Faculty of Business and Information Technology
332.510 and 323,509 Introduction to Commercial Law and Commercial Law
40% of Course Mark
Please attach the following cover sheet to your assignment.
Answer all the questions
The relevant legislation is located on the New Zealand legislation website: http://www.legislation.govt.nz
For submission instructions and due date please see Canvas
Please ensure that you number each task and each question correctly
For further guidance and recommended reading please see Canvas
Overview of Eco Tours Ltd
• Eco Tours Limited is a fictional company that operates tours throughout New Zealand
• The company has a Board of Directors. The CEO is Bruce Smith. Eco Tours employs a permanent staff of 40 full and part time people.
• Eco Tours Ltd has various aspects to its operation. It offers charter cruises for parties, fishing expeditions, coach tours to places of historic and cultural interest, bush walks, adventure tourism and events management. The company is showing steady growth. It owns several residential properties that it hopes to eventually convert to tourist accommodation. Most of these currently have tenants.
• The Head Office of Eco Tours Ltd is at the corner of Manukau Station Rd and Davies Avenue, Manukau. There are also branches in Auckland CBD and Henderson. A variety of staff work in the Head Office, including a human resources manager, marketing and communications officer and both permanent and casual tour guides and bus drivers. Eco Tours is also planning on employing a property manager.
• Assume that you have been employed in a managerial capacity at Eco Tour’s Head Ofﬁce. During your 8 week induction period you will be learning various aspects of the business.
• During your induction period you will be supervised by Jill Jones and John Horsley. Please submit your work as instructed on Canvas. You may also discuss your work with Jill and John during your usual class time and they will be happy to provide you with guidance and feedback. If you have any questions about your tasks outside of class time you can contact Jill by email Jill.Jones@manukau,ac,nz or John at John.Horsley@manukau.ac.nzPlease complete all the tasks below
This task relates to the following aspects of the NZQA prescription:
Students will apply the basic principles of the Tort of Negligence to a given situation.
Read the following incident report, which you have received from the Team Leader, Risk Management and Insurance. Analyse it using the ILAC method (Issue, Law, Application, Conclusion). Your answer should be in the ILAC format. For notes on the ILAC method of analysis please see Canvas. This will also be practiced in class.Confine your answer to the law of negligence: please do not refer to other aspects of the law such as employment law and the law of contract. These will be assessed in other tasks.
Word limit 800 words, this is, however, a rough guide. Consult your lecturer if you believe that your analysis needs to be significantly longer or shorter than this. Use the following headings:
Eco Tours employs a boat operator. His name is Buddy Brown. Buddy’s job is to maintain the boats belonging to Eco Tours at the Pine Harbour Marina and take tourists out on a large motor launch. On 24 December 2016 Buddy is driving the launch in the Gulf. He is behind schedule and he drives at excessive speed on a trip back from Goat Island. He is listening to loud music from Spotify on his phone and this distracts him from his task. He has on board a party of American tourists.
Unable to stop the launch in time, Buddy crashes into the wharf (which belongs to the local authority). The sparks from the impact ignite some petrol which has spilled on the deck of the boat. The launch catches fire. The fire spreads to the wharf, which was made of wood and completely destroys it.
Fortunately the tourists manage to jump into the water and swim to shore. Buddy is not so lucky, he sustains back and leg injuries. The launch is completely destroyed along with all the property belonging to the tourists. This property included expensive fishing gear, a latest model Apple i phone, two laptops, several pairs of designer sunglasses, fitness trackers and some items of designer clothing and accessories.
The Team Leader, Risk Management and Insurance, of Eco Tours, James Johns, wants to know who is liable in this scenario. Conduct an ILAC Analysis and present your findings in the form of a report.
This task deals with the following aspects of the NZQA prescription:
Interpretation of contractual terms -identification of parties and their main obligations, termination clause, two common clauses relevant to employment contacts, employment law (special topic)
You have received the following email from the CEO of Eco Tours
Dear New Employee
We are thinking of employing Mr Dufus Merryleggs as our new boat operator, to replace Buddy Brown, who will not be returning to work for at least 12 months. He will work full time for Eco Tours Ltd.
• Start Date : 1st April 2017
• Salary – $60,000 per annum.
• Trial Period : 3 months
• Term: 12 months from commencement date to relieve Buddy, who is on long term medical leave
The responsibilities of the replacement employee includes: routine maintenance of Eco Tours’ six boats berthed at Pine Harbour Marina,preparing monthly financial reports using our customized accounting package, and ensuring sound financial performance of the boat touring operation, liaising with the Marketing department of Eco tours Ltd, ensuring that all Health and Safety legislation is complied with and skippering the boats as and when required.
It is vital that the new staff member is a good performer and gets on well with the rest of the team. How can we make sure that we can get rid of the replacement employee if he does not perform well? I think we would know after about 3 months.
Could you please draft a suitable trial clause and also the clause that states that the employment ends after one year? You will find a standard agreement at https://www.employment.govt.nz/starting-employment/employment-agreements/employment-agreement-builder/
We also need to explain aspects of Dufus’ employment to him. Can you please make some notes about his and our obligations so that I can discuss this with him when I meet him next?
All the best
(a) Draft the three clauses that you have chosen to insert in the agreement. For the fixed term agreement you must clearly state how the fixed term will terminate.[6 marks]
(b) Compile the notes that Bruce has requested. Your notes should include:
1 Minimum standards of employment inNew Zealand [3 marks]
3 An explanation of the enforceability of fixed term agreements [2 marks]
5 Explain “good faith” in the context of New Zealand employment law [3 marks]
6 Describe minimum requirements on wages, holidays and leave [2 marks]
7 Describe the legal obligations of employer and employee [4marks]
[Total 20 marks]
Eco Tours employs a “Tourism Experience Manager.” Eco Tours runs activities such as bush camping trips, coastal cruises, eco farm trips, caving and so on. It is the Tourism Experience Manager’s job to organise and coordinate these events as well as finding customers to participate in them. The last Tourism Experience Manager (Angelica Bowes) has left to work for a rival touring company in a similar capacity and is based in Devonport, North Shore. She is soliciting Eco Tours’ customers. The following clause appears in the employment agreement of the previous Tourism Experience Manager
Angelica Bowes shall not for a period of five (5) years after ceasing to be employed by the Company for whatsoever reason, without the prior written permission of the Company, be interested or engage in any capacity whatsoever, whether as a partner, officer, employee, director, other equity owner, contractor, consultant, representative or agent, whether directly or indirectly in any activity that competes with the Company.
The provisions of this clause shall survive the termination of this Agreement regardless of the reason for termination
Please advise Samantha Seale, the HR consultant for Eco Tours, whether the Company can take any action against Angela Bowes. Explain your answer, referring to relevant legal principles and case law. Your answer should take the form of an email
Total 68 marks
This task deals with the following aspects of the NZQA prescription:
• intention to create legal relations
• offer and acceptance
• vitiation of the contract
• capacity of minors and companies
• consent – contractual misrepresentation, undue influence
• remedies, cancellation (Contractual Remedies Act,) damages
• debt recovery
The CEO of Eco Tours, Bruce Smith, holds regular staff meetings and you have been asked to be present at these. The following issues have been discussed. Give your opinion on each of these scenarios. Please ensure that you label each scenario correctly.
Scenario 1 (Intention to Create Legal Relations) Total 5 Marks
Bruce Smith has been out for drinks at the yacht club with his friend, Dominic Thumper. Bruce and Dominic have been friends for many years. Dominic tells Bruce that he wants to give up sailing as it is getting far too expensive and besides, his wife gets sea sick. Dominic agrees to sell his super yacht, Devil of the Seas, to Eco Tours for $50,000,000 and to arrange for it to be sailed from Tauranga to Auckland. Dominic writes the terms of their agreement on a paper napkin and adds the following words “This agreement is binding only in honour” The two men sign the napkin and shake hands. A few days later Dominic discovers that he can get at least a million more dollars for “Devil of the Seas”
Explain whether or not there is a binding contract, referring to relevant legal principles and case law.
Scenario 2 (Offer and Acceptance) Total 5 Marks
Bruce, on behalf of Eco Tours, wishes to buy a tractor to tow the launch that he uses to take tourists out into the Gulf. He wrote to Farm Supplies Limited (hereafter FSL) saying, “I was very impressed with your new Ford County tractor which you demonstrated at the Coromandel Agricultural Show last week. Will you please arrange for delivery of the demonstration tractor as soon as possible? I will pay the $75,000 by equal instalments over five months as stated in your display and brochures at the demonstration.”
FSL replied as follows, “We are delighted to accept your order for our tractor. We do however require to be paid by a first payment on delivery of $30,000 and the remainder in equal instalments over five months”.
James wrote back saying, “I think we have a contract for payment over five months, but if not would it be possible to pay the total sum over the four months?”
On the morning that FSL received this last communication from James, Burt, a local farmer, came to the office and he purchased the demonstration tractor for $75,000.
Give your opinion on whether there a valid contract between Eco Tours and FSLExplain your answer, referring to relevant legal principles and case law.
Scenario 3 Three (Consideration) Total 12 marks
Bruce has recently made the following two agreements:
3 (b)The first is with a landscape architect, Helen The agreed price is $2000 to plant a series of miniature flowering trees outside Head Office. Helen does the work and presents an invoice. Bruce is so impressed with Helens’ hard work that he promises her an extra $500. Is he contractually obliged to pay this? [6marks]
3 (b) The second contract is with Joan, chair of a local gardener’s club. Bruce decidesto supply a bus and driver to take the members of Joan’s local Garden Appreciation Club on a trip to see various gardens. The agreed price is $5,400 and the date of the trip is agreed to be 5 March. Payment is to be in two parts:
(I) a deposit of 50% two weeks before the trip and
(ii) the balance on the day.
Unfortunately Bruce has discovered that diesel prices have increased so he tells Joan that as diesel has increased in price the cost will be $5,500, an additional $100. Joan promises to pay the extra money.
Scenario Four (Capacity) Total 10 marks
Albertina is 17 years old. Albertina is a very good painter. She intends to start a business which involves painting designs and pictures on boats and cars. In order to do this, she needs special equipment. She also needs a place to paint the cars and boats.
Eco Tors own a boat shed at Clevedon. It is currently unoccupied. Albertina sees the boatshed on Trade me and, rings the property manager of Eco Tours. After some discussion she signs a lease for the workshop and its spray-painting equipment. She agrees to pay $1000 per week for the workshop and equipment.
Three months later, Albertina is in financial trouble. The lease was far too expensive and the painting she has done has been of low quality. The equipment is of no use as it is old and not suitable for painting boats. . This was not evident when she signed the lease and is the reason why her painting has been of low quality. Workshops (with equipment) nearby lease for $400 per week.
Advise Eco Tours of the legal position. Note all the applicable sections of the Minors Contracts Act 1969.Also discuss the situation if Albertina’s father guarantees the contract
Please use the ILAC format. For an explanation of the ILAC format, please see the assignment file on Canvas. [6 marks]
Explain the contractual capacity of Eco Tours [4 marks]
Scenario Five (Undue Influence) Total [8 Marks]
Bruce has recently married. His wife’s name is Georgie. He has come to you for some advice about his personal life.
Georgie is a doctor. Hazel has been a client of Georgie’s for 5 years. One day Hazel tells Georgie that she is thinking of moving house. Georgie replies that she wants to sell her house, and that two similar houses in her street have recently sold for $1, 000, 0000 each. Hazel visits Georgie’s house and agrees to buy the house for $ 800,000. Shortly after Hazel has purchased the house she finds that it suffers from ‘leaky building syndrome’, and that it will cost $200,000 to correct this fault.
Bruce wants to know whether Hazel is bound by this contract. Your answer should take the form of an ILAC analysis.
Scenario 6 (Misrepresentation,remedies, cancellation, Contractual Remedies Act) damages, debt recovery ) Total [28 Marks]
Eco Tours is looking for a house in a rural area, but not too far from town, that they can use as a hunting lodge.Don owns such a house. It is in Hunua, which abounds with natural beauty. The house is at the foothills of the Hunua Ranges (a mountain range in South East Auckland). The Hunua Ranges are teeming with pigs and deer. Don advertises his house for sale through an agent. Eco Tours’ property manager, Peter inspects the house and asks Don’s agent if sewerage is intended for this area which is just outside of the Hunua village limits. The agent replies “Not as yet, but sewerage will be extended to this area within the next six months.”
Eco Tours signs up to buy the house but the agreement makes no mention of the sewerage. Soon after settlement, which takes place in March 2017, Eco Tours is told by the local council that there is no prospect of sewerage for several years. The agent had innocently misunderstood the council’s planning scheme for the area.
Eco Tours had intended to use the house for a party of tourists from the South Island who are visiting in December. It will no longer be possible to use the house in Hunua. The tourists can be accommodated in Ararimu a few kilometres away, but this will mean that rather than making a profit, they (Eco Tours) will lose money on the deal. Eco Tours is considering installing sewage but as the consent process is slow, there is no real prospect of having it done before the hunting party visits.
In the form of a memo, write to the CEO of Eco Tours, explaining the following:
6 (a) Has a misrepresentation been made in this situation? If so, why and if not, why not?
6(b) Whether or not Eco Tours can cancel the contract and if so how this should be done. Refer to specific sections of the Contractual Remedies Act 1979[6 marks]
6 (c) Whether or not, in terms of the Contractual Remedies Act, Eco Tours can claim damages from Don? [6 marks]
6 (d) Assuming that it is possible to claim damages, how would such damages be calculated?[6 marks]
6 (e) Outline the methods that Eco Tours could use to recover any debt associated with the above transaction[4marks]