a separate legal entity.
(h) Complying superannuation fund is one where it complies with the SISA and the fund’s trust deed ie it is a fund that follows the rules contained in the Superannuation Industry (Supervision) Act 1993 and in the fund’s trust deed.
(i) Insolvency is when a person/company is unable to pay its debt as and when it falls due (s95 A)whereas bankruptcy is a legal status that has been imposed on a person who cannot or will not pay their debts when they fall due.ie a person who can pay his /her debts but refuses to can be declared bankrupt.
(j) Common law remedy-damages and equitable remedies -any one of the following specific performance injunctions, Mareva injunction, Anton Piller order, rectification and rescission.
FNSSS00005 Commercial Law for Tax Agents Skill Set Assignment – AU.

FNSSS00005 Commercial Law for Tax Agents Skill Set Assignment - AU.

Question 2
A. To earn full marks- under contract-learners need to explain the doctrine of privity of contract. Here the contract of purchase of the electric guitars is between Justin Bibi and Rocking Ltd and not with Australian Guitars Ltd therefore Justin Bibi cannot bring a breach of contract action against AG BUT only against Rocking Ltd.

B. Negligence Law-students should outline and apply the elements of negligence ie (i) duty of care exists (use Donoghue v Stevenson’s case) and the fore see ability of harm test( salient features test) (ii) the doc has been breached ie use the tests under CLA s 5(L) and (iii) causation-the breach caused the injury loss harm.(iv) defence-contributory negligence and voluntary assumption of risk Then come to a conclusion as to whether AG is negligent or not. To earn full marks learners should apply tests to question.

C) ACL-can use consumer guarantee provisions Part 5.4–s 54 against manufacturers and importers, ie goods should be of an acceptable quality, fit for its purpose and correspond to its description etc as long as it is consumer goods( ie defined purchase price less than $40,000 or if more than $40,000 ordinarily acquired for personal, domestic or household consumption or use). Also need to discuss Part 3.5-ie manufacturers and importers are strictly liable to users of their goods who suffer injury,loss or damage because of safety defects in these goods. Safety defects is defined in s 9 as “goods will have a ‘safety defect’ if their ‘safety is not such as persons generally are entitled to expect’ having regard to factors such as persons generally are entitled to expect’ having regard to factors such as:

• the marketing of the goods;
• their packaging or any mark use in relation to them;
• instructions for their use;
• what might reasonably be expected to be done with them; and
• the time they were supplied by the manufacturer.

The ACL also provides that an inference cannot be drawn that. All types of goods are covered. Here electric guitar is definitely a consumer good therefore can argue under both Parts. To earn full marks there must be evidence of application of law to the facts of question.

Question 3
(a) Answer should include i)enforcing and interpret the Australian Constitution; hear disputes between States and between states and the Commonwealth and hear appeals from States Supreme Courts, Full Federal Court and the Full Family Court.

b)A supplier guarantees that services are provided:

  • with due care and skill
  • which are fit for any specified purpose
  • within a reasonable time (when no time is set).To earn full marks all three guarantees must be included.

FNSSS00005 Commercial Law for Tax Agents Skill Set Assignment – AU.

c) Answers should include abide by the terms of the trust; for SMSF -the trustee may borrow or maintain a borrowing of money only for/under certain circumstance arrangements for eg

  • to enable the trustee to pay a surcharge or advance installment which the trustee is required to pay under the Superannuation Contributions Tax (Assessment and Collection) Act 1997 — as long as the borrowing complies with section 67(2A) of the SIS Act; follow the guidelines provided by APRA etc. To earn full marks learners should outline at least 2 duties.

(d)Learners should explain that apparent authority is authority a person has/may have as it would appear to a third party. The person may not have actual authority BUT so long as a third party hold the opinion that a person in the shoes of the agent would normally be able to deal/act/transact in a particular manner then the person has apparent authority. If apparent authority is established then the principal is bound by the actions of the agent.

e) Learners should refer to s 115 of the Bankruptcy Act-the doctrine of relation back-relates six months back to the date of the creditors’ petition/debtors’ petition. The first act of bankruptcy within that period is deemed the date of bankruptcy. All properties disposed of on or after this date can be clawed back by the Trustee of the bankruptcy.

Question 4
(a) Learners should:
(i)-discuss whether the company is using replaceable rules as its constitution and if yes then s 254U allows the directors to pay the dividends provided the assets exceed the liabilities etc

(ii) need to outline/explain the capital maintenance principle-essentially that a company must receive proper consideration for shares that it issues and that having received such capital it must not repay it to members except in certain circumstances. Rationale is to protect shareholders’ capital and creditors interests BUT inroads made –reflected in news 254 T(1) (a)-(c) where solvency test is used to determine whether dividends can be paid out or not (5 marks) -to earn full marks learners should cover old test-ie dividends can only be paid out of profits which makes it a further exception to the traditional maintenance of capital principle.

FNSSS00005 Commercial Law for Tax Agents Skill Set Assignment - AU.

(iii) should discuss s 254 V(1)-not bound to pay dividend merely by fixing time and date of payment; decision to pay dividend can be revoked any time before the date and time; However s254V(2) ie if a company has a constitution and it provides for the declaration of dividends the company incurs the debt when the dividend is declared ie it has to pay it –cannot be revoked.

(A) (i) personal property-all movables and leases are chattels
(ii)China Millionaires Travel Club Ltd- are lessee of the property has rights to exclusive possession of the property; NAZ only has secured fixed and floating charge over assets -sports cars may/may not be treated as assets depending on how the company treats it in their balance sheet;

(iii) Sportycars Ltd-their registered secured interests in the sports cars take priority over NAZ Bank Ltd as they are registered first on the PSPR. Yes the Receiver has a right to sell China Millionaires Travel Club Ltd assets and equipment as NAZ has secured fixed and floating charge over all the assets and undertakings of China Travels. Question is the sports cars assets? May/may not be treated as assets depending on how the company treats it in their balance sheet;

(iv) Learners should explain that there is a finance lease agt between Sporty Cars and China Millionares and discuss whether it is a security interest under PPSA( a security interest under PPSA-an interest in a personal property that secures payment or the performance of an obligation by a party). A hire purchase is covered by such a definition.

China Millionares as the lessee of the sports cars has exclusive possession of the toilets. Under the PPS Act secured interests takes priority over unsecured interests and there are also priorities between secured parties-earlier in time gets priority over later registered interests. Because Sporty Cars Pty Ltd has registered their lease first in time; their secured interest takes priority over NAZ’s registered fixed and floating charge and debenture mortgage according to the PPSA.

To earn full marks learners must conclude that 1)a hire purchase agt is a secured interest under PPSA and 2) China Millionaires Travel Club’s secured interest is second in time and is subject to Sporty cars secured interest; therefore cannot sell cars and keep proceeds.

i.No-privity of contract-advice was given to Picassa and monies belong to Vincent
(ii)Vincent could sue the ARZ Ltd and Jobbie for negligent mis-statement.Learners should also elude to the fact that the Bank is vicariously liable for Jobbie.

(iii)Students have to outline and apply the tests established by Shaddock’s case ie was the advice given in a serious matter under serious circumstance (ii) was it reasonable for V to rely on J’s advice(iii) would J have reasonably known that V would rely on his advice (iv) did J exercise reasonable care when giving the investment advice (v) Did the Bank issue a disclaimer.To earn full marks the learner should include a case.

(iv) Learners should outline both defences here and conclude that the most appropriate one here is the defence of the voluntary assumption of risk

b (1)
(a)Answer should include -disclosure of information without the knowledge of other directors-breached (a)s 181-act in good faith and in the best interest of the company(b) s 182(1)-must not improperly use their position to cause detriment to the company (c) s 183 (1) and possibly s 184(1) if he is reckless and intentional dishonest

(b) Price-fixing-illegal-activity-anti-competitive s 45 and cartel conduct –price fixing s 44ZZRD of the CCA

a)Lease= a contract which involves one party ie the lessor granting excusive possession of property to another party ie the lessee for a certain period of time. It also creates an interest in land Licence merely a personal( contractual ) right to use land in some way for eg right over exterior of a building for advertising. It does not create proprietary rights.

FNSSS00005 Commercial Law for Tax Agents Skill Set Assignment – AU.

b) For Torrens title commercial fixed term leases( of 3 years or more option included) the lessees have a right to remain possession of the premises for the duration of the term of the lease provided it is registered. If lease not registered the lessee has equitable interest only and his her leasehold interest is subject to a third party( including the purchaser of the property under lease) who acted in good faith and had no notice of the lease. Old system title-in all cases the lessee has a right to remain in possession until the date of the expiration of the term of the lease.