LLW2008 COMMERCIAL LAW
Please support your problem-based answer with relevant materials including case law. No legislation other than the Partnership Act 1958 should be discussed in this task.
You should use the legal system of referencing according to the Australian Guide to Legal Citation (AGLC), available online from VU
1500 words +/- 10%
Tuesday 12 November 2019 11.59pm
Anne and Beatrice are crazy about woollen products generally and knitting in particular. Their passion is such that they purchased some land in central Victoria to breed sheep. Their plan was to experiment with different breeds of sheep to find the perfect wool for hand knitting. Once found, they would use the wool to knit at their leisure.
Anne has some experience in farming, having studied agricultural science at university. She works at an office job for the Department of Agriculture in town. Beatrice is an accountant with no real interest in farming. She just loves her knitting. Beatrice is an independently wealthy woman who was happy to finance the project. The plan was that Anne would look after the farming and Beatrice would look after the business side of things. Being lifelong friends and trusting each other, nothing about the arrangement was put in writing.
As with many grand plans, this one came to a spectacular end. Beatrice had purchased 20 sheep but because Anne was unable to look after them during the week (because of her work commitments with the Department of Agriculture), they quickly suffered foot rot and Anne was charged with a
summary offence in the local Magistrate’s Court. Too shamed by the incident, she withdrew her involvement in the project.
Beatrice decided to continue on. Indeed, she decided to expand the experiment and turned to wool production as a means of enhancing her already considerable wealth. She engaged Central District Ewes Pty Ltd (CDE), a sheep breeding consultancy business, to manage the property and the wool production business. Finbar, an employee of CDE, was assigned to the project by George, CDE’s managing director.
Beatrice invested a considerable sum of money in the enterprise. The agreement with CDE is for them to buy and sell sheep, breed sheep, shear sheep and sell the wool for which they are paid a regular income and a further commission if profits exceed budget. Finbar’s responsibilities are limited to the hands-on farming. The business end is taken care of by George. The arrangement is that all costs and expenses are to be submitted to Beatrice for approval and payment. If the perfect wool for knitting is discovered in the course of the business then CDE will be paid a considerable bonus.
Business boomed for the first two years but Central Victoria is now in the midst of the Great Flood. Over the last two weeks, all properties in Central Victoria have suffered from the effects of a continuous storm, reminiscent of the great Queensland floods of 2011. Some property owners in the area have been able to save their sheep. Finbar, who is also managing a nearby sheep farm for CDE, has concentrated his efforts to save the sheep at that other property as this is a larger property and the owners pay considerably more to CDE for its breeding consultancy work. Finbar has managed to save some of Beatrice’s sheep at considerable cost to her- they have been air lifted to a farm in New South Wales. The remainder of the sheep have perished on the property.
Unhappy about the incursion of such a prohibitive expense, Beatrice refuses to pay for the cost of the airlift. She has argued that CDE should have sought instructions about whether she wished to relocate the sheep at such considerable expense. Finbar has argued that he was unable to contact Beatrice as Beatrice had left the area with the first drop of rain and all telephone signals were down.
Beatrice is also angry at the lack of effort on CDE’s part to save most of her sheep. She decides that she will not pay CDE for the month and terminates the contract going forward. She advises George of the termination. Given the extensive loss,
she has suddenly lost interest in sheep farming and is going to take up a new pass-time in fly fishing. Knitting is no longer for her.
Unaware of the termination of the contract, Finbar flys to the property in New South Wales to check the condition of the saved sheep. Upon examination he identifies a change in the wool quality – this might be the perfect wool for knitting that Beatrice has so desired. He makes enquiries of Harrison, a wool adviser with whom he has worked over the last two years on Beatrice’s project. Harrison sees great potential here and offers a secret commission to Finbar if Finbar will sell half of the existing stock to him. Harrison is prepared to pay a price far in excess of normal market rates (even accounting for the sudden increase in price due to the scarcity of stock caused by the Great Flood). Finbar agrees to the sale. He thinks it is a great deal for Beatrice and he gets a bonus for himself. He reasons that, but for his actions, Beatrice would not have any sheep to sell. This is, he thinks, a ‘win/win’ situation. Harrison deposits the agreed sale price directly into CDE’s account as instructed by Finbar. He pays Finbar’s secret commission in cash.
Beatrice has much to say when she gets wind of the change in wool quality and the sale of the sheep. She is happy that there was some progress in the search for the ideal knitting wool but not so happy that she wants to return to that business. She has better fish to fly. She is angry that the sheep have been sold on her behalf but happy to be rid of half of her remaining stock, given her decision to quit the business. Indeed, she would like to get rid of the remainder.
Harrison, on the other hand, realises that the change in the appearance of the wool was just due to the conditions that the airlifted sheep had faced. The airlifting had created a lightness in the wool that had turned to normal after a period of pasture. He wants to return the sheep.
1. Explain the relationships between Beatrice, Finbar, George and CDE. (3 marks)
2. Can Harrison return the sheep? (10 marks)
3. What are Beatrice’s obligations to CDE? (6 marks)
4. What is CDE’s liability with respect to Beatrice’s sheep that perished on the property? (3 marks)
5. Does Finbar have any liability for any of his actions? (3 marks)
6. Is Anne entitled to any profits from the experiment or the sheep breeding business? Why/Why not? (10 marks)
PLUS 5 marks as per rubric criteria covering expression and presentation, appropriate to the discipline (including IRAC and AGLC referencing).