200909: Three Competing Businesses Make A Secret Agreement To Charge The Same Prices: Enterprise Law Assignment, BU, Australia

Part A – Multiple choice

Part A consists of five multiple-choice questions (Questions 1–5 below). Answer each question by circling the most correct response. For example:

An apple is:
a. a vegetable
b. red in color
c. green in color
d. a fruit.

If you make a mistake, cross out the incorrect answer and circle the correct answer. Each question in Part A is worth one mark.

1. Three competing businesses make a secret agreement to charge the same prices as each other for the same items. Legally this is:
a. An enforceable contract.
b. Not of any significance.
c. Illegal price-fixing.
d. Collusive conduct, which is legal.

2. Which of the following statements is false?
a. Terms of a contract can only be enforced if they are in writing.
b. Express terms may be written or spoken (oral).
c. Contract terms can be either warranties or conditions, but not both.
d. The parole evidence rule excludes unwritten terms in situations where there is a written contract that appears to cover the whole of the agreement between the parties.

3. Under the Franchising Code of Conduct:
a. There is a 30-day cooling-off period within which franchisees can change their minds about the franchise agreement.
b. Franchisees are prohibited from associating with each other because it has a negative impact on competition.
c. Franchisors may be released from all liability towards their franchisees.
d. There is an obligation on both the franchisee and the franchisor to act in good faith towards one another.

4. If a contract has been breached but the innocent party still wants the party in breach to complete its obligations, the best remedy would be an order from the court for:
a. restitution.
b. damages.
c. specific performance.
d. an injunction.

5. Bait advertising is prohibited by the Australian Consumer Law:
a. only if a consumer complains.
b. if the advertiser does not specify a price for the goods.
c. if the advertised price is unreasonably low.
d. if the advertiser knows or ought to know that there are insufficient stocks available at the advertised price.

PART B – SHORT ANSWERS

This part is worth 15 marks in total. Marks for each part are as shown below. Answer these questions in the answer booklets provided.

1. Sean has a web design business called WebEd that designs digital educational resources. WebEd is not getting very many clients, and Sean wants to improve its appeal to customers. His friend Lila is a well-known web designer who has a lot of clients. Lila usually works for herself, but when Sean asks if she would like to join him, she decides there would be some benefit in having an office space and support staff, provided her own business stays
separate.

Lila starts to work from WebEd’s office, but she makes it clear to Sean that she will keep all her own clients, and the fees they pay her, but that she will pay him a set amount each fortnight for use of the business name as well as the office space and support staff. Lila makes sure that Sean signs a document indicating that she is not an employee or a partner in Sean’s business, but is paying for the office space and support staff only.

After a while, Lila finds that several of her customers think she is now working for, or with, WebEd. Lila has also paid WebEd’s support staff herself on several occasions when Sean did not have the funds to pay them. The arrangement between Lila and Sean eventually breaks down and Lila starts working from her home again. However, she continues to use the WebEd office stationery and the name of the business in her correspondence. Lila also discovers that Sean is still using many of the instructional (‘How to’) documents on the WebEd website, even though Lila is the author of those documents.

a. Are Sean and Lila in a partnership, in the legal sense of that term? How does the law determine such questions?

b. Lila wants to stop Sean from using the ‘How to’ documents she wrote. Is she legally entitled to do so? Explain your answer.

2. Thomas answers an advertisement for an ‘Office Assistant — 6-month contract’ placed by WebEd on an online recruitment site. The advertisement states that the position requires a marketing or communications degree and at least 2 years of experience in a similar position. Thomas is delighted when he is given an interview and is subsequently offered the job. He
receives a letter which reads (in part):

Dear Thomas,
We are delighted to offer you the position of Office Assistant on a 6-month contract basis, commencing 5 March 2016. The terms of your contract are contained in the Terms of Service document which is attached to this letter …

You will be paid fortnightly by direct debit to your nominated bank account. It is a condition of employment that you complete a Tax File Number declaration since PAYG tax at the applicable marginal rate will be automatically deducted from your wages.

Office hours are 9.15 am to 5.30 pm…

Thomas quickly signs and returns a copy of the letter without reading the attachment. One of the conditions of employment in the attachment states that Thomas’s employment can be terminated without notice at the employer’s absolute discretion. Another condition states that employees are not allowed to discuss their work or the conditions of their employment outside the workplace. Shortly after starting work, Thomas starts a Facebook group page entitled ‘Dumb Stuff My Boss Did Today’. The page is an instant hit, but it soon comes to Sean’s attention, and he fires Thomas without notice.

a. Is Thomas an employee or a contractor? Explain your answer.

b. Do WebEd has the right to dismiss Thomas in these circumstances? Why or why not?