Introduction to Commercial Law

Introduction to Commercial Law

• Law consists of enforceable rules established by the state, including parliaments and courts.
• Key features of law include its source from parliaments and courts and the enforceability by the state.

Functions of Law

• Provides a framework for dispute resolution within society.
• Reinforces fundamental community values and norms.
• Promotes societal stability and cohesion.
• Ensures equality and upholds the rule of law.
• Acts as a regulatory mechanism on permissible and mandatory actions.

Rule of Law

• A principle that mandates everyone, including the government, to be subject to the law.
• The content of the law should enable people to understand and comply willingly.
• Strong adherence to the rule of law is crucial for orderly business operations and general societal conduct.
• Law may differ in application based on individual circumstances.

Australian Legal System

• All businesses, including foreign entities, must navigate the Australian legal framework.
• Understanding the legal landscape aids in managing risks and leveraging opportunities for sound decision-making.
• The legal system is subject to continuous change, impacting both Australian society and international business practices.
• The Australian Constitution, enforced on January 1, 1901, became the foundation of the nation's legal framework.

Constitution of Australia

• Passed by the Imperial Parliament in 1900, it established Australia as a constitutional monarchy.
• Introduced a federal system of governance, comprising State, Territory, and central (Commonwealth) governments.
• Each jurisdiction possesses its own legislative and judicial authority, with responsibilities allocated by the Constitution.

Separation of Powers

• Government operates through three distinct branches: Parliament, Executive, and Judiciary.
• Each branch has specific functions, acting as a system of checks and balances.
• Legislative powers include exclusive, concurrent, and residual powers, determining how law-making authority is shared among different governments.

Legislative Conflicts

• Section 109 of the Constitution resolves disputes between state and Commonwealth laws, stating Commonwealth law prevails in cases of inconsistency.
• Amendments to the Constitution are outlined in Section 128.

Impact of Separation of Powers on Business

• The Parliament creates laws that directly influence business conduct and practices.
• Executive decisions affect the enforcement and implementation of laws, impacting business operations.
• Judiciary interprets laws, adjudicates disputes involving businesses, and sets legal precedents for future reference.

Sources of Law

• Primary sources include statutes, acts, and legislation from Parliament and common law established by courts.
• Secondary sources provide commentary and interpretation but do not contain the law.
• Statutes can create new laws, repeal old ones, and codify existing laws, with flexibility for amendments.

Statutory Interpretation

• The Australian Consumer Law (s 18(1)) prohibits misleading or deceptive conduct in trade or commerce.
• Case law establishes definitions of misleading conduct that influence future legal cases.
• Interpretation of laws is guided by statutory and common law principles.
• Acts Interpretation Act 1901 prioritizes interpretations that serve the intended purposes of the law.

Materials for Interpretation

• Intrinsic materials (within the Act) and extrinsic materials (outside the Act), such as preambles and explanatory memoranda, inform the legislative intent and assist in court interpretations.### Sources of Law
• Common law, case law, and judge-made law arise from court rulings and precedents.
• Contract law, a significant area of business activity, is still governed by common law despite prevailing legislation.
• Courts shape law by resolving disputes involving individuals and businesses in real contexts.
• Court hierarchies and understanding key concepts like ratio decidendi, obiter dicta, binding, and persuasive precedent are essential.
• Judge-made law can influence both future and past cases.

Australian Courts

• Defined hierarchy and structure exist within Australian legal systems impacting case law and the judicial process.

Understanding Case Law and Business

• Actual legal disputes drive the creation of case law, illustrating its relevance to real parties, including businesses.
• Most business disputes are settled outside of court due to the high costs and complexities of litigation.
• Key aspects to comprehend include the nature of the dispute, legal issues, arguments presented, and court decisions.
• Appeals may arise, with either party potentially initiating the process.

Classifying Law and Legal Proceedings

• Laws are categorized into public law vs. private law, substantive law vs. procedural law, and civil law vs. criminal law.
• Distinctions also exist between domestic law and international law.
• Understanding the roles of solicitors and barristers, including their interactions with business, is crucial.
• Alternative dispute resolution methods such as arbitration, mediation, and negotiation play important roles in resolving business conflicts.

Business Ethics

• Justice and ethics are subjective, and actions can be legal, ethical, both, or neither.
• Good business decisions may require considering ethical implications beyond mere legal compliance.

Australian Law and Business Impact

• Real-world legal cases, like BrewDog's promotions and the ACCC’s settlements, underline the law's influence on business operations.
• Legal outcomes do not always require court involvement, showcasing the various dimensions of business conduct.

Contract Formation

• A contract is not just an agreement but one that creates legal rights and obligations enforceable by courts.
• Key elements distinguish contracts from other agreements, focusing on enforceability and legal recognition.

Functions of Contract Law

• Promotes certainty in business dealings by ensuring contractual promises are honored.
• Facilitates planning and sets market value for goods and services.
• Offers formal dispute resolution channels and assigns risks to parties entering contracts.

Essential Elements of a Contract

• Contracts require an offer and acceptance, indicating mutual agreement.
• Parties must intend to create legal relations, provide valuable consideration, and have legal capacity.
• Genuine consent and legality of the agreement's object are crucial; absence of any element may render an agreement unenforceable.

Classification of Contracts

• Contracts can be oral, written, or implied; written contracts must be signed and witnessed.
• Express contracts clearly state terms; implied contracts infer terms from conduct.
• Bilateral contracts involve mutual promises; unilateral contracts invite acceptance through performance.
• Contracts can be valid, voidable, void, or unenforceable, each with distinct legal implications.

Offer and Acceptance

• The offeror expresses a willingness to enter into a legally binding agreement, which the offeree accepts to form a contract.### Agreement Formation
• Agreement Equation: Offer + Acceptance + Certainty = Agreement
• Role of Offeror: The offeror can act as either the buyer or seller in a transaction.
• Acceptance: An agreement forms upon acceptance of an offer, potentially leading to a contract.
• Nature of Offers: Offers are essential for legally binding contracts; only offers can be legally accepted.

Characteristics of Offers

• Audience: Offers can be made to individuals, groups, or the public as a whole.
• Distinction from Other Communications: Must differ from mere puffery, invitations to treat, or informational statements.
• Content Requirement: All significant terms must be included in the offer.
• Conditional Offers: Offers may outline specific conditions that must be adhered to.
• Communication: Offers must be communicated to the offeree to be valid.
• Revocation: Offers can be revoked or may expire over time.

Puffery

• Puffery refers to exaggerated claims or statements, which do not constitute legitimate offers.

Case Law Examples

Carlill v Carbolic Smoke Ball Co

• Facts: Advertisement claimed product prevented influenza, offered £100 for influenza cases despite usage.
• Legal Issue: Determining if the advertisement was an offer or mere puffery.
• Outcome: Court ruled it was a legitimate offer; Carlill could claim £100 since the conditions were satisfied.

Leonard v PepsiCo

• Facts: Pepsi advertisement featured a campaign for collecting "Pepsi Points," humorously advertised a Harrier jet as purchasable.
• Legal Issue: Whether consumers would reasonably conclude it was a real offer.
• Outcome: Court ruled the commercial was not a genuine offer, but a mere puff.

Gibson v Manchester City Council

• Facts: Council stated it "may be prepared to sell" property, prompting tenant Gibson to apply for purchase.
• Legal Issue: Determining if the Council's correspondence constituted an offer.
• Outcome: Court held the letter was an invitation to treat, not an offer.

Common Misunderstandings of Offers

• Advertisements, window displays, and product listings are typically considered invitations to treat rather than formal offers.

Pharmaceutical Society of Great Britain v Boots Cash Chemists

• Facts: Boots introduced a self-service pharmacy where drugs were displayed on shelves.
• Legal Issue: Whether the display of items constituted an offer.
• Outcome: The court ruled Boots' display was an invitation to treat, where the customer made an offer upon reaching the cashier, which could then be accepted by the pharmacist.

Summary of Legal Principles

• Invitations to Treat: Do not possess contractual significance but may lead to an offer.
• Contract Formation: Legally binding contracts emerge once an offer is accepted under agreed conditions.