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Business Law and Due Diligence

Question:

Discuss about the Business Law and Due Diligence.

Answer:

Introduction

The assignment deals with the business law of Australia, where Due diligence is present. Determination level of judgement is expected here with a business relationship, which is the part of due diligence (Joukhadar, et al. 2001). When an intensive investigation is conducted in the corporation law of Australia, potential lawsuits with pending debt in accompanied with the contract between their business partners and formation of agreement takes place in terms of leases, warranties, compensation and other arrangements. There are several cases where due diligence of business is followed with contract law such as, Franchise conduct and retailing act.  All these things are mentioned in the assignment. In this assignment, issues of the consideration of contract have been mentioned. The two business partners have opened a shop and making contract relationship with the franchisor (Integration in practice, 2000). While leasing in that place, the new permanent staffs are also needed to be recruit. There are various acts as per case study which is described to solve the cases.

Body

In this context, there are two business partners, Layla and Emile who opened a shop known as “Muffin Break” in Westfield Shopping Centre Food Court. It is important that the relationship should be made with the Franchisor (Food Co) properly when the agreement is done. As per Australian Franchise act, consideration took place between the Food court and the business partners (Emile and Layla).

Here, a Franchise agreement is made between the business partners and the Food Company, with whom the agreement is made (Khurtsidze, 2013). As per Competition and Consumer Regulation 2014, of clause, it is mandatory that there should be a disclosure document with the franchisor, where the industrial regulations of the Franchisor code are described with specific regulations and terms. While franchising was taking place between the business partners and the Food co, at that time as per sub clause (4), product code is needed to be mentioned in the franchise agreement. As per Australian government Franchise code has a rule, that at least after two years of the franchise, the servicing of any goods or solving problem in any case should be done by the franchisor. So, if Emile and Layla face any issue regarding the lease, then the franchisor (Food court) is bound to help them in 2 years time period. Franchise agreement take place in terms of Paragraph (2) (b) of the contract. There are some sections with codes and clause of franchise agreement which is mentioned in the column 1 and 2. Those should be followed by the franchisor and Emile and Layla should also draw clear concept before forming the agreement. Those codes are described below:

legislations.gov.au

               [Source: www.legislations.gov.au]

The Franchise agreement can be done by written, oral and implied term. If the rules of the franchise agreement are breached, then as per franchise code, the franchise agreement will be terminated for breaching the policies. That franchise or corporation will not be allowed to continue trade of commerce and application of contravention of industrial code as per section 51AD. On the basis of Clause 21 under 30 days the franchisor’s franchisee will be cancelled by Government of Australia. In this context, if the Food co. breaches the code of practice and regulations of the Franchise agreement, then Emile and Layla may sue the franchisee to court and under section 51AD of breach of franchisee code and they has to give penalty which is enforceable under law (Mariotti, et al, 2013).

While taking lease in a shopping centre of Westfield Shopping Centre Food Court, there are some regulations of Retail Lease act of 1994, which Emile and Layla has to follow. As per Retail Lease act of 1994 specific rent has to be given to the person whose place is taken in lease for any occupation purpose. They have to follow the Retail Shop leases act 1994 because they are planning to open a shop (Muffin break) at that place. The Retail Shop leases act 1994 is revised on 2015. Limitations of the act fall under section 5, sec 6, and sec 6A. In retail shop while taking lease, there is an agreement made between the owner of the place and the person who is taking lease in that place. The right is granted by the owner of the place on value of occupation to use the shops premises. There is some specification of clause 17 of schedule 3 and as per paragraph (a) which is needed to be followed to some regulations. It is very necessary that rent should be paid, after entering the possession of lessee. While taking lease the money should be given in advance and the time period should be written properly in a disclosure document with valid terms. The restrictions of the act should also be mentioned in the document. There are certain limitations which the Westfield Shopping Centre Food Court should set. Those limitations should be followed by Emile and Layla. As per section 6 of Retail Leases act 1994, there are some limitations which should be followed.

They are:

  • The lease cannot be taken for a long time period of 25 years. After 25 years the time and the documentation should be renewed or extended.
  • The commencement should follow the sections which are exempted in the act.

As per section 16(1), it is necessary that operation should be essentially covered following section 11. Lease disclosure update should always be in written format. As per clause 20 of schedule 3 of section 11 and 11(A) repealing forms should be prescribed with written disclosure update letter between the property owner and the person who is taking lease. Lease documentation also forms with Real property Act 1900 and registration of the property is followed with the rules of paragraphs (a) and (b) (Federal and District of Columbia Government Real Property Act, 2005). Generally there is 3 years term in which a lease is entered. It can extend up to 4 years. After 5 years, the term is again needed to be renewed following the rules of subsection (4). All the rules should be complied by Emile and Layla because if the rules are breached, then there are some penalties which they have to give to Westfield Shopping Centre.

As per section 10, there is right to compensation and pre-lease misrepresentation. If the lessee has done any injury to the property of the lessor then as per disclosure statement, then the lessor can ask for compensation by suing him to the Australian court. As per Retail Leases Act 1994 of section 16 P, if the rules are breached than penalty notices are sent from court. There are 20 penalty units and if the lessee contravenes any provision of the regulation or make omission, then as per section 16Q for doing offences he should be asked penalty under law. Emile and Layla should follow these rules and breach of these rules can ask penalty from them and their license will be cancel and they will imprison under Australian law (Westcott, 2005). The retail tenancy of small business is followed in the deal made between Westfield Shopping Centre Food Court and Emile & Layla, where the above regulations of Retail lease act should be followed and if the rules are breached then above penalty has to be given by the lessee to the lessor as per Australian law (Cahill, 2009).

After taking lease, it is necessary that part time and full time permanent staff should be recruited in the shop. For the recruitment various processes should be followed as per employment law. Under the Employment law of Fair Work Act 2009, the rules of employee/employer relationship of Australia are followed. As per that act, national work place relationship is needed to be followed by Emile and Layla. The Work place agreement act should be followed by the staffs recruited in the organization.

Fair work act 2009 is referred as the system based on bargaining at the organization level and also provides the protection from unfair release for employees. Furthermore, this act refers as the protection for the low paid as well as the right to be characterized in the workplace. Fair work act 2009 is the key of commonwealth statutes, managing the business of adult age labourers (Whalley, et al, 2000). It accommodates terms and states of job and sets out the rights and duties of workers and representative associations in connection to that business.

The Fair Work Act controls 'national framework' businesses and employees. Employment that is not secured under the national industrial framework stays managed by the important state modern relations frameworks. Nonetheless, a few qualifications under the Fair Work Act reach out to non-national framework employees. The Act additionally makes a consistence and requirement administration and builds up a few bodies to oversee the Act, including the FWO and Fair Work Australia (FWA). There are various parts of the Fair Work Act that present potential chances to deliver legitimate opportunities to interest by full grown age labourers and in connection to which the ALRC makes recommendations. These include, the privilege to ask for adaptable working arrangement arrangements identifying with notification of end of occupation or termination of employees; and the general assurances arrangements

There are 44 clauses of Fair work act 2009, which is needed to be discussed in scheduled way of acts under section A. As per state government, relationship between employer and employee should be proper where there should be no discrimination between all the employees in the organization. There are several clauses for different employees. For part time employee or weekly employee, Clauses 3 of Fair work act 2009 is applicable. In this case for the part time employee, certain rules are needed to be settled by the supervisor and Emile & Layla should use the Clauses of the regulations (Buchan, 2010). As per hourly rate or standard rate of level 2 rules are implied for National Employment Standards. As per National Standard act of Clause 6 full time act is needed to be applied in the organization for those people who is doing full time work. Clause 14 of part time job is needed to be applied in part time employment, where the needs of the employee are fulfilled by the employer. As per Clause 12, 13, 14 and 15, full time employment is needed to be worked out. Layla and Emile should use the rules of Fair work act 2009, where these clauses should be applied by the employers on recruiting the employees and making them understand about the rules of the clauses, so that  the employees for not breach the rules (Australian Fair Work Act, 2009).

If Fair Work Act 2009 is breached then, as per (FW ACT) the employer has to give $51,000 to $54,000 in corporation and if the employer breach the rules then he has to give $10,200 to $10,800 to the employee as penalty. In the Penalty Unit these codes are reluctantly described following the clauses and the penalty is taken in the perspectives of FW act. There are 300 penalty units and if the terms of the Fair Work Act are breached then unfair act is termed. Emile and Layla have to follow the rules of the clauses and they cannot discriminate between the part time and full time employee as per Fair Work Act. Even the employees cannot face any problem in this case. If such consequences take place then as per Australian national act they can complain against the Emile and Layla. This is the rules of the corporation act which should be incorporate in the shop which they are opening.

Conclusion

Various acts are described in the assignments following the such as employment act, fair work act, retail lease act, franchise code, real property act and with that various sections are also described following various rules. The agreement or the deal has taken place between both the party and in that consequence various federal rules of Australian government have been stated (Spedding, et al, 2009). The implication of breach of the acts and the penalties with punishments is also clearly defined. In that perspective, the notice and law rules are implied following several terms which took place between the business partners, the lessee, the lessor and the franchisor. The employee and employer relationships and the rules with the breach of law have also been described and in those terms the proper deal had taken place. 

References:

Cahill, T. (2009). Focus on commercial and retail leases (including proposed changes). St Leonards, N.S.W, from http://Cahill, T. (2009). Focus on commercial and retail leases (including proposed changes). St Leonards, N.S.W.: The Dept.

Fair Work Commission | Australia's national workplace relations tribunal. (2016). Fair Work Commission. from https://www.fwc.gov.au/

Federal and District of Columbia Government Real Property Act of 2005. (2005). [Washington, D.C.]. Integration in practice. London.

Joukhadar, Kristina, (2001), "Faster Due Dilligence." InformationWeek. 22 January.

Khurtsidze, T. (2013). Franchise agreement. Saarbrücken: LAP LAMBERT Academic Publishing,

Mariotti, S. & Glackin, C. (2013). Entrepreneurship. Upper Saddle River, N.JEntrepreneurship. Upper Saddle River, N.J.: Pearson/Prentice Hall.

Spedding, L. (2009). The due diligence handbook. Amsterdam: CIMA.

Westcott, M. (2005). Changes to the Retail Shop Leases Act 1994. Brisbane: Queensland Parliamentary Library, Research Publications and Resources

Whalley, M. & Semler, F. (2000). International business acquisitions. The Hague: Kluwer Law International

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