Scenario Part 1:

Joshua, Grace and Martin are great friends, having met 8 years ago at University where they studied a Master of Architecture. Since graduation they have always dreamt of going into business together designing corporate offices. Together they have $50,000 to invest in the business: Joshua has saved $25,000, Grace has saved $18,000 and Martin has saved $7,000 toward the business venture. Joshua has seen an advertisement in the local paper for an office space for rent, which he considers would be ideal for their new business and is keen to take out a business loan of $30,000 to enable the new premises to be furnished. Martin, however, is a little hesitant to enter into a lease or a business loan. Having only just returned from 3 years working overseas, Martin says he doesn't want to be financing a business loan just now and would like to get his personal living arrangements sorted first before they do anything like that. Grace has already been approached by several businesses that are interested in employing them to redesign their office spaces. Grace sees the potential of their business and thinks it might be worth leasing a larger (and more expensive) premises to enable future growth. Joshua, Grace and Martin can see there is the potential for the business to expand and grow quite quickly. They come to you for advice as to which type of business structure would best suit their needs.

• Discuss the various types of business structures available and advise Joshua, Martin and Grace as to what type of business structure you would recommend for their situation (based on the information provided above)
• Outline your advice, including clear reasons supporting your recommendation(s) as well as the reasons for discounting the business structure(s) you do not think are suitable for them, making reference to and discussing any relevant law
• Part 1 should be no longer than 3 pages.

Scenario Part 2:

Melanie and Andrew recently married and are in the process of buying furniture and whitegoods for their new home. One Saturday afternoon Andrew walks past Big Ted's
Electronics Pty Ltd, a vendor of electrical goods and home appliances, and notices an advertisement in their shop window:

'NEVER TO BE REPEATED OFFER. 50inch PLASMA 3D TELEVISIONS @ $3000'

Andrew immediately enters the store and says to Jenny, the sales manager 'I'd like to buy the TV advertised in the front window. Can I pay for the TV now and have it delivered as soon as possible?'

Jenny tells him to slow down. 'Unfortunately there has been a rush and we've sold out. The only 3D plasma TV left is the demonstration model.'

Andrew thinks about it for a moment and says 'I'll give you $1500 for it.'

Jenny replies 'I'll take $2000'.

Andrew, realising he needs to discuss the purchase with Melanie and check the measurements of the lounge room wall before buying the TV says to Jenny 'OK, it's a deal.
But first I'll just need to go home and measure my lounge room wall to make sure it will fit. Will you keep it for me and I'll let you know by 12pm tomorrow (Sunday)'. Jenny agrees and Andrew goes home to discuss the purchase with Melanie and to measure up the lounge room wall.

Andrew and Melanie discuss the television purchase that evening and measure up the wall and decide to go ahead and buy the television. On Sunday morning Andrew calls the store, but cannot get through, so he leaves a message on the store's answering machine letting Jenny know that he will buy the television at the price they discussed and that he will pop by on Monday morning to pay for the television. However, on Sunday afternoon at 4pm, another customer, Mia, walks into the store and says she can pay Jenny $2500 for the demonstration model. Jenny sells it to her.

On Monday morning Andrew visits the store to pay for the TV. Jenny is surprised to see him. Andrew explains that he's come in to pay for the television and organise delivery of it as soon as possible. Jenny then tells him the bad news – the TV has been sold. She asks Andrew why he didn't call the store on Sunday morning and let her know he wanted it. Andrew is frustrated and tells Jenny he tried to call but couldn't get through and that maybe she should check her telephone messages more often.

• Advise Andrew as to his legal position. Does a binding agreement exist that obliges Jenny to have sold Andrew the television?
• Include references to any case law and relevant sections of any applicable legislation.
• For the purposes of answering this question, you are only considering whether any agreement exists between Jenny and Andrew. Do NOT consider issues of consideration or intention.
• Part 2 should be no longer than 3 pages.

Scenario Part 1:

Letter of Advice for Joshua, Martin and Grace: Various Kinds of Business formations

Limited Liability Company: An edge over a Partnership Firm,

Before initiating any business it is important to evaluate and analyze various kinds of business structures that operate within the country. Therefore, it is imperative for Joshua, Martin and Grace to evaluate all the options before them prior to arriving at any conclusion regarding the business structure that they choose.
On the basis of the available information, it is recommended that they opt for Limited Liability Partnership form of structure. The arguments in support of selecting a Limited Liability Partnership can be put forth only after comparing the same with a Company. On comparison, one of the significant features of a Limited Liability Partnership is that the liability of the partners is unlimited, that is, the partners are liable towards the actions of the firm & partners and vice-versa. But, the liability of the shareholders in a company is limited to the extent of the value of the shares. (Spadaccini, 2007). This limited liability concept is a significant feature of a company and is called Separate legal personality……….

(Some parts of the solution has been blurred due to privacy protection policy)