Commercial and Corporation Law

Questions: 1.For the injured users explain the basis of possible liability in the tort of negligence that any manufacturer or distributor of the Thermomix appliance might have to those users. Leave aside the question of the amount of damages? 2.Why do caps on personal injuries damages exist in Australia? 3.Do the injured users have possible rights under Part 3-5 of Australian Consumer? Answers: 1. In circumstances, where a person is obliged to take proper care of another person, does or omits to do any act that any prudent person would or would not do and the act causes injury to the other person, the person doing or omitting to do the act is said to be negligent towards the aggrieved person (Martin, 2016). The claimant in order to claim compensation for an act of negligence must establish the following essential elements: The defendant owed a duty of care The defendant has infringed such duty of care The claimant has sustained injuries and has suffered damages or loss directly for the breach of such duty Duty of care: Section 48 of the Wrongs Act 1958 deals with the general principles of duty of care. A person is said to be negligent if he fails to take necessary precautions to avert the risk, which was foreseeable; if the risk was substantial; if the circumstance was such that any prudent person would have taken necessary precautions had he been in the persons place (Barravecchio, 2013). Infringement of duty of care: For determining whether a person has committed infringement of the duty of care, the court will ensure that the expected standard of care has been exerted by the defendant or not in the given circumstances. The court in order to determine if reasonable care has been exerted, shall perceive what a prudent person would have done or omitted to do in similar circumstances. If the court is of the opinion that the the actions of the defendant involved high amount of risks, then it is the duty of the defendant to exercise additional precautionary measures to avert the same in order to prevent any damages or injuries. In specific cases, the facts of the case may be in favor of the plaintiff to such an extent that the facts of the case itself speaks that the defendant is at fault. The burden of proving that the act was not a negligent act is shifted to the defendant. The legal maxim applied to describe such circumstances is known as res ipsa loquitur, which means that the facts of the case sp eak for themselves. Damages or injuries sustained as a result of the infringement: The aggrieved person or the claimant must establish that the damage or the injury sustained was a direct result of the defendants contravention of the duty of care. The claimant must prove that if it were not but for the defendants act then the aggrieved person would not have sustained any injuries, loss or damages. However, the damage caused must necessarily be the immediate outcome of the actions of the defendant and must not be too remote. The defendant shall not be held liable for any loss or damages that have not resulted from the acts that the defendant could have reasonably foresee (Mendelson, 2014). In the the context of the landmark case Donoghue v Stevenson, it was held by the House of Lords that every person has a duty to exercise care towards their neighbor and that any person who suffers damages or loss because of an negligent act by the other person, is entitled to be compensated by the wrongdoer. Section 51 of the Wrongs Act 1958 lays down that the negligence was a factual causation of the harm. The claimant must establish any fact that is relevant to the cause of issue. Under section 56 of the Act, it is necessary for the claimant to establish that he was not aware of the peril. However, a person cannot be held liable for an act of negligence if the damage or injury is caused as a result of an inherent risk. An inherent risk may be defined as a risk of the occurrence of an incident that cannot be averted even after exercising due standard of reasonable care. The determination of an injury whether it is significant or not can be evaluated from the extent of harm that has resulted from the injury suffered by the aggrieved person. After assessing the injury, the extent of harm it causes must fulfill the threshold level to be considered as a significant injury. Here, the Thermomix Company has committed negligence by contravening its duty of care towards the consumers of their products. The consumers are entitled to claim damages for personal injury sustained while using the products of the Company. The Wrongs Act 1958 imposes numerous restrictions while claiming damages for non-monetary or monetary loss arising as a result of the personal injury in Victoria. According to the Wrongs Act 1958, an aggrieved person cannot claim non-monetary loss, that is, damages for the pain or injuries sustained by that person unless the aggrieved person has been assessed to have sustained more than 5% injury as per the Medical Association Guidelines (AMA). The Amendments made in the Wrongs Act 1958 have modified and increased the cap on non-monetary damages to $577,050. The increase in the limit on non-monetary damages has been increased and is applicable only when the injuries suffered by the aggrieved person are of serious nature. The injured or the aggrie ved parties may claim damages for the injuries sustained within the stipulated period of 3 years. The relevant documents must be filed within 90 days before the expiry of the stipulated period. However, the manufacturers may use the following defenses against the legal actions brought by the injured parties for the act of negligence: Volenti non fit injuria- In simple words, it means that the aggrieved person has accepted the danger of injury voluntarily (Del Monte, 2015). If the defendant succeeds in establishing that the claimant has accepted the peril of the damage or loss on his own accord, the defendant shall be exempted from his liability. The acceptance may be made either expressly or impliedly (Mullins, 2013). Contributory negligence- The defendant to establish that the plaintiff was equally responsible for the injuries sustained or loss or damages suffered may use the defense of contributory negligence (Ahmed, 2014). The defendant must prove that the plaintiff has failed to take proper care of his own safety (Goudkamp, 2015). The defendant, although, will still be held liable for negligee nce but the amount of compensation shall be reduced by the courts (section 63) (Goudkamp Nolan, 2015). Novus Actus Intervieniens- If the defendant succeeds in establishing that despite taking reasonable care the actions of the aggrieved party were such that it was beyond the control of the defendant to foresee the consequences of the act. Act of third party- The defendant can only be held liable for his own actions or when the loss or damages suffered by the injured party are a direct result of the actions of the defendant. The defendant cannot be held liable when the cause of such loss or damages suffered by the aggrieved party is an intervening act by any third party (Goudkamp, 2013). Natural incidents- In case of natural events, which the defendant is unable to foresee, no legal action, can be brought against him. 2. The main rationale of tort damages in common law is to compensate the aggrieved person for the loss or damages suffered from the action of the wrongdoer. The judges after perusing the evidences of the loss or damages suffered by the aggrieved party awards damages in the form of compensation in order to restore the plaintiff to the position he was in prior to the damage or injuries caused by the actions of the defendant (McGivern Handford, 2015). The damage or harm suffered by the aggrieved party includes permanent or temporary physical injury, economic or non- economic loss. The non- pecuniary losses suffered by the claimant may arise in the form of personal injury, which includes physical pain and sufferings, emotional trauma, loss of life, disfigurement, loss of amenities. The damages awarded to the aggrieved party for the non-pecuniary loss or damages may be referred to as general damages. The underlying reason behind compensating the claimant by way of compensation is that mo ney can console the plaintiff and aid him to purchase substitute source of satisfaction and to meet expenditures (Sekendiz, Ammon Connaughton, 2016). The statutes and the legal framework of various states have imposed numerous restrictions on claiming damages for personal injuries. Unlike pecuniary damages, the judiciary does not award damages to the aggrieved party based on previous losses and upcoming calculations, instead the courts have to devise a more personal assessment (Mendelson Mendelson, 2016). Several states in Australia have introduced caps on non-pecuniary damages only for cases that are related to the issues of medical malpractice (Leslie et al., 2014). Very few states have introduced caps on non-economic damages for cases involving personal injuries. The amount of limitations or caps varies in several states ranging from $350,000 to $750,000. However, there are exceptions available on the laws of damage caps, which are applicable in cases involving serious injuries or death (Tobin, 2014). In such circumstances, the exceptions either allow a higher damage cap or eradicate the damage cap. In the state of Victoria, a ny aggrieved person sustains non-pecuniary or personal injuries shall be compensated if the claimant succeeds in establishing 30% impairment or that the injury suffered is of serious nature. The cap on damages for non-pecuniary loss is $527,610 (Carvalho et al., 2015). Role of caps in limiting the extent of possible liability in law of Torts The Wrongs Act imposed various restrictions on claiming compensation for pecuniary and non-pecuniary loss resulting from personal injury. The Australian Law Reform Commission has incorporated caps for non-pecuniary damages to provide equal importance to the status and privacy interest of the aggrieved party and the wrongdoer. The damages have been introduced for the loss suffered and the injuries sustained by the aggrieved party in order to punish the wrongdoer and to prevent him for conducting in similar manner in the future. However, the thresholds that have been introduced in the Act have the following adverse consequences: The thresholds signify that a certain amount of negligent acts exempt the wrongdoer from any monetary consequences. The risks associated with the standard of safety gradually decreases. The thresholds reduces the motivation for incorporating the risk management measures; The decline of the eligibility of the wrongdoer to compensate the injured party reduces The thresholds on the non-pecuniary losses have an adverse impact on the the stay at home fathers and mothers in particular. However, many scholars have put forward arguments in favor of the thresholds that have been imposed on the non-economic losses suffered by the injured party. The scholars are of the opinion that the the injured parties are awarded damages for the personal injuries sustained only when they meet the threshold imposed for becoming entitled to such compensation. The person who has suffered 30% impairment is entitled to pecuniary compensation. The imposition of the thresholds has reduced the chances of making false claims for unnecessary care costs against the defendant regarding the injury suffered. The aggrieved parties are entitled to pecuniary damages for the personal injuries sustained depending upon the magnitude of the harm suffered by them. 3. Australian consumer law (ACL) The ACL lays down statutory provisions regarding the legal responsibility of the manufacturers of goods having safety defects. The part 3-5 of the ACL deals with the liability of the manufacturer in case of any personal damage or monetary loss suffered by the consumers for the goods supplied. Section 138 of the ACL states that any individual person who has sustained injuries as a result of the loss or damages caused by the supplied goods may bring legal action against the manufacturer of the defected goods. The aggrieved persons may request the suppliers of the goods to aid them in identifying the manufacturer of the faulty goods to bring a legal action against him (Giliker, 2014). In case, the supplier fails to provide with the information about the manufacturer, the aggrieved person may become entitled to compensation by the supplier for the damages or loss suffered due to the unavailability of the required information. Here, as per the report provided by CHOICE, the aggrieved consumers may claim a legal action against the manufacturers of the Thermo mix products for the damages suffered as a result of the safety defects in the TM 31 model (Ward, 2016). However, there are defenses available to the manufacturers as laid down under sections 142 and 148 of the ACL. The defenses include: The defect in the safety of the goods was non-existing at the time of supplying the goods; The technical and scientific department failed to permit the manufacturer to find the default in the goods; The defect occurred because it was in conformity with only a compulsory standard; The loss suffered was due to destruction of a building or a land because of the defected goods (Viscusi, 2013). In case a defected good has met with only a commonwealth mandatory standard, then the Commonwealth and not the manufacturer of the defected goods shall be held liable for the loss suffered by the aggrieved person. The ACL does not lay down the penalties and remedies regarding the infringement of the provisions under part 3-5. The provisions laid down under this part of the ACL act as guidelines to the judges in dealing with the breach of the statutory provisions. However, part 4-3 of the ACL states that infringement of specific statutory provisions that leads to serious injuries may amount to criminal offenses for which the court may impose necessary criminal penalties. There are reported complaints where damages and injuries was caused to the consumers indicates that the Thermomix company did not effectively comply with the provisions for recall of consumer goods and shall be liable to pay fine of $1.1 million. In addition, where the defected goods have resulted in serious injuries to the consumers, the injured customers shall be entitled to monetary compensation up to $16,650 by the manufacturer. Part 4-6 of the ACL provides defenses that are applicable to the manufacturers. If the manufacturer succeeds in establishing that: The injury was caused due to the act of the third parties and proper steps were taken to avert the injury; The injury was caused because of rational mistakes of fact; Part 5 of the ACL deals with the civil pecuniary penalties that may be imposed by the court on the infringer. A court may impose civil pecuniary penalty only if it is established that the corporate boy or any individual have violated the statutory provisions laid down by the ACL relating to the civil standard of the goods manufactured. The Thermomix Company has failed to comply with the statutory provisions regarding the safety standard of the kitchen appliances under sections 106(1) to pay an amount of $1.1 million. In case of serious injuries caused due to the defected goods, the company is liable to pay $16,500 under sections 131 or 132 (Corones, 2013). The aggrieved consumers may approach the court and the court may issue injunctions against the company for the contravention of the statutory provisions as mentioned under section 232 of the ACL. The aggrieved consumers under the section 271 may also be entitled to receive compensation by the infringing company for the injuries sustained and the damages or loss suffered. However, a consumer after being aware of the fact that a guarantee has not been met with, legal action can be brought against the manufacturer for a period of three years (Baker, 2016). References Ahmed, R. (2014). " Contributory intent" as a defence limiting delictual liability.PER: Potchefstroomse Elektroniese Regsblad,17(4), 1517-1570. Baker, J. (2016). Causation laws should recognise loss of chance.Precedent (Sydney, NSW), (133), 58. Barravecchio, J. A. (2013). The tort of negligence.Legaldate,25(4), 4. Carvalho, N., Salomon, J., Grant, G., Fish, D., Studdert, D. M. (2015). Feasibility of a Health Utilities Approach for Quantifying Noneconomic Losses from Personal Injury.Available at SSRN 2629024. Corones, S. G. (2013).The Australian consumer law. Thomson Reuters, Lawbook Co.. Del Monte, D. L. (2015). Defences to intentional torts: An overview.Precedent (Sydney, NSW), (130), 4. Giliker, P. (2014). Tort Law and the Legislature: Common Law, Statute and the Dynamics of Legal Change. Goudkamp, J. (2013). Statutes and Tort Defences.James Goudkamp,Statutes and Tort Defences in Jenny Steele and TT Arvind (eds), Tort Law and the Legislature: Common Law, Statute and the Dynamics of Legal Change (Oxford, Hart Publishing, 2013) ch,3. Goudkamp, J. (2015). Apportionment of damages for contributory negligence: a fixed or discretionary approach?.Legal Studies,35(4), 621-647. Goudkamp, J., Nolan, D. (2015). Contributory Negligence in the Twenty-First Century: An Empirical Study of Trial Court Decisions.Available at SSRN 2629285. Leslie, K., Bramley, D., Shulman, M., Kennedy, E. (2014). Loss of chance in medical negligence.Anaesthesia and intensive care,42(3), 298. Martin, K. (2016). Topical matters pertaining to the tort of negligence-the attribution of blame.Brief,43(7), 38. McGivern, B., Handford, P. (2015). Two problems of occupiers' liability: Part two-the occupiers' liability and civil liability legislation.Melb. UL Rev.,39, 507. Mendelson, D. (2014).The new law of torts. Oxford University Press. Mendelson, G., Mendelson, D. (2016). Methods of Ascertainment of Personal Damage in Australia. InPersonal Injury and Damage Ascertainment under Civil Law(pp. 467-504). Springer International Publishing. Mullins, G. (2013). Voluntary assumption of risk.Precedent (Sydney, NSW), (115), 25. Sekendiz, B., Ammon, R., Connaughton, D. P. (2016). An Examination of Waiver Usage and Injury-Related Liability Claims in Health/Fitness Facilities in Australia.Journal of Legal Aspects of Sport,26(2), 144-161. Tobin, T. (2014). Wrongful death claims.Precedent (Sydney, NSW), (122), 22. Viscusi, W. K. (2013). 18. Empirical analysis of tort damages.Research Handbook on the Economics of Torts, 460. Ward, J. O. (2016). Differences Among Nations in Measuring Economic Damages. InForensic Economics(pp. 305-316). Palgrave Macmillan US. Commercial and Corporation Law Question: Write an essay onCommercial and Corporation Law. Answer: Introduction Business among nations has become a common phenomenon and multinational companies play a very big role to enjoin the nations and people of the nations in various business transactions. The multinational companies are engaged in doing trade and business in various nations and have been successful to provide employments to people and in enhancing the economic conditions of the nations. The operation of the multinational companies in different countries has made it possible for the governments to join hands and formulate policies for a better tomorrow. Over the years, through foreign direct investments and other governmental policies, the companies have able to operate successfully outside the host country. Multinational Company can be defined to be a company which has its assets in any country other than its home country. It carries its operations, owns businesses and manage its goods and production in more than one country. Generally one fourth of the revenue of a multinational company is derived from operation outside its home country. Multinational Company may be of following types: It may be a decentralised company having a strong home country presence It may be a centralised company having a global presence but engaged in production in those countries where there are availability of cheaper sources (Johanson and Mattsson 2015). MULKHOLDINGS (a multinational company) MULKHOLDINGS is one of the topmost multinational groups of companies in United Arab Emirates. It is engaged in the business of generation of power, real estate, solar energy, interior and exterior design and fit outs, healthcare, plastic industries and manufacturing of metal composites. The head quarter of the Company is in Sharjah. The Group carries its operation in Africa, Turkey, India, USA Middle East and Europe. The flagship brand of MULKHOLDINGS, Alubond U.S.A. is presently the largest metal composite panel brand in the world. The global turnover of MULKHOLDINGS group of companies is more than 200 million AED (Hussein and Saade 2015). Advantages of multinational companies Following advantages are derived when a multinational company sets its foot in a country: The balance of payments improves: Whenever a company invests in a country, the countrys balance of payments improves. There is a flow of capital into the country through foreign direct investment and the same results in import substitution and export promotion of the host country (Enderwick 2013). Increase in employment: This is one of the best benefits which directly flow from foreign direct investment. The employment chances and opportunities for people in the host country increases. Operations of a foreign company in the remote areas of the host countries further increase the possibilities of giving employment to the unemployed (Javorcik 2014). Source of tax for the government: The government of the host country will impose tax on a multinational company operating in its country. This will increase the revenue of the government (Balabanis 2013). Transfer of technology: Multinational companies bring with them a lot of techniques and methods of production. These techniques and methods may be extremely new to the host country and thus transfer of technology helps the host country to enjoy the benefit of newer technologies (Peltokorpi and Vaara 2014). The choice of the consumers increases: If the multinational companies get engaged in producing goods for the domestic market, then the consumers choices of buying products from different sources increase. Reputation of the host country increases: If a multinational company becomes successful in operating business in a host country, then the reputation of the host country increases in the sense that other multinational companies may soon follow and enter the host country. Disadvantages of multinational companies for the host country: Following are the disadvantages of a multinational company for a host country: Uncertainty: There is no certainty that a multinational company will always stick to the host country. Multinational companies tend to move very fast and they often change their operations from one country to another country. Increase in competition: The entry of multinational companies in the host country imposes a challenge to the domestic companies. The multinational companies come with new technologies and they tend to produce goods at a lower rate. This a huge threat to the domestic companies and they need to find new ways to match the cost at which the multinational companies produce goods and render service. Influence in governmental decisions and policies: For countries with weak economy, investment from multinational companies may be very much essential. The government of the host country may also sometimes come under the influence of the multinational companies and frame their policies in favour of them which may be detrimental to the growth of the nation (Bakir 2015). Low skilled employment: The multinational companies do not generally hire local employees for the skilled roles as they are not well aquatinted with the use of new technologies (Jiang et al. 2015) Social and cultural impact: The culture of the multinational companies is different from those of the local culture and traditions. The entry of a multinational company in a host country may have a negative impact on the culture of the locals (Bcker et al. 2014). Non maintenance of health and safety standards: The multinational companies do not focus much on the health and safety measures in the nations where regulations are not strict. The legal structure of a multinational company is basically designed as such so as to maximise its profit earning capacity and minimise its burden on tax. The legal structure of a multinational corporation is specified in its memorandum of association. Based on geographical locations and economic conditions under which it operates a multinational company designs its legal structure. It may be a limited liability company or a joint venture company or a joint stock company or a sole proprietorship company etc. The legal structure of a multinational company denotes it as a legal entity, which is separate from its shareholders and managers. A multinational company may have any number of subsidiary companies. Each such subsidiary company shall have a separate legal existence. Every such subsidiary companies and the parent company will have its own management structure, capital structure, accounting standards etc. A multinational company also needs to comply with the regulations and polici es of State and it is legally structured as such so as to meet the goals and aims of the organisation. Moreover, a multinational company operates in a number of nations and it requires a flexible legal structuring to cope up with the regulations of different nations (Harper 2015).The multinational companies face a lot of challenges and issues in pursuing business operations in UAE. There are some regulations which seeks to discourage big multinationals from entering into the UAE market.Under Article 10 of the Commercial Companies Law (2015) of UAE, a foreign national cannot own more than 49 % of a business in UAE. It means for a business to operate in UAE, an UAE national must be the owner of 51% of the business. This rule helps the citizens of UAE to hold control over all the companies which operated in UAE. At the same time the locals are able to maintain their traditions and values through 51% ownership of the business. The multinational companies which enter UAE has to adopt eit her of the two approaches to cope up with this regulation, which are as follows: The first approach for a multinational company would be to look for a sponsor and hand over 51% of the revenues to the sponsor. Another approach would be to look for citizen of UAE who is willing to be a sponsor for the business. The multinational company makes a one-time paymentto such citizen and in return the Company takes all the revenues of the business. The UAE nationals make a lot of money by just becoming sponsors of business and there is no limit in the number of companies to which an UAE national may become a sponsor. However, being an UAE national is extremely difficult. A child of an expatriate, who had lived in Dubai for several years, is also not considered for UAE citizenship (Truby et al. 2015). There was a law which used to prevail that prevented expatriate to own lands in UAE. However the law has been changed and now an expatriate isallowed to own land for a period of 99 years. Thislaw has been beneficial to the multinational companies who require a lot of land and other resources for operating their business in UAE. A lawsuit was filed by a local company against a foreign company praying before the Court to pass a judgment obligating the foreign company to pay QAR 1000000 and a ratio of 5% of the contracted project. A request was also submitted in the Court by the local company for imposing a travel ban on the managers of the foreign company so that they are prevented from taking the assets of the company outside Qatar. A travel ban was indeed imposed on the managers and representatives of the defendant company. The defendant company then appealed against the decision before the Court of first instance pleading that the imposition of ban was against Article 36 of the Constitution of Qatar. Article 36 of the Qatari Constitution guarantees personal freedom and it clearly lays down that such freedom cannot be curtailed except according to the provisions of law. The petitioner (foreign company) further said that they have started huge projects and assets in Qatar and it was unreasonable and unobvious for them to smuggle the assets outside Qatar. Further the petitioner argued that since the foreign company was a limited liability company therefore the managers and representatives of the company should not have any liability (Beydoun 2012). The Court of the first instance ruled accepted the Petitioners contention and uplifted the ban on the managers and representatives of the Company. The case involved the interpretation of the Constitution. The Constitution of a country is the parent law and all the laws and procedures have to be followed in accordance with the spirit of the Company. The Court which imposed a travel ban on the foreign company has overlooked the important provision of the Constitution. Moreover, right to personal freedom is the most important right for any human being and should be respected by all. Right to personal freedom has been recognised as an important human right under international law {such as UDHR (1947), ICCPR (1966)} and all the States have been recommended to respect personal freedom of human rights. When the interpretation of the Constitution is directly involved in a case there is no necessary to invoke any other provisions of law (Kronfol, Z et The decision is important in the light of the rights and personal freedom of the managers and representatives of a Company. A company is a separate entity and no shareholder or manager of a Company can be made liable for the debts of a Company. The Court has actually applied the provisions of the constitution to reach the conclusion. The new Qatar Commercial Companies Law of 2015 recognises a limited liability company as a company where the shareholders have a limited liability. Thus all the provisions have been clearly laid down under the provisions of law in force in Qatar. The Court which had imposed a travel ban on the foreign Company had failed to consider the relevant provisions of the law which should have been applied. Had been the relevant provisions applied in the case, the Court would have come to a different conclusion. Under these circumstances there is actually no need of any reform of the legislation. The only thing which is required is proper application of the releva nt provisions of law in appropriate circumstances (Kronfol, Z et al. 2013). Conclusion There are still many areas which have to be looked into and which needs a reform for letting the multinational companies to successfully operate. Certain laws and regulations of various are hindering the entry of multinational companies. A multinational company comes with various advantages and policies should be framed as such so as to encourage and invite the investments from foreign countries (Cullen and Parboteeah 2013).Appropriate policies and framework in favour of multinational companies would definitely help the countries to combat challenges such as unemployment, economic breakdown and the like. A strong step towards fostering the growth of multinational companies has to be taken by all the nations at the international level to ensure the sustainability of the multinational companies (Fuest et al. 2013). Reference list Bakir, C., 2015. Bargaining with multinationals: Why state capacity matters.New Political Economy,20(1), pp.63-84. Balabanis, G., 2013. 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