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Answer to question 1

A company is one of the business structures; it is possible to begin one’s business as a company or transform it later from other structures like a sole trader. Michael’s restaurant began as sole trader business, and the aim at hand is to transform it into a company at least his son’s want.   A company, as pointed out in the corporations Act 2001, is a legal entity. This means that a company is considered as a person in its right (Yogaratnam et al., 2016). There are several features that define a company in Australia; these include the following. First, the company can perform functions that pertain to a corporate body. Secondly, it can sue or sued; this means that owners or instead, shareholders cannot be taken to court on issues that involve the company as a corporate body. A company also has a perpetual succession, which means that unlike other business structures, its life is not determined by the shareholders whether they die or sell their shares.

Last but not least, a company as a legal entity can buy, hold, and even sell a property at its discretion. The law requires that a company has to show its legal entity status (Lipton et al., 2014). For an established company, its name has to include the term ‘proprietary,’ initials ‘Pty’ are also appropriate. For a company that has limited liability, its name should have the term ‘limited’ included at the end.

Michael and his sons should consider changing the restaurant’s business structure for a company. This is because of several advantages. However, they should be keen on the few disadvantages and technicalities that follow. The benefits lie within its features as a legal entity which treats the business separately from the owners. For instance, if a company is unable to settle its debts, the shareholder’s wealth and properties are not at risk of being used to settle the debt. This aspect is known as limited liability, which may only fail to apply where shareholders have given a personal guarantee. Another benefit is on the tax rate; companies are subjected to a lower rate of taxation. Again, it has a broad capital base at its disposal through the selling of shares (Lipton et al., 2014). Above all, a company in Australia has permission to operate all around the country.

Disadvantages include the following; first, involves the cost of establishment and maintenance, which are high. Winding up or terminating a company is also expensive. Another thing is that unlike in other business structures, the financial status of a business has to be made public. There is also, the aspect of double taxation, are not only the profits of the company taxed but also the profits distributed to owners. Again, companies are required to report their statements, and this can be a complicated endeavor (Lipton et al., 2014).

Apart from company business structure, there is other business structures; sole trader, partnership, trust, and co-operative. An individual holds a Sole trader business, Michael’s restaurant is an example, unlike a company, and the owner of this type of a structure does not have limited liability. Partnership, on the other hand, involves two or more individuals who undertake business as a group again, owners are liable to the debts of the business (Lipton et al., 2014). Trust is defined by the fact that it holds income and in other cases, properties on behalf and for the benefit of other people. Co-operative, on the other hand, is a business organization formed by members; the minimum number of members required is five (Yogaratnam et al., 2016). These are the primary and common business structures

In changing the restaurant to be a company, Michael and his sons should follow the Australian securities and investments commission (ASIC) guidelines for incorporating a company. Step 1 is on contemplating on the right company to incorporate; one should choose the structure that matches their needs. Step 2 involves choosing a company name. Here one needs to look for a name that is unique and is not assumed by any other registered companies. ASIC has several characters that are allowed, and one cannot go beyond those characters. One should check on the already existing trademarks so as not to duplicate, the ‘IP Australia Website’ has a list of all the registered companies and is the best platform to check from. The third thing is to structure procedures of governance, the rules, and the constitution. The fourth step constitutes of the comprehension of the set obligation for the company’s officeholder. The next step is to get the consent of the officeholder’s members or the occupiers; consent should be in a written form. The sixth step is on registering the company, which is done through ASIC. There is a fee that is charged, and the amount may depend on the method followed. Ones the application is processed, the company is registered, a corporate key is issued and a certificate of registration. The last step is after registration; here, one has to check on the validity and correctness of the documents issued, among other things (ASIC website).

 

 

Two types of companies are common in Australia, public and proprietary companies. A limited or public company is open to public ownership. Also, public companies have to present their accounts to the ASIC on an annual basis. Proprietary companies are the most popular, unlike limited companies, the shares for these companies are not open to the public: only the current shareholders, the company’s employees who can buy more shares of the company. Subsidiary companies can also buy those shares. Another essential feature for these types of companies is that they have a limited number of shareholders who are not employees; the maximum is 50 (ASIC). The liability of shareholders does not go beyond the worth of their total shares.

Michael should take up the ideas from suggested by his two sons. We have seen the advantages that come with registering a business as a company. There is favorable taxation and not to forget about the limited liability aspect among other benefits. Operating the restaurant as a company has more to offer than letting the company remain as a sole trader entity. Since Michael want to expand the business in other regions, going as a company will avoid legal technicalities that would follow a sole trader business. This is because as we have seen earlier, a company is allowed to operate country-wide. The fact that as a company can sell shares offers an opportunity to gain for more capital which would aid in expansion as Michaels’s sons envision. This is not possible with a sole trader or partnership, and they can only borrow to raise more money for expansion. A business’s name is significant as a part of the selling strategy. Michael should agree with his sons on the best name for a right and unique name for the business. The structure of a company is precise and explains matters to do with ownership of the company. Michael still has the chance to assume the most control where he can be the director with his sons as mere shareholders, so he should not fear that he would be robbed of his control. They can also structure a constitution to address more on control of the company.  It is also suitable for Michael and his sons to consider the disadvantage that comes with a company business structure and weigh on how it would affect their business.

 

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The bone of contention, in this case, is on whether George’s conduct of misrepresenting the company that has employed him, through offering terms that are not authorized by the firm can affect the validity of the contract.  George has been authorized by Golden Gate Technologies (GGT) Ltd to market and sell the company’s products, software so he has some authority.  One of the issues is deciding whether George has full authority on entering a contract on behalf of the contract. Whether his mistakes and ignorance can be taken to mean that GGT Ltd is reckless and liable for its employee’s mistakes. Another issue is on whether the email that Brendan sends to George accepting the offer is valid even though they have not signed the final contractual agreement. Brendan and his Colleagues have a feeling that the 15% discount offered by is too big and that it was possible that George did not have the authority to do so. Despite this, Brendan goes ahead to accept without confirming with GGT Ltd management. The issue here is to determine whether his knowledge and failure to communicate weaken Pool Woolworths Ltd case against GGT Ltd owing to its failure to honor the accept the contract.

There are several laws and principles in the Australian corporate law that govern contractual agreements. Section 124 of the Corporation Act 2001 outlines the legal capacity of a company to enter into a contractual agreement. Under the law, a company is treated as a legal entity hence enjoy some privileges just like an actual person. Section 126 of the same act has information on an agent’s capacity to act on behalf of a company to enter a contract. This section gives power to an agent to discharge a contract, whether through expressing or implying (Lipton et al., 2014). However, the agent has limited authority and can only act as per set boundaries. If an agent goes beyond his authority, a contract will not apply to the principal.

The following are principles or rather aspects that have to be present for a contract to be legally abiding. One is that the offer being made by the first part to the other need to be precise. The second thing is that the party to whom the offer is being presented to have to accept. Another thing is that there has to be a consideration paid between the two parties. Consideration relates to price offered in the acceptance of the promise made. Fourth, there has to be evidence that both parties had full intention to enter into a contract. The terms of the agreement have to specific, parties involved need to be up to date on their rights and obligations for certainty clause to be fulfilled. The sixth element puts it that, all the parties involved must have the capacity to engage in the contractual agreement in question (Yogaratnam et al., 2016).

George, as the salesperson is an agent of the Golden Gate Technologies having been contracted to sell software on behalf of the company. Being the salesperson, it is legally binding for him to enter into a contract on behalf of GGT Ltd. The problem comes about George decides to go against the specific stipulation of his employer. There are Company terms applying to his position as the salesperson, and he is well aware that he can only offer a discount, not exceeding 10%. It is possible to exceed this amount, but this can only be approved by the manager. George takes matters into his hands and offers a high discount of 15%. By doing this, he goes beyond his authority. According to Australian law, an agent should follow the directives of the principal. Otherwise, his action beyond such directives cannot affect the principal.

On the second issue, once George presents the offers Brendan, who also can act on behalf of his company; Pool Woolworths Ltd accepts the offer. He does so by writing an email expressing his acceptance. The intention to enter into a contract is apparent as both parties have consent. Consideration is also at play, George is ready to sell the agreed software while Brendan, on the other hand, is ready to pay the agreed sum of money. Again both individuals can enter into a contractual agreement, being of a sound mind, and given the mandate to do so by their respective employer companies. With the above principles of a contract fulfilled, we can say that the contract is legally binding.

The failure of Brendan to confirm with whether the offer by George is correct or not does affect the case. It is true that if he had confirmed with the management, first before accepting the offer, they could have straightened things up. However, the word of George as the salesperson is enough as it is supposed to be the voice of GGT Ltd, his offer is valid and should be accepted. The problem comes up to George’s misrepresentation of his company, offering what is not stipulated. The manager has every right to refuse the furtherance of the contract. GGT Ltd cannot be held liable for George’s ignorance.