Business Law Homework
- Manuel Schmick graduated from the National University of Hairdressing with a major in hairstyling for spunky lads. After attending his graduation, Manuel watched a youtube video that inspired what he deemed to be his true calling; opening and owning a chain of hairdressing salons in Western Sydney specialised in male grooming. In early 2019, Manuel decided to expand his business across New South Wales. He scheduled and attended a meeting with Loren Knowsitall, an accountant and financial adviser, for the purpose of discussing his financial position and the prospects of business expansion. They discussed Manuel’s expansion plans and Loren agreed to prepare a business plan for Manuel and his alleged hairdressing empire. Loren advised Manuel that he was in a sound position to expand the business and recommended that he borrow money to set up five salons in Sydney’s Eastern suburbs. Manuel relied on Loren and acted on his advice. In July 2019, he borrowed $2,500,000 from Ripoff Credit, a small credit union that provided a loan and overdraft facilities. Manuel then signed five three-year leases, bought hairdressing equipment, employed two international celebrity hairstylists, and hired Tracey’s Designs & Graphics to design a webpage for his growing business. Then things went sour and financial tragedy stroke. Loren admitted that she had not adequately factored in Manuel’s pre-existing debts, had underestimated the significant establishment costs associated with setting up businesses in Sydney’s Eastern suburbs. Loren explained to Manuel that in addition to reviewing his financial position, she also consulted her tarot cards on the matter and the reading showed that Manuel’s business would reach financial glory. Manuel has suffered great losses as a result of this advice and is unable to pay Ripoff Credit. Advise Manuel on any rights and liabilities arising from these facts, citing relevant statutory and case law authority, using the ILAC format of legal problem solving.
- Manuel’s husband, Cecil, and Cecil’s long term lover, Roger, decided to rekindle their long term open relationship after attending their second appointment with relationship expert, Dr Holy Moly. Immediately after leaving their couple’s session, the pair decided to go to the club where they first met, ‘The Joyful House of Ill Fame’. There is a pedestrian path that leads directly to this renowned hot club but it would take them about one hour and a forty five minutes to make the journey. As they were impatiently looking forward to spending quality time alone, the couple decided to borrow two push bikes from their friend Sweet Brownie to ride along the cycleway which runs parallel to the freeway to the city. The cycleway enables them to reach the club in about 25 minutes. Sweet advised them to use the cycleway as opposed to the actual freeway but they are feeling adventurous and decide to disregard Sweet’s advice and ride along the freeway. There are several signs which read “DANGER ! DO NOT WALK OR RIDE ALONG THE FREEWAY”. They are not wearing fluorescent or reflective garments and Cecil’s bike is missing its red rear reflector. Both bikes lack front lights although Roger’s has a flashing taillight. In the meantime, a Holden Barina displaying red Ps, driven by Bob comes around a bend in the freeway. Bob takes his eyes off the road for a moment as he rummages through his man-bag to grab his phone which alerted him that he had received a hot snap from his crush, Tallulah. His car veers to the left, and crashes into Cecil and Roger’s bikes, breaking 12 of Roger’s bones. Advise Bob on any liabilities arising from these facts, citing relevant statutory and case law authority, using the ILAC format of legal problem solving.
Question 2 [15 marks]
Cecil Sagdiyev owns several Kyrgyzstani restaurants in New South Wales. He and his family has solicited your advice as to their contractual liabilities and rights arising out of these circumstances:
- On 22 September, Cecil meets Ranie over lunch. Ranie owns a small dairy farm called ‘The Mighty Cow’’. After some negotiations, Ranie offers to sell Cecil 100 kgs of Wagyu beef and 20 kgs of lamb-shanks for $4600. She also tells him that she will keep the offer open for the next 24 hours. Four hours later, Ranie receives a call from Angel who offers $4900 for the meat. She immediately accepts Angel’s offer. Cecil calls five hours later ( within the 24 hours period) and informs Ranie that he accepts the offer, want his meat delivered and that he will sue her for breach of contract if she does not comply with their deal.
- Cecil agrees to buy a new motorbike for home deliveries. He approaches The Speedy Brothers Bikes & Motors Pty Ltd and makes enquiries about a couple of bikes. He agrees to purchase a Honda CBR 500, 2019 model for $8,000. After the contract is signed he asks Gus, the sales manager, if they will provide the first service free of charge. Gus agrees. Two months after the purchase, the bike needs to be serviced and Gus is reluctant to honour his promise.
- Cecil commenced negotiations to lease some commercial premises to be used for their new restaurant in Leura. Part of the negotiation concerned the ability of Cecil to demolish a wall in order to remodel the interior and build a pizza oven. Nano, the landlord, shook Cecil’s hand and told him they had a deal and that he could go ahead and get started. Cecil took a large bank loan to finance the re-modelling. Four weeks later, Cecil received a letter from Nano indicating that he did not intend to proceed with the lease. Cecil has already spent $120 000 on the remodelling but has not received a signed lease as yet. He has also hired two International chefs to work at the new restaurant.
- Cecil’s parents, Mr and Mrs Sagdiyev, migrated to Australia from Kyrgyzstan in 1957. They are dependent on their two sons, Cecil and Borat, for advice and support. They have limited education, no business acumen and poor language skills. Their only income is their age pension. They own their home which is valued at around $550,000. Borat is a charming but feckless business man who is always on the verge of something great. In 2018, he needed $265,000 to pursue a dot com opportunity that would make him as rich as his brother Cecil. He is able to borrow money from The Con Bank but only after he persuades his parents to act as guarantors. He misleads his parents as to the extent and purpose of the loan. The bank is unaware of this. After investigating their financial position the bank manager meets with Mr and Mrs Sagdiyev and go over the guarantee contract. He asks whether they had any questions and when they do not, they signed the documents as required. Borat uses the money in an internet company. The company becomes insolvent and Borat loses his entire investment. When he is unable to repay the loan, Com Bank looks to the parents to honour their obligations as guarantors.
Assume that you are Cecil’s solicitor and that he has asked you for legal advice. Advise him as to what contractual liability, if any, he and, or his family have in the above circumstances, citing relevant case law authority and using the ILAC format.