1: Intellectual Property Law and Business
I have just met with a new client, Claudia Lovely. Claudia intends to set up a business providing a unique after-school care program for primary school aged- students which involves teaching them about science, technology, engineering, art and management (STEAM) concepts in a fun and hands-on way. Claudia seeks advice on potential business structures she could use to run her business as well intellectual property
protection she will require.
She intends to call herself ‘GENIUZ STEAM Kids’ and has developed her own unique logo. She wants to promote herself on social media via catchy slogans and tunes as
well. She has been doing extensive research in the past couple of months regarding her business model and has developed her own unique teaching methodology as well as teaching materials.
Claudia intends to have three different centres and hence wishes to purchase at least two office spaces (which she will use to run her business from) and a fleet of vans to transport school kids to and from school. She estimates this will cost approximately $800,000. She further intends to hire staff to support the anticipated increase in workload. Claudia has big ideas for her business and she believes she will need to borrow money to fund future expansion plans and is concerned that she may not meet the required lending and servicing requirements due to insufficient insecurity available for any bank loans she wants to take out.
Claudia owns a house, with $200,000 worth of equity and has $100,000 in savings. She further does not want to give up control of the day-to-day operations of her business, but would consider sharing ownership with business with others if they contribute capital. She has two friends (Tara and Greg) who are interested in being part of her business. Tara and Greg both have extensive industry experience in the after school program industry but Claudia is concerned with the number of failed businesses Greg has been involved in. In conversations with Claudia, it transpires that Tara and Greg can each provide $250,000 and Claudia the remaining balance.
Claudia has identified a number of key questions and concerns below:
• She wants advice on how to set up each of these structures and the ease with which she can do so, including whether there are any registration requirements for each of these.
• She wants advice on how each of these structures can be terminated.
• She wants a low reporting burden.
• She wants to ensure that the business structure she chooses would help in raising capital.
• She wishes to know how she could be protected from any poor management decisions of employees/ partners/ directors from a liability point of view.
• She wants to minimise her overall tax liabilities.
• She wishes to know how she could retain control over the day-to-day decisions of the business.
Required:
Please prepare a memorandum of advice for the client.
a) Explain to Claudia the importance of getting intellectual property (IP) protection and recommend to her the various types of IP that might be suitable for her circumstances. When making a recommendation, please provide her with sufficient detail regarding the following:
a. Whether the IP needs to be registered and if so with whom;
b. What criteria must be satisfied to apply for the IP; and
c. The duration of protection (including prospect of renewal).
b) Advise Claudia on at least three ways to structure her business, including the strengths and weaknesses of each option for her specific circumstances. Please remember to address the specific needs and concerns for the client as well as her specific assets and liabilities when giving advice.
Please address the suitability of each business structure in IRAC format. In your answer, remember to refer to specific sections of relevant legislation and case-law in your answer.
2: Contract Law
Tania was watching television one evening and came across an advertisement by Comp Whiz Pty Ltd which had the following wording:
“Financial year end sale. Up to 70% off on all computer equipment and other electronics in our store. Hurry now. This promotion lasts for selected brands only. While stocks last. Terms and conditions apply.
If customers spend at least $1000 on mobile and electronic goods, they are entitled to get 50% off on future purchases over the next year.”
Tania turns up at the store the next day and walks around browsing the items for sale. Tania took a liking for an ‘IPhone Geni 3+’ which had a price tag of $700 and proceeded to the counter to make her purchase. When the item was scanned at the registry, she was informed that the price tag of the item was in fact inaccurate and the correct price according to their system was $800.
Tania believes she is entitled to purchase the IPhone Geni 3+ at the displayed price of $700.
Tania further enquired whether she would be entitled to get 50% off on future purchases if she decided to spend at least $1000 on mobile and electronic goods at the
store. The store assistant replied, “Sorry, the promotion was not meant to be taken seriously. It is just advertising dear!”
Meanwhile, Tania has been looking to move into her new apartment. While surfing the web later in the day, Tania went onto the Gumtree website, read some terms on their website and came across the following advertisement:
“Second-hand study furniture for $500- study table and chair only. Mahogany wood.” Tania emailed the relevant contact person (Dorothy) as follows: “I am very keen to purchase your furniture but how old is your furniture and would you accept payment in 2 instalments?”
Dorothy replied stating: “I’m sorry but I need the funds urgently in a lump sum. The furniture is 5 months old.” Tania emailed back four days later stating “I accept.” Dorothy replied stating “I’m sorry but I have already sold the furniture to someone else. There is no contract between us!”
Advise Tania on the following questions:
It is important that you outline the issue, relevant law (legal principles), application and conclusion (IRAC) for questions (b) and (c).
(a)Explain what are the elements to form a valid contract. Provide relevant definitions and refer to relevant case-law in your answer.
(b)Was there a contract to sell Tania:
i) the IPhone Geni 3+ at the displayed price of $700 and
ii) to provide the discount of 50% on future purchases.
Please answer this question using the IRAC format. Refer to relevant case- law in your answer.
(c)Was there a contract between Tania and Dorothy regarding the purchase of the furniture for $500?
Please answer this question using the IRAC format. Refer to relevant case- law in your answer.
(d)Tania is curious about the types of terms that could apply to purchases (online or otherwise) and is uncertain what consequences could apply if she inadvertently breached certain terms. Review the topic on ‘Terms of a Contract’ and advise her on types of terms that exist and what remedies are available where a term has been breached.
