ACCY5105: Commercial Law Assignment | Open Polytechnic

ACCY5105 Assignment

IMPORTANT:

1. Do NOT pdf. This must be submitted in word.
2. Submissions should NOT include the questions.
3. Clearly indicate the task.
4. Answer ONLY in the order provided.
5. Word Limit –  Range 25-50 words per mark. This is a guide. MAX allowed is 50 words per mark. Concise answers are encouraged.
6. Refer to policy on AI and plagiarism. Use the plagiarism submission check for the assignment.
7. Referencing of cases may use Legal referencing, the case name and legal reference.

Note:  You may use legal referencing where appropriate including legislation and may abbreviate eg PS for Partnership Act, CA for Companies Act, TA for Trustees Act.  Reference the relevant section used.

Checking prior to submission.  There is a link on canvas where the test is downloaded to check AI and similarity.

Instructions:

You are required to select a business of your choice (e.g., manufacturing, retail, technology services) to apply the legal principles discussed in this assignment. You must create relevant facts and scenarios based on your chosen business to address each task.

Add facts from your business to illustrate or apply the law in completing the task.

The assignment is divided into four parts: Contracts and Fair Business Practices (LO2), Negligence (LO3), Ownership and Risk (LO4), and Security Interests (LO4). This assignment constitutes 50% of your final grade, so detailed and thorough responses are expected.

Your Business

Briefly describe your business.  This is not a business plan and does not need detail. Simply set out the basic business. If you have difficulty the lecturer will assign you a business.

This is a simple description of the business, who it sells to, who it buys from, premises. You can add more facts as you need to throughout the assignment. No more than 400 words initially.

Part 1: Contracts And Fair Business Practices (LO2) [10 MARKS]

Scenario Setup:

Your business has been approached by a new client which is interested in procuring your products/services. The engagement involves multiple stages, including negotiations, contract formation, and ongoing business dealings.

• Describe your product or services.
• The new client has contacted you with an interest in your product or service

TASK 1 : Drafting Communication:

Explain the legal rules distinguishing each type of communication below, and discuss how each impacts the formation of a contract for the following.  After each explanation draft a communication that illustrates applying the law.

• An answer to a question posed by the prospective client. (2 marks)
• An invitation to treat. (4 marks)
• An offer (4 marks)

Task 2: Responding To The Prospective Clients Offer. [9 MARKS]

The Prospective Client receives your invitation to treat.

The client makes an offer to you from the invitation to treat.

Your business needs to respond. This response could take the form of a further inquiry, you making changes to the Prospective Clients offer, or a rejection of the offer.

a. Further Inquiry: Draft a communication that seeks additional information or clarification about the offer without committing to acceptance or rejection. Explain how this inquiry impacts the status of the offer.

(3 marks)

b. Changes to the offer: Draft a communication that proposes different terms from those in the original offer. Discuss the legal implications of making a counteroffer, particularly how it affects the original offer.

(3 marks)

c. Rejection: Draft a communication that clearly rejects the original offer. Explain the legal consequences of this rejection in terms of how it affects the original offer and what this means for both parties in relation to sourcing and supplying goods or services.

(3 marks)

The terms of your Contract

TASK 3. Terms [5 MARKS]

Draft any ONE express terms for your contract.

Identify ONE term implied on the basis of business efficacy for the express term you drafted. Explain how this implied term supports the operation of the contract.

Identify ONE term implied by statute that would apply to your contract. Provide a brief explanation of the statutory provision that implies this term.

Electronic Exchange and Contract Formation:

The client sends an email saying they are ready to buy and set out the product or services they want and ask for a quote. You reply with a statement of price, quantity and delivery details and a purchase order form for completion. The prospective client responds agreeing and completing your purchase order form.  All communications were by email.

Assume both businesses operate in New Zealand. You are in New Zealand. The Prospective client is a business owned by one person as a sole trader who is in Australia (on holiday)  throughout the negotiation and contract agreement.

TASK 4 : [5 MARKS]

Discuss how the electronic exchange affects the formation of the contract under the Contract and Commercial Law Act 2017.

Negotiating complex situations:

You have been approached by an established company that wants to work with you on a joint venture.

During negotiations, you are exploring possibilities but do not want to commit to a binding contract at this stage. You do want to negotiate in detail with what you will both do, the costs, the delivery and all other things.

TASK 5:[5 MARKS]

Briefly create a scenario where you are negotiating a joint venture for working together on a new product or service.

Draft a clause for inclusion in a Memorandum of Understanding that meets your aim to negotiate in detail but not form a contract. Discuss the legal principles applying and how your communication applies the law.

Consideration and Variation:

A customer cannot pay a debt when due and asks for additional time to pay. You want to agree but are concerned you might not be able to sue for the debt until that time has expired.

TASK 6: [5 MARKS]

Describe the scenario above for your business. Explain the legal principles applying to this scenario and applying it to your business discuss how this situation affects your rights to sue.

TASK 7: [5 MARKS]

Describe a scenario where your business agrees to modify a contract with a customer or supplier by offering additional services or a changed product in exchange for a higher payment.

Discuss the legal principles applying and how this impacts the original contract.

Misrepresentation:

During negotiations, your business made statements about the performance of your products that the Prospective client relied upon when entering into the contract. Later, it turns out that the products do not perform as represented.

TASK 8: [8 MARKS]

Describe a situation for the failure of your product or service related to a representation made in the course of negotiations and how it affects the other party

Analyze whether this constitutes misrepresentation, and discuss the remedies available to the Client.

Minors’ Contracts:

Your business contracts with a 17-year-old freelancer to develop software for your business. The minor fails to deliver as agreed, causing significant delays.

TASK 9: [7 MARKS]

Describe the contract, and discuss the enforceability of this contract. Explain the legal principles that apply to contracts with minors.  Provide ONE situation where your contract could be unenforceable by you.

Restraint of Trade:

You have a key employee with critical knowledge who you fear may leave and work for a competitor, potentially taking your clients with them.

TASK 10: [9 MARKS]

Draft a restraint of trade clause to be included in the employee’s contract covering time, area and activities you will include. Explain why you believe it is enforceable.

Total for Part 1: 68 Marks

Part 2: Negligence (LO3)

TASK 11

Scenario Setup:

Create a scenario where an employee of your business has, while engaged in work business, caused a loss to a person who is NOT a customer.  The scenario needs to be relevant to the law of negligence and the business and include

• Loss or damage to property
• Loss of income resulting from the action of your employee
• Personal injury
• Stress and personal problems resulting from the incident. (4 Marks]

TASK 12

Apply the law of negligence to the situation. Your application must explain and apply;

NOTE:  the first two below may be answered as one question for 20 marks. If answering separately you will address the details of damages in the second part and the first can be limited a general consideration of the tests.

• All steps to establish negligence. (not defences)
  (12 marks)
• The damages available to the person for all the losses noted above.
  (8 marks)
• The responsibility you have for the employee actions and why you are responsible in your scenario.
  (5 marks)
• How the situation may be different if the person causing the losses was a contractor to your business, not an employee.
  (5 marks)

Total for Part 2: 34 Marks

Part 3: Analyze The Principles Of Ownership And Risk Associated With Transfer Of Ownership In The Aotearoa New Zealand Context. (LO4)

TASK 13: Transfer Of Ownership:  [8 MARKS]

Your business sells equipment or another asset to a client.

Describe a scenario relevant to your business describing the property.  Draft a retention of title clause for your contract.

Discuss when ownership passes from your business to the client under the contract. Analyze how the retention of title clauses affects the questions of ownership and risk. Refer to the relevant sections of the applicable Act.

TASK 14: Risk Of Loss [10 MARKS]

Describe two scenarios relevant to your business;

• Scenario 1: The client ordered the goods, agreed to the price and you have it in stock ready. The equipment is lost during transport by a third-party logistics provider.
• Scenario 2: The equipment has to be manufactured by you but it is destroyed by a fire while it is in a delivery van at your place of business, about to be delivered to the client.

For both scenarios, analyze who bears the risk of loss. (Do not consider liability of the transport provider)

Consider how the transfer of ownership and insurance coverage might interact with these scenarios and the potential implications.

TASK 15: [16 MARKS]

Your business has entered into a commercial lease to buy agreement for a high-value piece of equipment. Depending on your business, you are either the seller / Lessor (the business providing the equipment) or the buyer / lessee (the client acquiring the equipment). The key terms of the agreement include:

• Possession: The lessee takes possession of the equipment immediately upon signing the agreement.
• Ownership: Ownership remains with the lessor until the final payment is made whereupon ownership shall transfer to the lessee.
• Risk: The lessee assumes all risks of ownership associated with the property for the duration of the agreement.
• Exclusion of Warranties: The warranties provided by the Contract and Commercial Law Act 2017 shall not apply.
• Note: This is not a consumer lease and you do not need to consider the law that applies to consumer leases.

TASK:

Describe the high value equipment relevant to your business that could be the subject of the hire purchase agreement.

Analyze how the specific terms of this hire purchase agreement impact the obligations of the parties. Consider the following aspects:

1. Ownership and Possession:

Explain the default rules regarding ownership and possession in a sale contract where goods are delivered and payment is due 20th of the following month, and contrast with this lease to buy agreement. (4 marks)

2. Risks of Ownership:

Analyse how the clause stating that the buyer assumes all risks of ownership associated with the property in its possession alters the default legal position, and the implications for both parties.  (4 marks)

3. Exclusion of Warranties:

Explain the meaning of default warranties provided by the Contract and Commercial Law Act 2017, with specific reference to Section 137 on implied conditions and warranties as to fitness and Section 138  on implied conditions of fitness for purpose.
With reference to a piece of high value equipment relevant to  your business, and assuming it is the subject of the lease to buy agreement, analyse and illustrate the implications of the clause excluding these warranties, in relation to EITHER s.137 or s.138 of the Contract and Commercial Law Act 2017. (8 marks)

TASK 16: [14 MARKS]

Describe a scenario where you sell some equipment or asset to a customer. You are not retaining ownership.  However, you take a security over the asset for the full purchase price before delivery.

With reference to the relevant law;

1. Explain what is meant by a security interest and discuss why this is a security interest.

(4 marks)

2. Briefly explain the steps your business must take to protect this interest and the effect of failure to do so.

(4 marks)

3. Priority of Security Interests: The client has other creditors with registered security interests. This includes a bank with an “all obligations” security over the clients’ asset which was registered prior to your sale to the customer. Analyze the situation and advice of who has priority to the assets if the customer does not pay.

(6 marks)

Land Securities:

TASK 17:[20 MARKS]

Assume your business is expanding and acquires land to construct a new facility.  You have agreed to buy the land and the bank is lending the money. The bank will take a mortgage on the land.  Your sale and purchase agreement settles in 6 months. The title to the land has a registered easement for access to a property behind the one you are buying which is 3 meters wide and along a boundary. It is unused at present and in grass.  There is also a rumour that the seller has granted an easement for a power line to be placed on another boundary to the property at the back. (Not to the power company).

Analyse this situation for your business. Include consideration of the following and how they affect this situation;

• Explain the legal requirements for your contract to be enforceable including the main requirements. (4 marks)
• An explanation of transfer of ownership of the land, the mortgage and when indefeasibility applies. (4 marks)
• The effect of the rights to the land included on the title. (4 marks)
• The effect of the unregistered easement if;
• you were not aware of at the time of entering the agreement and is only confirmed after settlement.
• you knew of the agreement but didn’t like it so when negotiating the sale persuaded the seller not to register the easement 
• prior to settlement by offering a better price.
  (5 marks total both parts)
• The risks associated with the long term settlement and how you can protect your rights. (3 marks)

Total for Part 3: 68 Marks