Law Make Decisions Within Legal Context

Question 1: 1. Kenny and Duke must register this business name. According to the Business Names Act, 2002, the legislation states that it is compulsory to register a business name where a person, including a company, wishes to use a name other than their own.

2. To register a business name, the owner or owners must submit an application form and pay the prescribed fees to the appropriate government agency. In New South Wales, it is called the Office of Fair Trading.

3. There are certain requirements to the display and use of a business name. The business name must be displayed at each place where the business is carried on under the business name. The owner of the business name must notify the consumer affairs agency, such as the Office of Fair Trading in New South Wales, of any changes in ownership, addresses and so on. Failure to do so may result in penalties and cancellation of registration.

4. Kenny and Duke do not have a copyright in their business name yet until they register their business name under the registration of trademarks. They can first search the Register of Trade Marks before registering their business name, to check that the name has not been registered by someone else as a trade mark. Once they have registered their business name as a trademark, then they will have exclusive rights to use or control the mark.

5. Kenny and Duke must also obtain an Australian Business Number (ABN). Following the introduction of the GST in 2000, all businesses in Australia should have an Australian Business Number or they may be liable for the withholding of 48.5% on payments.

Question 2:

1. The issue in this situation is whether Food Hall is a holder in due course under the Cheques Act 1986. In Section 22 of the Cheques Act 1986, bearer cheques are defined to be payable either to the party named as payee, in this situation, M Mouse, or to any person, who is the holder or ‘bearer’ of the cheque, who presents the cheque at the bank or financial institution. The Act defines ‘bearer’ as the person in possession of the cheque. According to the Nemo dat rule, it states that a person cannot pass on a title which that person does not possess.

In other words, the Nemo dat rule says that when a property is transferred, the transferee cannot acquire a better title to it than the transferor had. In this situation, Melanie Moose, who stole the cheque from Mickey Mouse, holds no title, and when Melanie Moose transfers the cheque to ‘Food Hall’, the manager of ‘Food Hall’ does not hold any title as well, or in other words, holds the same title as Melanie Moose.

But the exception to the Nemo dat rule is the holder in due course. When the manager of ‘Food Hall’ receives the cheque from Melanie Moose and takes it to the bank, the manager is the holder in due course and therefore has good title even though it was taken from a thief. It is defined in Section 50 that a holder in due course is a holder to whom a cheque is negotiated where, at the time of negotiation, the cheque * Is complete and regular on the face of it

* Is not stale * Does not contain a “not negotiable” crossing. The holder must have also taken the cheque in good faith, for value and without notice of any dishonour of the cheque or defect in the transferor’s title. In this case, the manager of ‘Food Hall’ receives the cheque from Melanie Moose for giving her $100 cash and $400 worth of groceries and therefore holds good title.

When the bank refuses to pay ‘Food Hall’, the manager can sue Melanie Moose for the amount of the cheque, because the holder in due course deserves the payment for the cash and the groceries that they have given to Melanie Moose regardless of what happened before the cheque was negotiated. Under Section 50(1) (b), ‘Food Hall’ must prove that they had received the cheque in good faith, for value and without notice of any dishonour or defect from the title from Melanie Moose.

2. According to the Cheques Act 1986, only two crossings on cheques are recognized: * Two parallel transverse lines across the face of the cheque The legal effect of this type of crossing serves as a direction by the drawer to the drawee institution not to pay the cheque otherwise than to a financial institution. This means that the payee, or the endorsee, cannot cash the cheque but must pay it into his or her own account with a financial institution. That institution, called the ‘collecting institution’, must then collect it from the drawee institution.

* Two parallel transverse lines across the face of the cheque with the words ‘not negotiable’ between the lines Where a cheque bears not only two parallel transverse lines but also the words ‘not negotiable’ between them, the cheque can still be transferred but it cannot be ‘negotiated’. This means that the transferee does not receive and is not capable of giving a better title to the cheque than the transferor had. The effect of crossing a cheque ‘not negotiable’ is to warn the transferee that their title is subject to prior defects in title. The Nemo dat rule is reimposed.

Question 3: 1. The term ‘title’ refers to a person’s rights to ownership of property. When we say a person has title to land, we mean that they ‘own’ it. The main system of land title in Australia, including New South Wales, is Torrens title. This form of title replaced the old system title, inherited from England under the doctrine of reception.

The Torrens title is a system of title based on registration. This means that the land owner is registered as the owner at a state government registry. In New South Wales, the registry is called Land & Property Information (LPI). Following the re-organisation of the NSW public service, the Land & Property Infromation is now part of the Department of Lands. Once a person is registered, no one else can upset or challenge that ownership. This is called indefeasibility of title. One exception is if the title was acquired by fraud. The Torrens title is a government guaranteed form of title.

The essential benefits or features of the Torrens title system is that a single document, the certificate of title, conclusively proves the title. There is no need for a prospective purchaser to search back through a series of documents in order to establish a good root of title.

Under the indefeasibility of title, various provisions of the Real Property Act 1900 (NSW), once a person has registered their interest in a parcel of land, they have government-guaranteed, indefeasible title to the land. That person’s title, however, will be subject to any encumbrances such as mortgages registered on the certificate of the title. The title is said to be indefeasible because it can only be set aside where there has been fraud on the part of the person acquiring the title.

2. A mortgage is a loan contract whereby the borrower gives their property as security to the lender. During the term of the loan, the borrower retains possession of the land. In a mortgage, the borrower is called the mortgagor and the lender is called the mortgagee.

A mortgage provides more protection to a lender than just a loan contract because, in the case of a mortgage under Torrens Title, the mortgagor has legal title to the property and the mortgagee has a security over the property for the money loaned. The mortgagor can transfer ownership of the property, but the mortgage must be discharged before the transfer can be registered. The remedies of the mortgagee when a mortgagor is in default are: * Sue for breach of contract

The mortgagee can also sue the mortgagor personally for the mortgage debt.

* Power of sale/ To take possession The mortgagee can exercise a power of sale, but only after there has been a default in the mortgage payments that exceeds one month and a written notice has been served on the mortgagor. The notice must warn that the land may be sold if default continues for one month after service of the notice. The proceeds of the sale are applied as in old system land. The mortgage can also enter into possession and collect rents.

* Appointment of a receiver The mortgage can, subject to the provisions of the mortgage, appoint a receiver to take over the running of the property.

* Foreclosure The mortgagee has a right of foreclosure if there has been default for six months. The mortgagee must apply to the Lands Department stating the length of time of the default, that the power of sale has been exercised but that the highest price offered at a public auction did not satisfy the debt and that the mortgagor has been given written notice of the application to foreclose.

3. The importance of determining when the ownership passes to the buyer under a contract for sale of goods are: * Risk that passes with the ownership such as risk of damage and loss of the goods. This means if the goods are destroyed, damaged or stolen the loss falls on the party who owned the goods at the time.

* Insolvency of a party If one of the parties becomes insolvent, whether or not ownership has passed determines whether a liquidator or trustee in bankruptcy can seize the goods. Unless otherwise agreed, the goods remain at the seller’s risk until ownership is transferred to the buyer. When this occurs, the goods are at the buyer’s risk whether or not delivery has been made. However, if the delivery has been delayed through the fault of either the seller or the buyer, the goods are at the risk of the party at fault with respect of any loss which might not otherwise have occurred.

* Nemo dat rule The Nemo dat rule states that only the owner of goods can pass title on to someone else.

The remedies may also differ depending on whether ownership has passed to the buyer or not.

The Romalpa clause is a clause that specifically reserves the rights of the seller and which gives the seller the rights to trace the goods to recover payment. The seller, can, in the contract of sale, make special provision by using a Romalpa cause. A seller might include the Romalpa clause in a contract for sale because the clause gives them an equitable interest or charge over goods. If the buyer fails to pay, or becomes bankrupt or goes into liquidation, the seller can try to repossess the goods on the ground that ownership had never passed. The practical value of the clause is limited, especially when the debtor is a company.

Question 4: 1. The issue in this situation is whether Angioletto’s Shoes and Accessories has engaged in deceptive or misleading conduct. According to the Australian Consumer Law, Section 18 prohibits a person, in trade or commerce, from engaging in a misleading or deceptive conduct. This prohibition is not limited to the supply of goods or services and creates a broad, economy-wide norm of conduct. A conduct includes advertisements, promotions, quotations, statements or any other representation made by a person.

The business conduct is likely to breach the law if it creates a misleading overall impression among the audience about the price, value or quality of consumer goods or services. The false or misleading representations regarding the country of origin are also a breach in the Australian Consumer Law. Under section 254-258, it states that businesses should not make false or misleading representations about the country of origin of goods. A representation about the country of origin includes words that are indicating that the goods were made or produced in that particular country.

The false representation can be attached to the goods in the form of a label and also in the promotional material linked to the goods. For a business to claim that their goods are ‘made in’ or ‘manufactured in’ a specified country, the goods must be substantially transformed in that country and 50 per cent or more of the total cost of producing or manufacturing the goods must be incurred in that particular country. In this situation, Angioletto’s Shoes & Accessories breaches the Australian Consumer Law by making a false representation in their advertisement of the shoes being ‘Made in Italy’ of ‘the very finest quality Italian leather’.

The small stickers that Penny found on the shoes indicating that they were actually ‘Made in China’ of ‘imitation leather’ proved that Angioletto’s has given a false representation of their product to their customers. This conduct breaches Sections 18, 29 and 254-258 of the Australian Consumer Law. Furthermore, when Penny returned the shoes back to them and asked for a refund of money, the Angioletto’s store manager refused to refund her money and instead pointed to a sign that read ‘WE EXCHANGE BUT DO NOT GIVE REFUNDS’.

The area of law that is breached in this situation is the Unfair Practices under the Australian Consumer Law. Section 64 states that suppliers must be very careful about what they say to consumers and in the wording of any signs, advertisements or any other documents. Signs that state ‘no refunds’ are unlawful, because they imply it is not possible to get a refund under any circumstance, even when there is a major problem with the goods. In this situation, Angioletto’s have breached Section 64 by having a ‘No refund’ sign board.

They have sold goods to the customers which do not meet the standards of their advertisement but also have a rule of not refunding the customers money if there is a problem with the goods. Although Angioletto’s agrees to exchange the goods with real Italian leather shoes for the customer, the customers might not further trust them for their goods anymore and would want a refund of their money.

2. Penalty: Under Section 224, a person who breaches specified provisions of the Australian Consumer Law will be liable to pay a civil pecuniary penalty of up to $1.1 million for bodies corporate and $220,000 for persons other than a body corporate. A civil pecuniary penalty may only be imposed by a court which has found that, at the civil standard of proof, a breach of the Australian Consumer Law has occurred. Civil pecuniary penalties enable a targeted and proportionate regulatory response, in addition to increasing the deterrent effect of consumer law provisions.

Damages: Section 236 of the Australian Consumer Law provides a right for a person to apply to a court for damages to compensate them for their loss or damage resulting from a contravention of the Australian Consumer Law.

Punitive orders: Section 247 of the Australian Consumer Law gives a regulator the power to seek an adverse publicity order in connection with a contravention of the Australian Consumer Law.

Non-punitive orders: Section 246 of the Australian Consumer Law gives a regulator the power to seek a non-punitive order in connection with a contravention of the Australian Consumer Law. The court may impose a remedy to redress harm suffered in the community from a contravention, and which will help those in breach to comply with the Australian Consumer Law in the future.

Injunctions: Part 5-2, Division 2 of the Australian Consumer Law allows a court to issue injunctions with respect to contraventions or attempted contraventions of the Australian Consumer Law or conduct which relates to either of those things. Injunctions may be of four classes:

* Restraining injunctions * Performance injunctions * Consent injunctions * Interim injunctions

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Question 5: