Business And Corporation Law For Industrial Employment Law

Solution 1

Describe about the Business and Corporation Law for Industrial Employment Law.

Issues

Whether Richard’s father is liable to Richard for the weekly allowance?

The law which deals with the present issue is the law of contract and in order to provide conclusion to the issue aroused, analysis of the elements of the law of contract is necessary.

A contract is created when a person gives an offer to another with a view of the same being accepted by that other person. Along with an offer and acceptance there also should be consideration that must be involved, the parties to a contract must be major and the intention of the parties must be there to be in legal relation with each other. All the essentials of the contract must be there in order to be a valid contract. Combination of offer and its acceptance cannot be termed as a contract as it is just an agreement and to become a contract it must have capacity of parties, intention and consideration (Coulls v Bagots Executor & Trustee Co Ltd. (1967). Agreement is a broader term when compared to contract as all contracts are agreements but all agreements are not contracts.  (The Law Handbook 2016)

An offer is an intention which the offeror communicates to an offeree specifying his expectations in the offer and expects that the terms which are specified by him will be approved by an offeree  (Payne v Cave (1789). In order to make a valid offer it is necessary that an offer must be specific and not vague in the eyes of law. An offer can be general offer which is open to world at large or for a specific person Carlill v Carbolic Smoke Ball Co (1893).

But many a times an offer is confused with an invitation to treat. Mainly, whenever goods are displayed in shop window with price tag for sale or auction or advertisements etc. then, the same cannot be categorized as an offer as the same falls within preview of invitation to treat. In case of invitation to treat the offers are invited by the prospective customers or bidders and when their offer is received and when the same is accepted by the inviter, then a concluded contract is formed between the two parties. (The law Teacher 2016)

An Acceptance is said to occur when the offer is assented by the offeree. The acceptance is only valid when the same is communicated by the offeree to an offeror Acceptance is only valid when the same is equal to offer and in case of variation in accepting the offer, the acceptance is not valid and gives rise to another offer which is known as a counter offer which makes the original offer terminated (Latec Finance Ltd v Knight (1969). (Gillies, 2004)

Solution 2

A Consideration is the value which may be in kind or in monetary terms which is paid in return of the performance of promise by one to another (Australian Woollen Mills v The Commonwealth (1954). A consideration is basically a support which is provided to the promises to make it enforceable in law. (Moles & Sangha 1998)

The capacity of parties to a contract must also be present to make a valid contract. The parties to a contract must be of sound mind and must have attained majority then only they can be considered to have capacity to contract. In case either party does not has capacity to contract then the contract is a voidable at the instance of the party who does not has capacity to contract. But, whenever a contract is made by a person who has not attained the age of majority but the contract is for his necessity (Nash v Inman (1908) & (Peters v Fleming (1840) or employment  (De Francesco v Barnum (1890) then such contracts are for the benefit of the minor and are valid and thus are enforceable as per law of contract. (Spencer & Brogan, 2006)

The intention to be in legal relation with each is other should also be there while formulating a contract. If the same is absent from the contract there cannot be a valid contract  (Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1989). It is a general presumption that the intention to be in legal relation is there in commercial transactions and likewise the same is presumed to be absent in social and domestic transactions unless the same is disapproved by party to a contract Balfour v Balfour (1919) &  (Adicho v Dankeith Homes Pty Ltd (2012). But, a valid contract can also be established amid family members provided it is established that they intent to abide by the contract legally Ermogenous v Greek Orthodox Community of SA Inc  (2002). (Clark 2010)

The applicable law is now applied to the facts.

Richard is a student who entered into an arrangement with his father and agreed that he will maintain the front and backyard of family property mowed. On this his father agreed to pay an amount of $200 as weekly allowance to Richard for the work as promised by him. Before this the same work was done by a garden contractor who was paid an amount of $350. Thereafter Richard’s father after four weeks told him that he will not pay Richard for the work as agreed as he being a family member should do this work for free.

Issues

Thus,

As per the facts of the case Richard’s father agreed to pay Richard for keeping the front and backyard of family property mowed but later he backed out.

There is a contract between the two as there was offer and acceptance along with consideration of $200 involved.

In case Richard is considered to be a minor then also the contract is valid as it is for the employment and necessity of Richard and such kinds of contract are held to be valid in (Nash v Inman (1908).

Moreover the basic ingredient which is to be considered is the intention of the parties to be in legal relation. In the instant case the intention to be in legal relation from the facts of case seems to be present as though it is a contract between father and son but there was consideration involved and moreover the intention of the father to pay is more strengthened as he was earlier also paying for same work to garden contractor.

That from the facts of the case it is clear that all the ingredients of contract are present and thus father of Richard will have to pay him the due consideration of $ 200 for the work undertakne by Richard.

Conclusion

As there is a concluded contract between Richard and his father, so Richard’s father is bound to pay Richard as there was intention of both the parties to be in legal relation when the contract was formed between two.

Issues

Whether Joe will be liable to Frère Bros for the breach of restrain clause?

As and when a contract is formed between an employee and an employer, then, an employer imposes certain restriction upon the employee at the time of offering the employment. These restrictions are generally imposed upon an employee by employer so that the employee does not share confidential information relating to the employer’s company with some other person and in turn affect the reputation or goodwill of the employer company which had been achieved by the employer by working hard. The clause which thus restrain the employee from working with a company in similar business for certain span of time or in certain location such term is known as a non compete clause  (Woolworths Limited V Mark Konrad Olson (2014). If the conditions imposed are unreasonable then such clause if invoked by employer does not stand in court of law but a reasonable clause is binding upon the employee. (Gibson & Fraser, 2014)

Relevant Law

A non compete clause must be so designed that it must be reasonable and should not be against the public policy or law. The same must also be designed in such a way so that it does not in any way cause obstruction to the legal claims of the employee. When the restrain clause is unreasonable then it is considered as invalid as a restrain clause for restraining employee not to work in similar business for more than two years was held to be invalid by court in Smith v Nomad Modular Building Pty Ltd (2007) as court held that the period was unreasonable and did not allowed and validated the plea of the employer in the instant case and ruled in favor of employee. (Hopgood Ganim 2016)

But if the clause is incorporated to protect the secrecy or confidentiality of the company then in that case it is valid as the important information of the company which is vital for the company if is shared by the employee with other persons then it will cause irreparably harm to the employer and thus ruin the business of the company (AGA Assistance Australia Pty Ltd v Tokody (2012).. This clause is also incorporated as in certain cases an employee can join an employer with the aim of taking information from him and thus can help his previous employer by taking the relevant information and thus in turn leaving the employer after achieving the motive  (Nordenfeldt v Maxim Nordenfeldt Guns and Ammunition Company (1894). The court on many occasions had held the non compete clause to be valid when the clause is incorporated for safeguarding the interest of the employer as interest of employer is the main reason for which he incorporates such clauses (Stenhouse Australia v Phillips (1974). Protection of legal interest and Goodwill are also reasons for which such clauses are incorporated as thus whole business is based on confidential information and in case such information is made public by the employee then the employer will suffer.

Thus, as far as the non compete clause is not against the legitimate interest of the employee and for safeguarding the interest of the employer then in that case the clause is valid. The same should be reasonable and thus should not be against the public policy.

Joe who is a well-known film actor entered into a contracted with Frère Bros for five years and as per the contract Joe agreed to exclusively provides his acting services to Frère Bros and he further agreed not to act in film for any other company. But during the first year only Joe contracted with Pretty Pictures.

Application of Law

In the instant case law provided in assignment, Joe was employed by Frère Bros for a period of five years as an actor to work with him. Frère Bros further restrained Joe not to work for anybody else for five years through a contract executed between them.

The clause is considered to be invalid in nature. This is because the clause was am period of five years. In the leading case of Smith, it was rightly held that the basic restrain that can be imposed on any person is up to one year or at most two years. If any person wants to impose a restrain of more than such period of time then there must be legitimate interest of the employer which must be secured by such restrain.

Frère Bros has to prove that hi legitimate interest is protected otherwise the clause cannot be held valid as the same will affect the public policy and legitimate interest of Joe.

Further, Frère Bros can rely on the application of such retrain only when it can prove that the restrain is necessary for protecting the confidentiality of the company and the good will of the company.

If Frère Bros is not able to prove the same, then, the restrain is not valid.

Conclusion

The restrain of five years upon Joe is only valid when the same is required tom protect the confidentiality, good will and legitimate interest of Frère Bros. otherwise the clause is not valid and no restrain can be imposed upon Joe.

Reference List

Gibson, A & Fraser, D. (2014) Business Law 2014. Pearson Higher Education AU.

Clark J (2010) Intention to create legal relations (online). Available at: https://www.australiancontractlaw.com/law/formation-intention.html. [Viewed on 19^th September 2016]. 

Gillies, P. (2004). Business law. Federation Press.

Hopgood Ganim (2016) Non-compete Clause (online). Available at: https://www.hopgoodganim.com.au/page/Publications/Industrial_and_Employment_Law_Alert_Recent_court_case_provides_clues_to_successfully_enforcing_non-compete_restraint_obligations_-_31_Aug_2012/. [Viewed on 19^th September 2016]. 

Moles & Sangha (1998) consideration (online). Available at: https://netk.net.au/Contract/04Consideration.asp. [Viewed on 19^th September 2016]. 

Spencer, D & Brogan, M. (2006) Mediation Law and Practice. Cambridge University Press.

The law HandBook (2016) Elements of contract (online). Available at: https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/. [Viewed on 19^th September 2016]. 

The Law Teacher (2016) cases on formation of contract offer (online). Available at: https://www.lawteacher.net/cases/contract-law/agreement-cases.php. [Viewed on 17^th September 2016]. 

Case law

Adicho v Dankeith Homes Pty Ltd (2012).

Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1989).

AGA Assistance Australia Pty Ltd v Tokody (2012).

Australian Woollen Mills v The Commonwealth (1954)

Balfour v Balfour (1919)

Carlill v Carbolic Smoke Ball Co (1893).

Coulls v Bagots Executor & Trustee Co Ltd. (1967).

De Francesco v Barnum (1890). 

Ermogenous v Greek Orthodox Community of SA Inc  (2002).

Latec Finance Ltd v Knight (1969).

Nash v Inman (1908).

Nordenfeldt v Maxim Nordenfeldt Guns and Ammunition Company (1894).

Payne v Cave (1789).

Peters v Fleming (1840).

Stenhouse Australia v Phillips (1974).

Smith v Nomad Modular Building Pty Ltd (2007).

Woolworths Limited V Mark Konrad Olson (2014).