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 Pearson
COpyrighl llil Pearson A!Jslralia (a division or Pearson AAJslralia aroup Ply Ud) 2020 - 97&1488620737 -Gibson & Clsbome/Buslness Law lle
 lle

Copyright(£) Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020- 9781488620737 - Gibson & Osborne/Business Law 1l e
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Copyoghl ® Pearson Australia (a division of Pearson Australia Group Ply Ltd) 2020 - 97814l!8620737 - Gibson & Osborne/Business law 11 e
 Copyright© Pearson Australia (a division of Pearson Australia Group Pty Ltd) 2020
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Copyright ~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
 Detail ed cont ent s vi. i.

How to use this book xi. i. i.

Educat or resources xvi. i. i.
Preface xi.x
About the authors xxvi. i.
Key to case report abbreviations xxvi. i. i.
Table of cases xxi.x
Table of statutes xxxi.v

PART 1 THE LEGAL FRAMEWORK 1

CHAPTER 1 legal foundations 2
CHAPTER 2 How the legal system works 27

PART 2 LAW OF CONTRACTS 91

CHAPTER 3 Creation of the contract 92
CHAPTER 4 Validity 165
CHAPTER 5 Terms of the contract 220
CHAPTER 6 Rights and liabilities of the parties, discharge and remedies 255

PART 3 CIVIL LIABILITY 301

CHAPTER 7 Civil liability: The law of torts and negligence 302
CHAPTER 8 Applications of negligence to business 348

PART 4 CONSUMER LAW 381

CHAPTER 9 Statutory consumer guarantees and the Australian Consumer Law 382
CHAPTER 10 General and specific consumer protections under the ACL 405

PART 5 BUSINESS ORGANISATIONS AND THE LAW 453

CHAPTER 11 Agency 454
CHAPTER 12 Sole traders and partnersh ips 480
CHAPTER 13 Introduction to companies and incorporated associations 510
CHAPTER 14 Choosing a business ent ity 542

Copyright (2) Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law 11 e
 ADDITIONAL CONTENT
CHAPTER 15 Other business-related torts 562
CHAPTER 16 Insurance 598
CHAPTER 17 Sale of goods-business to business 634
CHAPTER 18 Property and mortgages 663
CHAPTER 19 Intellectual property 703
CHAPTER 20 Ethics and business practice 734
CHAPTER 21 Criminal law in a business context 753
CHAPTER 22 Competition law 773
CHAPTER 23 Insolvency and debt recovery 797
CHAPTER 24 The work environment and the employment relationship 827
CHAPTER 25 Electronic commerce 862
CHAPTER 26 Negotiable instruments 885
CHAPTER 27 Consumer credit and privacy 917
CHAPTER 28 Ethics and regulations in marketing and advertising 940

Glossary G-1
Index I-1

vt BRIEF CONTENTS

Copyright(£) Pearson Australia (a division of Pearson Australia Group Pty ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
 How to use this book xi. i. i. \Vhat type of anion is a reprcscmativc or class
anion? 62
Educator resources xvi. i. i.
Section 3: Precedent and
Preface xi.x statute la1v 66
About the authors xxvi. i. \Vhcrc do you look for sources of law? 66
How do you find a case? 67
Key to case report abbreviations xxvi. i. i. \Vhat is case Jaw? 69
\Vhat is statute law? 76
Table of cases xxi.x
\Vhat arc the methods of statutory
Table of statutes xxxi. v incerpretation used by chc courts? 79

PART 1 PART 2
THE LEGAL FRAMEWORK 1 LAW OF CONTRACTS 91
CHAPTER 1 CHAPTER 3
Legal foundations 2 Creation of the contract 92
\¥hat is 'law'? 3 Section 1: The i.mportance of
Can we define 'the law'? 3 contracts i.n soci.ety 93
Are rules always law? 3 \Vhat is chc importance of comract law? 93
\¥here is the Jaw round? 5 \Vhat arc the sources of concran law? 94
\¥hat arc the charaneristics of a legal system? 7 \Vhat is chc difference between a
\¥hat arc the major types of laws comracc and an agreemcm? 94
found in chc Australian legal system? 9 \Vhat is a comract? 95
\¥hat arc Commonwealth and state powers? 12 How is an ·apparcm· simple
\¥hat docs separation of powers mean? 23 com race created? 95
How do you know what has been created
CHAPTER 2 is enforceable? 96
How t he legal system works 27 How arc comracts classified? 97
Secti.on 1 : Classi.f,cation of laws 28 \Vhat is chc importance to business of
How arc laws classified? 28 the distinction between formal and
Secti.on 2 : Courts and tri.bunals 34 simple comracts? 100
\¥hat is a court system? 34 Secti.on 2: Agreement between
\¥hat arc the roles of chc police the parti.es 105
and the courts? 35 \Vhat constitutes a comraccual
\¥hat is a court hierarchy? 36 agrccmcnc? 105
\¥hat is the difference between original and Step I: Is there agrccmem between
appellate jurisdiction? 37 the parties? 106
\¥hat cases ca n state. territory and \Vhat arc the rules relating to offer? 110
federal courts hear? 38 Ca n an offer be tcnninatcd? 11 9
\¥hat arc federal courts? 44 \Vhat arc the rules relating to acceptance? 123
\¥hat arc the features of a court hierarchy? 47 \Vhat arc the rules as co contracts by post? 127
\¥hat alternative methods are there How docs electronic offer and
to couns? 48 acceptance work? 129
What arc judicia I and quasi-judicial Secti.on 3: Intenti.on to create
tribunals? 52 legal relations 135
What is an ombudsman? 55 \Vhat is imcmion? 135
What is the composition of an adversary Step 2: rs there inccmion co contract? 137
system? 55 \Vhat is chc scatucory position? 142

vii

Copyright C9 Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law 1l e
 What is the legal position with Sect"lon 2: Remed"les for breach
non-commercia l agreemencs of contract 278
(agreemencs lacking serious intencion)? 143 \.Yhac remedies are available ac
Section 4: Consideration 149 common law? 278
Step 3: Is consideration present? 149 How are damages determined for breach
What is ·consideration'? 149 of contract? 28 1
What are the essential rules for \.Yhac are equitable remedies? 292
consideration? 150 \.Yhen is there a loss of right to sue? 298
What is promissory escoppel? 158

CHAPTER 4
PART 3
Validity 165 CIVIL LIABILITY 301
Section 1: Capacity of
the part"les 166 CHAPTER 7
Step 4: Do the parties co the contract Civil liability: The law of torts
have full contractual ca pacity? 166 and negligence 302
Who are infants (or minors)? 167 \.Yhy is an understanding of the law of torts
Does a corporation have che capacity important to business? 303
10 contract? 173 \.Yhac are the general principles ofconious
Do bankrupts have che capacity liability (negligence)? 304
10 contract? 173 \.Yhac are the cime periods for tort ace ions? 307
Do mentally unsound and intoxicated \.Yhac is civil liability and the tort
persons have the capacity to concract? 173 of negligence? 309
\.Yhac are the roles of che plaincin' and the
Section 2: ls there genuine
defendant in establishing che elemencs
consent? 176
Step 5: Have the parties consented? 176
of negligence? 3 10
What is mistake? 176 CHAPTER 8
What is misrepresentation? 186 Applications of neg ligence
What actions can constitute duress
to business 348
or undue influence? 192
Produce liability (defective produces}:
What are unconscionable (un fair) contracts? 197 What is the legal position of
Section 3: ls the purpose of manufacwrers? 349
the contract legal? 204 How does the con of negligence impact on
Step 6: Is the contract legal? 204 the application of occupier's liability? 366
What type of concracts are illegal \.Yhac are the requirements of criminal
by scatuce? 204 negligence? 375
What is che common law position of
contracts that are illegal and contracts
that are void? 207 PART 4
CHAPTER 5 CONSUMER LAW 381
Terms of t he contract 22 0 CHAPTER 9
What are express terms? 22 1
Statutory consumer guarantees
What are collateral contracts? 226
and the Australian Consumer Law 382
How important is the cerm? 228
\.Yhac are consumer guarantees? 384
What are impl ied terms? 235
\.Yhac are the consumer guarancees
What are meaningless terms? 237
that apply to goods? 388
What are exclusion clauses or terms? 238
\.Yhac are the consumer guarancees
CHAPTER 6 that relate co the acceptability of goods? 390
Rights and liabilities of the parties, Are there situations where there is no
overlap with the Sale of Goods Aces? 397
discharge and remed ies 255
Are there consumer guarantees relating
Section 1: R"lghts and liab"ll"lt"les to the supply of services? 398
of the parties, and conclusion of \.Yhat are consumers' rights concerning
the contract 256 guarantees for che supply of goods
What is privity of contract? 256 and services? 399
Can you assign liabilities and rights? 258 What are the rights of action against
How can a contract be ended? 260 manufacwrers? 400

viii DETAILED CONTENTS

Copyright C9 Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law 1l e
 Can an implied consumer guarancee \Vhat are the remedies of a principal
be excluded? 401 fo r breach by an agent? 474
\Vhat are some specific cypes of agency? 474
CHAPTER 10
General and specific consumer CHAPTER 12
protections under theACL 405 Sole t raders and partnersh ips 480
\.Yhat is the scope ofche A11stralia11 \Vho is a sole trader? 48 1
Consumer Laut? 406 \Vhat areas of law apply to
\.Yhat is the purpose of Chapter 2- General partnerships? 481
protections? 409 \Vhat are the essential elements of
\.Yhat does Chapter 2, Part 2-1 - Misleading a parmership? 482
or deceptive conduct (ss 18- 19). cover? 410 \Vhen does a partnership exist? 485
\.Yhat does Chapter 2, Part 2-2- \Vhat ocher type of relationships
Unconscionable conduct can look like partnerships? 486
(ss20- 22),cover? 421 How is a partnership created? 491
\.Yhat is the effecc on a cont race of \Vhat is che relationship ofpanners
Chapcer 2, Part 2-3- Unfair contract to outsiders? 492
terms (ss 23-28)? 424 \Vhat is che liability ofpanners in
\.Yhat are the proteccions in Chapter 3 against contract and ton? 493
fa lse representations (ss 29- 3 I,37)7 426 \Vhat does being an apparem
\.Yhat other ·unfair practices· are caught partner or 'hold ing ouc' mean? 496
by the ACL? 43 I Does a retiring partner continue to
How does Chapter 3, Pan 3-3- Safety of be liable for partnership debts? 497
consumer goods and produce related \Vhat is che relationship between partners? 497
services.apply underche ACL? 435 \Vhat are the r ights of each partner? 498
\.Yhat is manufactu rer's liabilicy? 436 \Vhat are the duties of each parmer? 499
\.Yhat is the liabilicy of manufacwrers for \Vhat happens to partnership property? 501
goods with safety defects under \Vhat is che effect of dissolution? 501
Cha peer 3, Part 3-5. of the ACL? 439 \Vhat is a limited parmership? 504
What other consumer transactions are
caught by the ACL? 442 CHAPTER 13
What does Chapter 5- Enforcement and Int roduction to companies and
remedies provide fo r breach of the ACL? 444 incorporated associations 510
Is chere still a role for state and cerritory \Vhat is che role of ASIC in the
consumer procection bodies? 448 administration of company law? 511
\Vhat is a company? 512
PART 5 \Vhen will a court pierce che
corporate veil? 514
BUSINESS ORGANISATIONS \Vhat is che best corporate struccure for
AND THE LAW 453 my business? 515
\Vhat is che effect ofincorporation? 518
CHAPTER 11 \Vhat is regiscration? 519
Agency 454 How is the internal management
\.Yhat is an agency relacionship? 455 of a company governed? 519
How does an agency relationship differ \Vhat does being a director involve? 520
from ocher relationships? 455 \Vhat is che purpose offundraising? 533
How may agents be classified? 457 How do I raise company capital? 534
How ca n an agent be appointed? 458 \Vhat is corporate insolvency? 536
\.Yhat authoricy does an agent have? 461 \Vhat are un incorporated and
\.Yhat are the duties owed by an agent co incorporated associacions? 538
their principal? 464
\.Yhat are the rights of the agent against CHAPTER 14
their principal? 468 Choosing a business entity 542
\.Yhat is the liabilicy of agents and \Vhat factors shou Id you consider
principals co third parties? 469 in choosing a business entity? 544
What is the liabilicy of the principal \Vho is a sole trader? 544
and agent in tort? 472 \Vhat is a partnership? 545
How can an agency agreement be \Vhat is a company? 546
terminated? 472 \Vhat is a trust and who is a trustee? 547

DETAILED CONTENTS ix

Copyright C9 Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
 \Vhat are franchises? 552 CHAPTER 18
\Vhy have a business name? 556 Property and mortgages 663
\,Vhac is the difference between
ADDITIONAL CONTENT ownership and possession? 664
CHAPTER 15 Can possession of land give title? 664
Can possession of goods be evidence
Other business-related torts 562 of ownership?
\Vhat ocher conious liabilicies at law are 665
relevant 10 business? \,Vhac is the difference between real
563
\Vhat are 1respassory acts? and personal property? 666
563
\Vhat are the essential elements of \,Vhac is the extem of land? 671
\,Vhac types of imerescs exist in land? 672
defamation? 575
In what business situations might \,Vhac are the mechods by which land
ownership is escablished? 674
a plain tiff rely on an economic tort? 584
\Vhat are public and privace nuisance? \¥hat is a mortgage? 687
59 1
Stawtory torts: \Vhat are the clemencs \¥hat is the mortgagor's right 10 dea I
with che property? 689
of breach of statutory duty and
What remedies are available to
stalllLOry nuisance? 595
\Vhat are the contemporary new cons? 596 the mongagee? 689
What is the difference between
CHAPTER 16 a licence and a lease? 691
Insu rance 598 What are the differem categories of lease? 692
\Vhat is risk? 600 What are the terms of agreemenc
\Vhat is an insurance comract? 600 for a lease? 693
\Vho are the parties co an insurance What are the terms of a leasing contracc? 693
contract? 601 How can leases and tenancies be
\Vhat are the sources of insurance law? 601 1erminaced? 694
\Vhat is the Ge11era/ /11sura11ce Code Can che landlord recover possession
of Practice? 602 ofche premises? 695
\Vho regulates the insura nce induscry? 602 What is the purpose of residemial
How arc industry complaints resolved? 603 tenancies legislation? 695
\Vhat are the key concepcs underlying Who does retail tenancies legislation
insurance law? 603 protect? 698
How is a contract of insurance made? 616
How is the insurance policy construed? 622 CHAPTER 19
\Vhat is che difference between an Intellectual property 703
agem and a broker? 626 \,Vhac is intellectual property? 704
\Vhat is fire insurance? 627 \,Vhac is copyright? 705
\Vhat ocher kinds of general \,Vhac are designs? 716
(indemnity) insurance are there? 628 \,Vhac are patents? 720
\,Vhac are trade marks? 723
CHAPTER 17 \,Vhac is passing off? 728
Sale of goods- business to business 634 Can che A11stralia11 Consumer Law-
\Vhat are non-consumer sale of Unfair practices provide trade
goods comraccs? 635 mark protection? 729
Sale of Goods Act or ACL? 636 Can confidential information
How is the contract formed? 637 be protected? 729
\Vhat are the terms of the contract? 640
\Vhy is the distinction between property CHAPTER 20
and possession imporcam in business? 642 Eth ics and business practice 734
\Vhy is the classification of \,Vhac is the relationship between law
goods imponant? 643 and morality? 735
How docs risk pass? 650 Are morals and ethics the same thing? 737
Can there be a cransfer of title by \,Vhac are the main cheories of ethics? 738
a non-owner? 65 1 \,Vhac kinds of situations raise ethical
\Vhat are the rights and duties ofche issues in business? 739
panics in performance of the contract? 653 Is chere a link becwecn corporations
\Vhat remedies are available for and echics? 744
breach of contract? 656 \,Vhac is echica) investing? 746
\Vhat is che Vienna Sales Convention? 659 \,Vhac is echica) professional advice? 746

X DETAILED CONTENTS

Copyright ~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
 CHAPTER 21 CHAPTER 24
Criminal law in a business context 753 The work environment and the
\.Yhac are the sources of the criminal law? 754 employment relationship 827
\.Yhac are the differences between \Vhat is employment law? 828
crim inal law and civil law? 754 \Vhat is chc employmcm rclacionship? 829
How a rc criminal offences classified? 755 How is the cont race of
How a rc criminal proceedings employment for med? 832
commenced? 757 \Vhat implied duties cxisc in a comract
\¥hat elemcms must be prcscm for a of cmploymcnc? 834
person to be found guilty of a crime? 758 How can a contract of employment
\.Yhac is the sta ndard of proof be ccrm inatcd? 839
in a criminal matter? 758 How does the national workplace
\¥hat is a white-collar crime? 759 relations sysccm work? 84 1
\¥hen can stawtory criminal liability \Vhat arc human rights-based work
arise in business situations? 763 regulations? 844
When can a company face criminal \Vhat is chc interrelationship between
liability? 767 work health and safety and workers·
What is a civil penalty? 769 compensation? 85 1

CHAPTER 22 CHAPTER 25
Competition law 773 Electron ic commerce 862
How docs the Competitio11 a11d Consumer Electronic transaccions legislation-
Act operate? 774 How do we make cont races
How is the CCA admin istered? 775 electronically? 864
\.Yhac are the concepts of•markct· and Arc cherc legal aspects to maimain ing
·competition· in business under chc CCA? 776 a business website? 870
\.Yhac rcscrictivc trade practices are Is there electronic commerce consumer
prohibited by Pa n JV? 778 protection? 873
\.Yhac are authorisations and Docs the Internet create jurisdictiona l
notifications? 791 problems? 875
\.Yhac enforcement procedures and \Vhat is privacy in che context of
remedies are available for breaches the Internet? 876
of Pares IV and JVB? 792 Is cybercrime a problem for
\.Yhac is the purpose of industry codes business? 879
of conduct? 792 \Vhat is electronic banking? 880

CHAPTER 23 CHAPTER 26
Insolvency and d ebt recovery 797
Negot iable instruments 885
\Vhy is negotiability an exception
\¥hen should legal proceedings
to the nemo dot rule? 886
be commenced? 798 \Vhat is a bill of excha nge? 887
\.Yhac is the debt recovery process? 798
\Vhat are cheques? 89 1
\.Yhac is the process for bankru pccy
\Vhat is che liability of the parcies? 894
proceedings? 800 \Vhat is che difference between a bearer
Are there any other effects of bankruptcy? 802 and an order cheque? 896
\.Yhac are the key aspects ofba nkrupccy? 802
\Vhat are the duties ofche financial
\.Yhac is an act ofbankru pccy? 806
instillltion and che customer? 901
\.Yhac is the cffccc of a sequcscracion
\Vhat are bank cheques? 907
order? 809
\Vhat ocher methods of money transfer
\.Yhac are the alternatives to bankruptcy? 809
are cherc? 908
\.Yhac property is ava ilable for paymcm \Vhat is che code of banking? 9 10
of debts? 8I2 \Vhat is che role of AFCA? 9 10
\.Yhac power docs a trustee have to avoid
\Vhat is che purpose of che
antecedent transactions? 8I7
Finn11cial Tra11sactio11 Reports
Can money or property be collected
Act 1988? 9 11
from third panics? 8I8
What is the order of paymcm of debts? 8I8 CHAPTER 27
What are discharge and annulmem Consu mer credit and privacy 917
of bankruptcy? 819 \Vhat are the opcracional areas of
What is corporace insolvency? 82 I the Natio11a/ Credit Code? 9 18
DETAILED CONTENTS xi

Copyright C9 Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
 What types or credit arrangements CHAPTER 28
can you have? 919 Eth ics and regulations in marketing
What formalities muse a credit and advertising 940
provider meet? 92 1 \.Yhy is ignorance of the law no excuse? 941
What i s chc purpose of a mortgage \¥hat is the di fference between
or guaramcc? 923 the law and ethics? 943
What i s chc effect of hardship? 925 \¥hat is the role of ethics in a business
What arc the obligations or government
context? 944
agencies and busi nesses under \¥hat docs marketi ng law cover? 945
t he Privacy Act? 928 \¥hat is advertising law? 959
What was the i mpact of the Privacy
Ame11d111e11t (E11ha11cing Pl'ivacy Protection) Glossary G- 1
Act on the Pl'ivacy Acn 93 1 Index I-1
What i s hire-purchase? 936

xii DETAILED CONTENTS

Copyright ~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
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xi.v HOW TO USE THIS BOOK

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HOW TO USE THIS BOOK xv

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 11\,tak.o _, third portitt
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text. They contain:

.: the court in which the case was heard
..f f
(which is often important for
a.,, Of'ff"•tlon of b1i1 ,/ determining the importance of the case
s.,,.,._...,.",_.,.
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/ an outline of the facts;

"--_.
- ... .........., "'............ _ _ _, .,,.,..i,:,n,,,,,,r,,n,n11 ......

"""" ••""'P""' •_.,_on-•-o,,,n.. .,..,,...,,4,,ti,I?<",.. ,n i

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.....
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1 .....,.,. ""' "" •l>t - · ·· "
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encourage students to reflect on the

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application to business.

a.,, vi.M:uo of • te-r• \.n the contr.«

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xvi. HO'<' TO USE TH IS BOOK

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HOW TO USE THI S BOOK xvi.i.

Copyright ~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
 A suite of resources is provided to assist with delivery of the text, as well as to support
teachi ng and learning.
Solutions Manual
The Solutions Ma nual provides educa tors with detailed, accuracy-verified solutions to the
in-chapter and end-of-chapter questions in the book.
Test Bank
The Test Bank provides a wealth of accuracy-verified testing material. Updated for the new
edition, each chapter offers a wide variety of true/false, short-answer and 1nultiple-choice
questions, arranged by learning objective and tagged by AACSB sta ndards.
Questions can be in tegrated into Blackboard, Canvas or Moodie.
PowerPoint lecture slides
A comprehensive set of PowerPoint slides can be used by ed ucators for class presentations
or by students for lecture preview or review. They include key figures and tables, as wel l as
a sum1nary of key concepts and exa1nples fro1n the text.
Digital image PowerPoint slides
All the diagran1s and tables from the course content are avai lable for lecturer use.

xvi. i. i.

Copyright C9 Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020- 9781488620737 - Gibson & Osborne/Business Law 1l e
 The eleventh edition of Business Law conti n-
ues to provide students of co mm erci al or
bus iness law wi th an accessib le and stu -
dent-friendly but authoritative and con1pre-
hensive textboo k. It provides ex tens ive
coverage of business law topics and considers
the lega l environn1ent in which businesses
must operate. Care ha s been taken to ensure
that the text represents cu rrent law in all
states and territories. Business Law wi ll satisfy
the req uirements of n1ost business or con1 -
mercial law subjects throughout Australia.
This ed ition has retained the distinctive
layout of t he previous ten editions. The
learning aids, such as In brief, Business tips
and Business risk ,nanage,nent alerts, and
the boxed cases and flowcharts, continue to
feature strongly th roughout the text.
Perhaps the most significa nt change in th is
edition has been the consolidation of contract
law in to four chapters ra the r than the I 0
chapters found in previous editions. The aim
is to try and ma ke it easier fo r students to:
) understand how a contract is created
(Chapter 3, 'Creation of the contract', con-
tai ns an introducto ry section and then
three sections: agreement, intention and
consideration, all of which n1ust be present
for the crea ti on of a sin1ple contract);
) consider the validity of the contract
(Chapter 4, ·validity', considers whether the
contract that the parties have created in
Chapter 3 is va lid; this requi res considera-
tion of th ree fmther elen1ents-the capacity
of the parties, what they have consen ted to
and the legality of their agreement);
) decide what tern1s the parties have
agreed to (Chapter 5, 'Terms of the con -
tract', considers wha t it is exactly that the
pa rties have agreed to and the in1portance
Copyright(£) Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020- 9781488620737 - Gibson & Osborne/Business Law 1l e
that shou ld be attached to any staten1ent
in the contract that is a term ra ther than a
mere representation-that is, whether it is
a condition, wa rranty, innom in ate tenn or
a consumer guarantee under the Austral-
ian Consumer Law (ACL)); and
) consider the rights and liabilities of the
parties, includ ing the issue of discharge,
and the remedies avai lable to an innocent
party in the forn1 of n1oneta ry con1pensa -
tion and/or an equ itable remedy such as
spec ific perforn1ance or an injunction
(Chapter 6).
Further fea tures of the text are as follows.
) The citation for Australian cases, whe re
possib le, is now in what is referred to as
'report-neut ral' for m. Th e reference to
where the case may be fou nd is cited not to
a law report but rather to where it can be
accessed online at sites such as AustLII or
the sites of the cou rts and tribun als of the
Comn1onweal th, states and territories.
Students often ca nnot access a law library
or understand how to find a law report or
statu te easily. However, today they are so
con1puter literate that it is easier fo r then1
to look up what they need on line.
) Topic coverage has been increased in a
nun1ber of areas to reflect changing needs
in student unde rsta nding of how the law
interfaces and interacts with business.
Discussions have also been fine-tuned
throughou t the text.
) All cases now conta in a Comntents section
afte r the decision, setting out points to note
about the case and putting it in to a con text
tha t will help to give business students a
better understanding of where a lega l prin-
ciple might have emanated from or how it
applies to a particu lar fact situation.
xi.x
 I All cases also contain a Case reflection
question at the end of each case, asking
students to think about the case and the
decision, and to reflect on the in1porta nce
of the case and its application to business.
I Important cases have been n1ore clearly
iden ti fied: a list of key cases is provided at
the beginning of the chapter where rele-
vant, and each case is distingu ished by a
red backgrou nd withi n the chapter. Th e
authors consider t hese cases in1portant
because they may have established new
legal principles o r cla rified ex isting areas of
law, suc h as th e decisio n of Grant v
Australian Knitting Mills. They shou ld be
read to get a better understanding of how o r
why the law might have developed in, for
exa mple, the area of negligence in tort law.
I In addition to the text chapters that cover the
subject material in most Business Law units,
custom chapters are also available that cover
a diverse range of o ther business topics.
The legal environment
of business
Text chapters
Business Law presents top ics tha t are t ra di -
tionally part of business law courses.
Part 1- The legal framework co ntai ns two
chapters tha t int roduce the stu dent to the
lega l framework of business.
I Chapter I (Legal foundations) discusses
what law is; the interface between business
and law; its major characte ri stics; th e
major sources and classi fica tions of law;
the o rigins of major sources of English law;
the interface between Comn1onwealth and
state powers and the role of the Australian
Constitution; the division of powers under
the Constitution; the difficulty of cha nging
the Constitution; the role of the High Court
in federa l expa nsion; and, fina lly, what the
separation of powers is.
I Chapter 2 (How the legal systen1 works)
is divided into three sections.
- Section I (Classification of Jaws )
loo ks at the class ificatio n of laws and
the laws t hat make up th e Austra lian
legal system.
xx PREFACE
Copyright~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
- Section 2 (Courts and tribunals) con -
siders th e role of th e police and the
courts within the Australian legal sys -
tem that n1ake up the federa l, state and
territory systen1s, includ ing thei r juris-
dictions (wha t n1atters they can dea l
with ); the growth of e-technology in the
cou rts; and the growth in alternatives to
the cou rts, includ ing alternative forms
of dispute resolution, quasi -judicial t ri-
bunals and the on1budsmen. The sec -
tion concludes by providing an overview
of the adversary system, the role of the
various parties in it, as well as the role
and growth of class actions.
- Section 3 (Precedent and statute law)
looks at where law con1es from and how
it can be found, as well as how to cor-
rectly cite cases and statutes for essays or
answe ring problen1 questions. It then
goes on to exp lain the in1portance of
case law (the ratio decidendi and obiter
dicta ) and wha t is precedent as a source
of law withi n the Australian legal sys-
tem. The fina l part of this sectio n begins
by looking at how statute law is n1ade by
Parliament and then interpreted by the
cou rts when doubts arise about t he
n1eaning of words or phrases when
applied to particu lar facts; and concludes
with a brief overview of the g rowing
in1portance of delegated or su bordinate
legislation as a regulatory tool by all
levels of governn1ent.
Part 2- Law of contracts contai ns four chap -
te rs on contracts: how a contract is created,
whether the contract that has been created is
valid and enfo rceable, wha t are the tern1s
that the parties have agreed to in the con-
tract, and what are the rights and liabilities
of the parties includ ing breach and re me-
dies. Without con tracts, business and the
co mmunity as we know th en1 today would
not exist.
) Chapter 3 (Creation of the contrac.t)
looks at how a contract is crea ted. It is not
conce rned with whether th e con tract is
valid; th at is for the next chapter. This
 chap ter is concerned with t he elen1ents
that ,nust be present for the crea tion of a
simple contract. They are not in any orde r
of importance-each has to be considered.
The chapter has been divided into sections
for reader convenience:
- Section I (The in1portance of con -
tracts in society) explains the role and
importance of contracts in society as
well as son1e of the te rn1inology you will
encounte r when read ing the next four
chapters. Without understanding what
the purpose of a contract is and how it is
crea ted, it is difticult to see its relevance
or importance to both business and the
comn1unity generally. Thi s section also
considers the sou rces of contract law,
what elen1ents need to be conside red in
the creation of a simple valid contract,
and the various ways in which a con-
tract may be classified.
- Section 2 (Agreement between the
parties) considers whe th er t here has
been an offer by one party and accept-
ance by another, as these two elen1ents
together form the basis of an agreen1ent
between the pa1ties. If the parties have
not reached an agreen1ent on what it is
they a re con tra cti ng about, ca n t here
even be a cont ract? Ca n you contract by
post or electronica lly?
- Section 3 (Intention to create legal
relations ) cons iders the elemen t of
'inten tion'; that is, do the parties intend
to create a contract that is lega lly enforce-
able in a cou rt of law? If they do not
intend to create lega l relations, what have
the parties crea ted? Is the agreement
co mn1ercial and serious in inten t or
non-con11nercial and lack ing serious
intent?
- Section 4 (Consideration), the tin al step
in determining whether a contract ex ists,
looks at the elen1ent of 'consideration';
that is, what is the price paid to buy the
other person's promise? This paymen t is
what distinguishes a bargain from a gift.
No consideration, no contract.
Copyright(£) Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
> Chapter 4 (Validity) considers the issue of
validity of the contract. Is the simple con-
tract that was crea ted in Chapter 3-
because the elements of agreement,
intention and consideration were present
and iden tifi able-capable of being valid
and enforceable? To detern1 ine valid ity, it
is necessary to look at more elements: in
this case, capacity of the parties, what they
have consented to and whether what has
been agreed to is lega l. As with Chapter 3,
these elen1ents are in no particu lar order of
in1portance in ter ms of determ in ing
whether the contract is va lid or not.
- Section I (Capacity of the parties) looks
at the abi lity of the parties-i ncluding
infan ts, corporations, bankrupts and
menta ll y unsound and intox icated
persons-to fully understand wha t they
have entered into (thei r 'capacity· to
understand what they are entering into).
- Section 2 (Is there genuine consent?!
cons iders wha t t he consequences are
if one (or both I of the parties say they
have misunderstood the si tuation ( e.g.
because of mi sta ke, misrepresentation,
duress, undue in fluence or unconscion-
abili ty). Has an agreen1ent been reached?
- Section 3 ( ls the purpose of the
contract legal? ) looks at the purpose of
th e co ntract and wheth er it is lega l.
What is the legal stand ing of the parties
if a statute or the common law says the
contra ct is void or illega l? Can it still be
enforceab le?
If each of the elements is sa tisfied in
Chapte rs 3 and 4, t hen the contract can be
considered to be valid. But that is not the
end of the matter. There can still be uncer-
tainty ove r exactly what the parties have
agreed to. If this is the case, then the cou rts
n1 ight need to exami ne what it is tha t the
pa1ties have agreed to.
> Chapter 5 (Tern1s of the contract) consid-
ers what it is that the parties have agreed
to (the 'terms· of the contract). The chap-
ter begins by consid ering whether the
state men ts made by th e parties du ri ng
PREFACE xxi
 negotiations are intended to be ·,nere rep -
resentations' tha t are not enforceable or
terms that the cou rts will enforce. Where a
statement is a term, the chapter then con -
siders its importance; that is, whether it is a
condition, a warranty, an inno1ninate term
o r, if a consume r contra ct, a consumer
gua rantee caught by the ACL. Strange as it
n1ay seen1, it son1eti mes happens that what
the parties think they have agreed to is not
the same, and a dispu te even tuates.
) Chapter 6 (Rights and liabilities of the
parties, discharge and ren1edies). As for
Chapters 3 and 4, this cha pter is divided
into Sections.
- Section I (Rights and liabilities of the
parties, and conclusion of t he contract)
begins by considering the rights of the
parties and who is a pa rty to the contract
(an issue of privity) before moving on to
consider the issue of assignment of liabi l-
ities and rights. Thi s section concludes by
looking at the ways in which a contract
may be ended; that is, by performance,
agreemen t, frustration, operation of law
or lapse of time or di ssolved o r breached
by vi rtue of a term such as a condition,
innon1i nate term, o r warran ty (or con-
sumer guarantee if it is a consumer con-
tract and caught by the ACL).
- Section 2 (Ren1edies for breach of
contract) conside rs the remedies that
are available to the innocent party ( i.e.
the party not in breach). The innocent
party may seek a remedy at com mon
law in the fonn of dan1ages. These may
be nom in al, ord inary or 'rea l', or exen1 -
plary, and liq uida ted (for a fixed
an1ount), unliquidated (left to the court
to determ ine) o r a pena lty. The innocent
party may also seek a ren1edy in equity,
which will genera lly be either speci fic
performance to make a person ca rry out
the ir co nt rac tual obligations or an
injunction to restrai n a party from
breaking their contract.
Part 3-Civil liability The following two chap -
ters outline tort law, in particular the tort of
xxH PREFACE
Copyright~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
negligence. An understanding of negligence
is important for business from an employer,
manageria l and employee perspective. These
chapters will assist students to understand,
recognise and eva luate to rtious liabili ty and
potentia l negligence scena rios that may
arise in business. Chap ter 15 (add it ional
content) conta in s fu rt her commentary on
other areas of to rt law tha t are relevant to
business ope ra tio ns, in cl udi ng business
decision ma king.
t Chapter 7 (Civil liability: The law of torts
and negligence) begins by cons ideri ng
why an understanding of the law of torts is
so impo rtan t to business; the different
types of to rt actions; some of the general
principles of to rt law; the range of reme-
dies available; the compensatio n available
outside tort law; the in1portance of tin1e in
terms of comn1encing an action; and the
distinction between tort and crimina l law,
and tort and contract law. The chapter then
moves on to exan1 ine the tort of negl i-
gence, and what an injured party o r plain -
tiff needs to establish in o rd er to have a
cause of action in negligence-for the
plaintiff, the elements of duty, breach and
dan1age; and for the defendant, the issue of
defences. This is particularly releva nt to
business, for understanding and t hereby
mitigating potentia l losses in damages. The
chapter concludes with a brief overview of
wha t a successfu l plaintiff will recover if
they win their case. It shou ld be noted that,
th e du ty question aside (wh ich is still
based on the common law), the ren1a ining
elements of breach, damage, defences and
remedies are all now based o n the civil
liabi lity legislation (for examp le, the Civil
Liability Act 2002 and Legal Profession Act
2004 in New South Wales, the Civil Liability
Act 2003 and Personal Injuries Proceedings
Act 2002 in Queensland, and the Wrongs Act
I 9 58 in Victoria).
t Chapter 8 (Applications of negligence to
business) then explores some of the areas
of tort absorbed by negligence, includ ing
occup ie r's liability, product liability,
 non -delegable du ties and strict liabili ty,
product liabili ty, defective structures, neg-
ligent misstaten1ents, the liability of pro-
fessionals, vicarious liability, no n-delegable
duties and strict liability, breach of sta tu-
tory duty and, finally, crin1 inal negligence.
Part 4-Consumer law contains two chapters.
The prin1ary focus of this part is on consun1er
rights and protection, the changes that have
occu rred as a result of the ACL and the referra l
by the states and territories of their consun1er
pro tection powers to the Commonwealth.
) Chapter 9 (Statutory consu,ner guaran-
tees and the A11stralia11 Co11s11111er Law)
exa mines the interpretation of the implied
sta tuto ry consumer guarantees and the ir
application to con tracts involving con -
sume rs. Th e pos ition of non-consun1ers
(i.e. businesses) is exan1 ined in Chapter I 0.
The ACL replaced the in1plied terms of con -
dition and wa rranty found in the old state
and terri tory (Sale of] Goods Acts with
non-excludab)e sta tuto ry gua rantees, and
extended the n1ea ning of'sa le' by using the
te rm ·acquire· instead. These tenns were
implied by the ACL into eve ry contract for
the sa le of goods and se rvices, and have
expanded a consumer's righ ts in the event
of a supplie r o r manufacturer failing to
con1ply with a consumer gua rantee.
) Chapter JO (General and specific con-
sun1er protections under the ACL) dis-
cusses the consumer protection provisions
con ta ined in the AC L in rega rd to prohib-
ited unconscionab le conduct, misleading
and deceptive conduct, and unfair trad ing
practices. It also exam in es the new nationa l
regulation of consumer transactions, in
pa11icular unfair contract tenns, unsolic-
ited consumer ag ree ments and lay -by
agreements. The chapter exam ines the
national schen1e for product safety, prod-
uct infonna tion and product liability cre-
ated by the ACL. It then outl ines the new
system fo r enforcement and remed ies
under the new penalty regime introduced
by the federa l governn1ent in Septen1ber
20 18, bringing the penalty provisions in
Copyright C9 Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020- 9781488620737 - Gibson & Osborne/Business Law l l e
the AC L into line with the trade practices
provisions of the Competition and Consumer
Act 20/0(Cth) (which can mean fines of up
to SJO million per breach for co rporations
and $500000 for individua ls). The chapter
concludes by providing a brief overview of
the role of the states and territories in the
protection of consumers.
Part 5-Business organisations and the law
conta ins four chap ters covering the law of
agency, sole traders and partnerships, con1pa -
nies and in co rp orated associations, and
choosi ng a business entity.
) Chapter 11 {Agency) examines the law of
agency, the purpose of an agency and how
it is created, the authority of the agen t, the
righ ts and duties of the agent and principal
to each other, their liability to third parties,
and how the agreement ca n be term inated.
) Chapter 12 (Sole traders and partner-
ships) begins by conside ring what is per-
ha ps the sin1plest form of bus in ess
ownership-the largely unregulated sole
trader-how it is created and its advan -
tages and disadvantages fo r a bus iness
ope rato r, before moving on to consider a
more fonnal ly regu lated business struc-
tu re: the pa rtn ership. The chapter th en
examines the essentia l characteristics of a
partnership, how it is crea ted, how it is dis-
tingu ished from another sim ilar entity
(the joint ventu re), what the righ ts and lia -
bilities of the partners are, as well as thei r
d uties, and how a partnership may be dis-
solved and its assets distrib uted. The fin al
part of the chapte r looks at what a li mited
liability partnership is.
) Chapter I 3 (Jntroduc.t ion to con1panies
and incorporated associations) examines
perhaps the most in1porta nt form of busi-
ness ownersh ip that ex ists in Australia
today: the con1pany. This chapter begins by
considering the essentia l cha racteristics of
a company, before discussing the different
types of con1pany tha t a bus iness ca n
choose fron1, and the legal requi rements
related to the managen1ent and winding-
up of the con1pany. The chapter concludes
PREFACE xxiH
 by considering one other form of incorpo-
rated bod y-the sta tu to ry assoc iation-
whic h is wide ly used by clubs a nd
assoc ia t io ns that wa nt the protectio n
offered by incorporation but are not trad-
ing bodies.
) Chapter 14 (Choosing a business entity)
exami nes which business enti ty is n1ost
su ited to a particu lar business; that is, sole
trader, partnership, con1pany, trust or fran-
chise (includ in g a comn1entary on the
Franchising Code of Conduct). The chapter
also incl udes a con1menta ry o n the AS IC's
national Business Names Register.
Additional content
If you prefer to customise the conten t to su it
the needs of you r cou rse, we have a suite of
additiona l chapters ava ilable for you.
) Chapter 15 (Other business-related
torts) exam ines son1e othe r business-
related torts that are of g rowi ng impor-
tance to business that students should be
awa re of, be able to identify and then pro-
vide possible resolu tion fo r. First are the
intentiona l torts, including trespass, defa -
mation and the econon1ic o r business torts
(which pro tec t business interests and
include in t imidatio n, inte rference with
contra ctual relations, conspiracy, passing
off, injurious falsehood, deceit and misrep-
resentatio n). The second group is probably
a mi snomer because it consists of only one
tort: nuisance. It is concerned with indi rect
harm involving the use and enj oyment of
land and takes three forms: public nu i-
sance, private nuisance and sta tutory
nuisance. Finally, there is a brief overview
of what are known as the statutory torts.
) Chapter 16 (Insurance) is concerned with
a very in1portant topic fo r bus inesses,
because they cannot operate w it hou t
incuning some risk and son1etin1es su bse-
quent loss. Insu rance is a means fo r busi-
ness to protect its assets against the risk of
loss and obta in compensation where loss
occurs. Th is chapter exam ines the concepts
underlying insu rance, the n1aking and con-
stru ction of the in surance contract, the law
xxtv PREFACE
Copyright~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
rega rding agents and broke rs, and some
common fonns of business insura nce.
) Chapter 17 (Sale of goods -business to
business) exan1 ines t he sta tu tory rules
that business has to ope rate under involv-
ing the sa le of goods. The two earlier chap-
te rs o n consun1er protection (Chapters 8
and 9) largely focused on the rights of the
consu mer. This chapter considers how the
contra ct is fo rm ed, the in1portance of
the distinction between property (o r own-
ersh ip ) and possession, the different classi -
fications of goods, the transfe r of title, how
the contract may be pe rformed, and the
ren1ed ies for breach by ei ther party. The
chapter concludes by briefly exami ning
what t he legal posi tion of the parties is
when they are in different cou ntries (the
Vienna Sa les Convention).
) Chapter 18 (Property and ntortgages)
begi ns by loo king at the d istin ction
between real property (or realty) and per-
sonal property. It includes a reference to
the very in1portant Personal Property Secu-
rity Act 2009 (Cth ). It also considers inter-
ests in land and how ownersh ip and
possession may be obtained, the mortgag-
ing and leasing of land, and the righ ts and
duties of residen ti al and comn1ercial land -
lords and tenants.
) Chapter 19 (Intellectual property) looks
at a con1pletely differen t kind of ·property'
right called in tellectual prope rty, such as
pa ten ts, des igns, copyrigh ts and trade
n1arks. Th is is a parti cu larly important area
for a business because the fa ilure to protect
and manage its in tellectua l property can
n1ean the difference between success and
fai lure.
) Chapter 20 (Ethics and business prac-
tice) briefly discusses business eth ics and
n1ora ls, en1phasisi ng the idea that 'j ust
because it is legal does not make it right'.
The concepts of ethics and morals are con-
sidered in the con text of the law, with ref-
erence to several ethical theories.
) Chapter 21 (Crin1inal Ja,v in a business
context) discusses the crimina l law aspects
 of business rela tionships. It cons id ers
wh ite-co llar crim e as well as exa mples of
criminal offences crea ted by the various
sta tutes referred to in the book. 'Cha in of
responsibility' legislation and its in1pact on
n1a nagement are also considered.
) Chapter 22 (Co,npetition law) exam in es
the opera tion and administration of the
restrictive trade practices provisions con-
tained in Part IV and the authorisations and
notifica tions contained in Pa rt VII of the
Competition and C-0nsumer Act 20 JO (Cth) on
businesses. Part IV prohibits anti-con1peti-
tive business practices that cou ld have the
effect of substa nti ally lessening con1peti-
tion such as cartel conduct. The aim of the
Act is to strengthen con1petitiveness of
businesses at the va rious levels of produc-
tion and distributio n of goods and services
for the benefit of consumers and business
in general. As a resu lt of these aim s, the Act
has enormous in1portance for business.
) Chapter 23 (Insolvency and debt recov-
ery) looks briefly at the process of debt
recovery in the lower cou rts before exa m-
in ing persona l ba nkruptcy and the choice
fo r a debtor between a debto r's petition
(vo luntary bankruptcy) and a cred itor's
peti tio n (involuntary bankruptcy), what
an1ount to acts of ban kruptcy, what the
alterna tives are to bank ru ptcy, and what
property is avai lab le for pay,nent of debts.
The chapter concludes by look ing at the
issue of corporate insolvency.
) Chapter 24 (The work environment and
the en1ploy1nent relationship) begins by
considering whether a person is an
emp loyee o r an independent contracto r,
and why the distinction is in1po rtant,
befo re exp laining how a contract of
employment is formed, and what the rights
and du ties are of the employer and th e
en1ployee. The chapter then considers
aspects of the wo rk environn1ent, includ-
ing the Fair 11'ork Australia Act 2009 (Cth),
the issue of discriminatory behaviou r in
the wo rkplace and the nationa l wo rk
hea lth and safety regimen.
Copyright~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
) Chapter 25 {Electron ic con1merce) looks
at an area t hat is beco ming very impor-
tant for business. This is the area of elec-
tro ni c con1n1e rce, and th is chapte r
examines son1e of the issues confronting
business, includ in g the e lec tronic
transactions legis lat io n and elec tro nic
contracts, the lega l aspects of mai ntai ning
a business website (and the jurisdictional
problen1s tha t raises), and the issues
of pr ivacy, cyberc rin1e and e lectronic
banking.
) Chapter 26 (Negotiable instrun1ents)
looks at the different methods t hat are
used to pay for goods or services (i.e. bills
of exchange, cheques, cred it/deb it cards
and t he growi ng use of electro nic pay-
ments). The pu rpose and opera tion of the
Financial Transaction Reports Act J 988 ( Cth)
is also examined.
) Chapter 27 Consun1er cred it and pri-
vacy) exan1 ines consumer credit under the
new Na tio nal Cred it Code and the issue of
privacy. It includes a reference to the Pri-
vacy Amendment (Enhancing Privacy Protec-
tion) Act 2012 (Cth).
) Chapter 28 (Ethics and regulations in
n1arketing and advertising) begins by
exam ining the connection between busi-
ness and ethics before look ing at aspects of
marketing law, inclu ding t he marketing
mix and the legal factors impacting o n
marketing, and concludes by looking at
some of the ethical and legal requ irements
fo r advertising in Australia.
Business application
Many business law textbooks take a legal istic
app roach to presenting lega l topics to busi-
ness studen ts. A con1 mon comn1ent fron1 stu -
dents in busi ness courses is: 'Why are we
studying law? We aren't going to be lawyers.
If we need lega l help or advice, we will go and
see a lawyer.' While this sta tement is partly
true, the reality is that an awa reness of one's
lega l rights and a general knowledge of the
law a re increasingly impo rtant in business
today. Regulators who make and enforce the
PREFACE XXV
 law, such as the ACCC, assun1e that ind ividu-
als and compan ies both have an understand-
ing of the lega l p rocesses that impact on their
business. A failure to understand th is in an
a rea such as consumer law today, when the
ACCC has introduced a new pena lty regin1e
for breaches of the Australian Co11s11111er Law,
cou ld have catastrophic results fo r the busi-
ness, as well as for the directors and ofticers of
the business. This book recognises that wha t
is importa nt to studen ts studying con1n1ercial
or business law is a basic understanding of
the application of court decisions, sta tu tes
and governme nt regulation to both business
and their da ily li ves.
A nun1ber of features have been incorpo-
rated into Business Law to demonstra te the
applica tion of law and government regula -
tion to the business environn1ent. These fea-
tures a re tools to make you r lea rni ng n1ore
effective and help you see the relevance of the
book's content to your life and work.
Acknowledgments
Pea rso n Austra lia and t he authors are
indebted to the many acaden1ics, known and
anonyn1ous, who were su rveyed o r inter-
viewed and who provided feed back in the
planning, developn1en t and p roductio n stages
XXV\ PREFACE
Copyright(£) Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law 1l e
of this new edition. As usual, your inpu t has
ensured that, wh ile this ed ition reta ins all the
ha ll marks of ea rlier editions, it is a true collab-
o rat ive effort, e nsu ring we put the business
law student, and the business perspective, at
the centre of this new, re-la un ched edition .
We would specitically like to acknowledge Mr
John Tretola of the University of Adelaide for
his detailed review of the manuscript.
The autho rs wou ld also li ke to acknowl -
edge the effo rts of all the Pearson Austra lia
staff who have been invo lved in p ublishing
the 11th ed ition . In particu lar, special thanks
should go to Anna Carter (Developme nt Edi-
tor) and Jul ie Ganner (Copy Editor) for their
grea t editorial work, and the support of Nina
Sha rpe (Portfo lio Manager) throughou t the
process of p roducing another ed ition.
We wou ld be gra teful for any further co m-
ments o r suggestions from teachers or stu -
de nts concerning Business Law. Your feedback
will in1prove future editions.
You can contact us at the email add ress
below (and, yes, you wi ll get a reply, as we do
appreciate the input).
Andy Gibson and Sarah Osborne
andygibson IOO@hotmail.com.au
April 2019
 Andy Gibson
Andy Gibson has worked in private legal practice and lectured in busi-
ness law now for 40 years, first at the (then) Roya l Melbourne Institute
of Technology, then at Griftith Un iversity and fina ll y at Southern Cross
University. Andy has co-authored a number of business law texts with
Doug Fraser, as well as being sole author of another. He has jointly
authored a text on the law of torts and was the found ing editor o f a
sports law loose -leaf publication. Andy was Financial Di rector of the
Australian and New Zealand Spo11s Law Association (ANZSLA) and is
now a life member. He writes cu rrent case and legislative summaries
for the ANZSLA onl ine publications Sports Shorts and The Co111111e11ta-
tor, as well as being a reviewer for the ANZS LA peer-reviewed Sports
Law Jo11r11al. He also writes occasiona l articles on various sports law
issues that clubs and associations in sport face today for the Sport Aus-
tralia publication, Play by the Rules, as well as conducti ng sem inars for
sporting bodies on legal issues such as governance and disputes.

Sarah Osborne
Sarah Osborne has taught for IO years across business law, accounting
and fina nce at Australian universities, including The Australian
Na tio nal University, The University of Queensland and Bond Univer-
sity. She is cu rren tl y a Lectu re r of Business Law in the Schoo l of
Accountancy at Queensland Un iversity of Techno logy. Her research
focuses on p ri vate equ ity transactions and the complexities of the
1nergers and acquisitio ns regu latory envi ronment. In addition, Sa rah
resea rches corporate la w and governmen t regulation a rou nd insider
trading and FinTech. She has wo rked in both the Australian
Gove rn1nent and p rivate legal p ractice, and has a keen interest in a
blended-lea rning student lea rning experience.

xxvi.i.

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 Son1e of the n1ore conunonly encountered ca se reports and references that can be found in
Co1nn1ercial La,v are n1entioned below. However, this is not an ex haustive list of all the case
reports and references. Where the case reports are from another country or are a reference or
journa l, details appear in brackets after the repo,t·s name. It is also wor th noting that w here
A ustra lian cases have been referred to in the text, if the case is avai lable on line the citatio n is an
' electronic' online citation rather than a citation to a Law Report. This is to facil itate ease of
access to cases for t he reader w ho is interested in reading the full case rather than j ust an extract.

ABC Australian Bankruptcy Cases LR (NSW) Law Reports (New South Wales)
AC Appeal Cases 1891 to present (England) LSB Law Society Bulletin (South Australia)
ACL Australian Current Law (a reference guide) (articles)

ACLC Australian Company Law Cases LSJ Law Society Journal (New South
Wales)
ACLD Australian Company Law Digest
LTR Law Times Reports (England)
ALJ Australian Law Journal (articles only)
Lloyd's Rep Lloyd's Reports (England)
ALJR Australian Law Journal Reports
MLR Modern Law Review (articles)
ALR Australian Law Reports
NSWLR New South Wales Law Reports
ASLR Australian Securities Law Reporter
NSWR New South Wales Reports
ATPR Australian Trade Practices Reporter
NTR Northern Territory Reports
All ER All England Reports (England)
NZLR New Zealand Law Reports
App Cas Law Reports, Appeal Cases (England)
QdR Queensland Reports
Aust Torts Australian Torts Reports
Reports QSCR Queensland Supreme Court Reports

BCLC Butterworths Company Law Cases QSR Queensland State Reports

CB Common Bench Reports (England) QWN Queensland Weekly Notes
CLR Commonwealth Law Reports SALR South Australian Law Reports

Ch Law Reports, Chancery Division 1891 to SASR South Australian State Reports
present (England) SCR (NSW) Supreme Court Reports (New South
DLR Dominion Law Reports (Canada) Wales)

ER English Reports (England) R ( NSW) State Reports (New South Wales)

Ex/ Exch Exchequer Reports (England) TLR Times Law Reports (England)

FLC Family Law Reports TPC Trade Practices Cases

FLR Federal Law Reports Tas LR Tasmanian Law Reports

HL House of Lords (England) VLR Victorian Law Reports

JLJ Insurance Law Journal (articles) VR Victorian Reports

IPR Intellectual Property Reports WALR Western Australian Law Reports

KB/ QB King's Bench/Queen's Bench Reports WAR Western Australian Reports

189 1 to present (England) WLR Weekly Law Reports (England)
LJJ Law Institute Journal of Victoria (articles) WN (NSW) Weekly Notes (New South Wales)
LQR Law Quarterly Reviews (articles) WR Weekly Reporter (England)

xxvi. i. i.

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 Page numbers in bold indicate boxed discussi ons
of cases.
A-G for Australia & Kirby v Rand the
Boilermake1·s Society ( 1957 ] 24
A Schroede1· iWusic Publishing Co Ltd v f'tlacauley
( 1974] 2 13
Adeels Palace Pty Ltd v f'tloubarak: Adee/s Palace
Pry Lid v Bou Najem (2009 ] 336. 374
Adler v Dickson (Tlte Himalaya) (I 955 ] 250
Agar v Hyde; Agar v Worsley (2000 ] 306, 323,
324, 325
Alameddine v Glenworth Horse Riding Pry Ltd
(2015 ] 372
Alexander v Camb,-idge Credi t Co1poration Ltd (in
rec) { 1987) 282
A/Icard v Skinner { 1887) 196
Amoco Australia Pry Ltd v Rocca Brothers Mo101·
Engineering Co Pry Ltd ( I 973 ] 214-215
Andar Transport Pry Ltd v Brambles (2004] 247
Anderson v Glass ( I 869] I 5 I
Anderson Ltd v Daniel ( I 924] 205
Andrews v Aus//·alia and New Zealand Banking
Group Ltd (20 12] 291
Ankar Pty Ltd v National Wes1minste1· Finance
(Aus11·a lia) Ltd ( 1987 ] 232
Anton Piller KG v 1Wanufac1uring Processes Ltd
( 1976 ] 296
Ashington Pigge1·ies Lid v Chrisl;Jp/te1· Hill Lid
( I972 ] 39 5
Ashton v P1·a11 {No 2) (20 12 ] 144-145, 207
Associated Newspapers Ltd v Bancks ( 195 1] 230
AttwoodvLamon/( 1920 ] 211-212
Ausrorel Pry Ltd v F1·anklins Se/fse1·ve Pty Ltd
( 1989) 161- 162
Aus//·alia and New Zealand Bank Ltd v Ate/ie,-s de
Cons1ruc1ions Electriques de Cltarleroi
( 1967 ] 461. 462
Aus//·a lian Compe1i1ion & Consume,· Commission
(ACCC) v Birubi Art Ply Lid (2018] 417
Aus//·a lian Compe1i1ion & Consume,· Commission
(ACCC) v DuluxGroup (Aus//·alia) Pty Ltd
(No 2) (20 16] 429
Aus//·alian Compe1i1ion & Consume,· Commission
(ACCC) v Energy Wa/c/1 Pty Ltd (20 12] 43 2
Aus//·a lian Compe1i1ion & Consume,· Commission
( ACCC) v Excite Mobile Ply Ltd ( 2013] 423
Aus//·a lian Compe1i1ion & Consume,· Commission
(ACCC) v Glendale Chemical P,-oduc1s Pry Ltd
( 1998 ] 387
Copyright 1:9 Pearson Australia (a division of Pearson Australia Group Ply Ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
Aus1ralian Compelilion & Consumer Commission
(ACCC) v Hew/ett-Packa,-d Ausrralia Pry Lid
(20 13] 416
Aus1ralian Compelilion & Consumer Commission
(ACCC) v Hillside (Aus//·alia New Media) Pry
Lid (1/as Bet 265) (20 15] 428
Aus1ralian Compelilion & Consumer Commission
(ACCC) v Keshow (2005 ] 422
Aus1ralian Compelilion & Consumer Commission
(ACCC) v Radio Rentals Lid (2005 ] 422
Aus1ralian Compelilion & Consumer Commission
(ACCC) v SNIS Global Ply Ltd (20 1 I] 4 1 I
Aus1ralian Compelilion & Consumer Commission
(ACCC) v Snowdale Holdings Pty Ltd (No 2)
(20 17] 428
Aus1ralian Compelilion & Consumer Commission
(ACCC) v Woolworths Ltd (2016] 432
Aus1ralian Safeway S1ores Ply Ltd v Zaluzna
(1987] 368
Aus1ralian Secu,•i1ies and lnves/ments
Commission (ASIC) v Adle,· & 4 Ors
(2002] 526, 527
Aus1ralian Secu1·i1ies and lnves1men1s Commission
(ASIC) v Channic Pty Ltd (No 4) (2016 ] 422
Australian Securities and I nvestments Commission
(ASIC) v Gallagher ( 1993) 523, 524
Aus1ralian Secu,•i1ies and lnves/ments
Commission (ASIC) v Hocluief
Akliengesellsclta.ft (20 16] 59
Aus1ralian Secu,•i1ies and lnves/ments
Commission (ASIC) v Plymin, Ellioll and
Ha,·r ison (2003 ] 528
Aus1ralian Secu,•i1ies and lnves/ments
Commission (ASIC) v Rich (2003 ] 524, 525
Aus1ralian Secu,•i1ies and lnves/ments
Commission v ViZ'a rd (2005] 526
Aus1ralian Woollen 1Wills Pry Lid v Tlte
Commo111veal1h (I 954] 142
Ani v Volvo Car Aus1ralia Pry Ltd (2007] 107-108
Ballas v Theophilos ( No 2) (I 957] I 18, 12 1, 274
Ba/main New Feny Co Lid v Robenson
[ I 906 J 244, 245
Bailie Shipping Co Lid v Dillon ( 1991] 242, 287
Banque Brussels Lambert SA v Aus1ralian
Nalional Industries Ltd ( I 989) 14 1
Barnet/ v Chelsea and Kensington Hospital
Manage111en1 Commillee ( I 969] 335
Be/I v Leve1· B,-01hers Ltd (1 932] 180
Belna Pry Limi1ed v lnvin (2009] 372
xxi.x
 Bettini v Gye (1 876 J 231-232
Birtchnell v Equiry Trustees, Execu101·s and Agency
CoLrd[l 929 I 500
BlomleyvRyan [1956] 173
Bolton Part11e1·s v Lamber, ( 1889) 460
Bolton v Stone ( 195 I] 329
Boulton vJ011es ( 1857) I81
BP Rejine,y (Wesren,porr) Pl)' Lid v P1-esident, Cou11cillors
and Rarepaye,s ofShire ofHastings ( 1978) 236
Brighton le Sands Amateur Fishermen ~ Association
Ltd v Vasilios Koromvokis [20071 34 I
Brooks,, Burns Philp Trustee Co Ltd ( 1969 } 209
B1yan v Maloney (1995] 35 1, 356
Burnie Pon Aurhor i1y v General Jones Pry Ltd
I I 994 I 360
Burns v MAN Automotive (Aust) Pty Ltd ( 1986 J 287,
288
Byn1e & Co v Leon Van Tienhoven & Co ( 1880) 120
Calrex Refineries (Qld) Pry Ltd v Stava1· (2009 J 318
Canny Gabl'iel Castle Jackson Advertising Pty Lid v
Volume Sales (Finance) Pl)' Lid I 19741 484, 489
Carlill v Carbolic Smoke Ball Co ( 1893} I I I. I 13.
117- 119, 123- 125, 142
Carpet Call Pl)' Lid v Chan ( 1987) 387
Car terv Hyde( 1923 } 122
Cassidy v Minis11y of Health [ I 951 I 358
Carerso11 v Commissioner/01· Railways ( 1973 ] 340
Cause1·vBrowne (l952J 241-242
Central London Property Trust v High Trees House Ltd
[19471 158-159
Chapelton v Ba1·ry Urban Disrricr Council
I I 9401 239-240
Chapman v Hearse ( 1961 } 313. 3 I 6
Chapman v Taylor & 0/'s; Vero Insurance Lid v Taylor
& Ors ( 2004] 269
Chappell and Co Ltd v Nestle Co Lrd ( 1960} 153
Chappell v Han ( I 9881 336
Clark Equipment Australia Lrd v Covca, Pl)' Ltd
( 1987) 411
Clarke v Earl ofDum·aven and Mormr-Earl (The
Saranira) ( 1897] 105-106, 109, 12 5
Clayton v Woodman (Builders) Lrd ( 1962} 35 1
Code/fa Co11srr11crio11 Pty Ltd v Srare Rail Aurhol'i/J'
(NSW) (1982] 270-271
Cohen vCohen [1929] 144
Colgate-Palmolive Pl)' Ltd v Rexona Pty Lrd ( 1981J 418
Collins v Godefroy ( I 83 1 ) 154
Commercial Bank ofAustralia Ltd v Amadio
[19831 II, 197-198,42 1
Commonwealth v Amann Avia1ion Pl)' Ltd
I I 99 I I 286, 306
Commonwealth v McCormack ( 1984 J 281
Commonwealth of Australia v Dil'ecror, Fair Wo1·k
Building J11d11sny /J1specro1·are; CFMEU v Direcr01;
Fair Work Building Industry Inspectorate (CFMEU)
[2015 1 59
Commonwealth of Australia v Jn11·ovigne ( 1982] 322
Commonwealth of Australia v Verwayen ( 1990 J 161
Commonwealth v Tasmania ( 1983 J 19
XXX TABLE OF CASES
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Co11solida1ed Bl'oken Hill Lid v Edwards (2005 J 366,
367-368
Cook v Cook ( 1986 ] 327
CookvPasmincoLtd (No 2 ) [2000] 63
Coope1· ,, Commonwealth Bank: Ma,·shall 11
Commonweahh Bank ( 1998 } I 72
Coulls v Bagot~ Executor and Trustee Co Lrd
( 1967 ] 153
Council of 1he Ci/)' of G/'earer Taree v Wells
(2010 ] 34 1-342
The Council of rhe Ci/)' ofSydney,, West ( 1965] 246,
247
Council of1he Shi1-e of Sutherland v Heyman
( I 985 ] 320
The Council of rhe Shil·eo/Wyong v Shin ( I 9801 369
C,·ibb v Korn ( 19 1 I ] 485
Cl·immins v Srevedoring J11dusny Finance Committee
( 1999) 322, 323
Cl·own Melboun1e Ltd v Cosmopolitan Hore/ (Vic) P1y
Lrd&A11or(2016I 162
Cummings & Anor v Clal'emonr Petroleum NL
( 1993) 525
Cundy v Lindsay I I 8781 183
Curro v Beyond Productions Pl)' Lid ( 1993) 295
Curtis v Chemical Cleaning and Dyeing Co ( 195 1 I 240
Curre,- ,, Powell ( I 795) 262, 267
Darling,on Punires Ltd v Delco Ausrralia Pl)' Ltd
( 1986 ] 247
Darmanill v cowan (2010} 145
David Jones Lrd v Willis ( 1934] 390. 39 1
David Securities Pl)' Ltd v Commomvealrh Bank of
A11s11·alia (1992] 177, 28 1
Dearo11s Pl)' Lrd v Flew ( 1949] 358, 359
Del Casale & Ors v Anedomus (Aust) Pl)' Ltd
(2007] 2 10
Deny v Peek ( 1889) I 88
Dick Bentley Productions Lid v Harold Smi1h (/Horors)
Ltd (1965] 224
Dickinson v Dodds ( 1876 J 120
Direcror of Posrs and Telegraphs v Abborr ( 1974) 456
Dobler v Halverson (2007] 356. 357
Donoghue v Stevenson (1932] 310, 313, 349- 352
Drummond v Van Inge11 ( I 887) 396, 397
The Duke Group Ltd (in liquidarion) v Pi/mer& Ors
( I 999] 490
Dunlop Pneumatic 1)//-e Co Lid v Selfridge & Co Ltd
( 1915] 152
Dunlop Pneumatic 1)//-e Co Lid v New Garage and
Motor Co Lid I I 9 15J 291
Easnvood v Kenyon ( 1840) 157
Ebenezer Mining Co PI L v Judi1h Seppanen & Anor
(2003] 126- 127
Effem Foods Lrd vNicholls (2004] 441-442
En11ogeno11s v Greek Onhodox Communil)' ofSA Inc
(2002] I 36. I 39. 140, 143
Esanda Finance Co1po1·ario11 Lrd v Pear Ma,·wick
Hunger/01-ds (Reg) ( 1997 ] 354, 355
Esso Perroleum Co Lrd v Mardon ( 1976 ] 189, 190
 Ethnic Eanh Pry Ltd v Quoin Technology Pry Ltd
(Receivers and Managers Appointed) (in liq)
(No 3) (2006 J 280-28 1
Evans ,, Secreraiy, Depanme111 of Families, Housing,
Community Services and Indigenous Affairs
(2012 ] I 36
Felrhouse v Bindley ( 1862) 124
Fibrosa Spolka Akcyjna v Fail·bainr Lawson Combe
Barbour ltd ( I 943] 272
Fislter v Bell (196 1J 8 1 - 82
Fit,gerald v Nlasrer·s I I 9561 237
Foakes v Beer (l884) 155-156, 159,266
Foran v Wight (1968] 275
Foran v Wight (1989] 161
Ford & A nor v l a Forrest & Ors ( 200 I ] 131
Ford by /tis Tutor Bearrice Ann Watkinson v Perpetual
Trustees Victor ia l imited (2009] I 85
Forsrer& So11s ltdvS11gge11( 1918) 21 1
Foss v Ha1·bo11le ( I 84 3) 5 32
Fre11clt v Sryring ( I 857] 483
Galea v Bagrra11s Pry limited (2010 } 362
Garner v Mun·ay I I 904 I 504
Gee v lV/erropolitan Railway Co ( I 873 ] 332
Gibson v Nla11cltesrer City Council ( 1979 ] I 06
Gilbert J NlcCaul (Aust) Pry ltd v Pitt Club ltd ( 1954) 124
Gillies v Saddingron ( 2004 ] 33 1
Giumelli v Giumelli [ I 9991 16 I
Glasbrook Bros ltd v Glamorgan City Council ( 1925 ] I 54
Glendale Chemical Products Pty ltd & Anor v ACCC
( 1999] 439
Goldman v Hargrave ( 1967 ] 320-321
Goldsborouglt Mon & Co Ltd v Quinn ( 191 O] 118- 119
Google Inc v Ausrralia11 Competition and Cons11me1·
Commission ( 20 I 3] 4 13
G1·aham Barclay Oysre1·s Pty Lid v Ryan [2000 1 442
G1·aha111 Barclay Oysre1·s Pty Lid v Ryan [2002 I 313,
32 3, 33 1, 400
G1·an1 v Australian Kni11ing Nii/ls ( 1933] 436
Grant ,, Australian Kniuing Mills ( 1936] 349-350, 392
G1·ay vlauer (20 14] 4 11
G1·ea1 Nonher11 Railway v Swaffield ( 1874) 460
G1·een and Clara Pry l td v Besrobell Industries Pry l td
( 1982] 514, 523
G1·een v Cormuy Rugby Football League ofNSW I nc
(2008] 3 19
G1·iffirhs v Peter Conway l id [ I 9391 392
Guru v Coles Supenna,•kers Australia Pry Ltd (2016) 325
Hackshaw v Shaw ( 1984) 68-69, 366
Hadley v Baxendale ( I854) 283, 284- 286
Hami/1011 v l erltbridge (19 12] 169-170
Harmer v Cornelius ( 1858) 360
Harris vNickerso11 ( 1873 ] I 14, I 16
Hanley v Ponsonby ( 187 1) I 55
Hannell v Sharp Corpo1·ario11 ofAustralia Pty lid
( 1975) 427, 429
Hanog v Colin & Shields ( 1939 } 183
Har vela I nvestments Pty ltd v Royal Trust Co of
Canada (Cl ) l imited ( 1986] I 15
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Harvey v Facey ( I893 ] I I I. I I 6
Hawker Pacific Pry ltd v Helicopter Charter Pty ltd
(1 99 1) 193, 194
Head v Taaersa/1 I 187 1J 234, 235
Healing (Sales) Pry ltd v I nglis Elecrrix P1y l td
[1968] 389
Hearne Bay Sreamboa, Co v Hutton ( 1903 J 270
Hedley Byrne & Co lid v Heller & Panners lid
[1964] 72, 75, 179,189,317,35 1, 352, 356
Henjo Jnves11ne111s Pry Lid & 01·s v Collins
Ma1·rickville Pry ltd ( 1988) 4 12
Hercules Motors Pty ltd v Schuben ( 19 53) 156, 157
Hewson v Sydney Stock Excltange ( I 96 7) 465, 466
Hi/las and Co ltd v Arcos lid ( I 932) 236- 237
Hirachand Punamchand v Temple I I 911 I 156, 266
Hoenig v Isaacs ( 1952 ] 262
Hollis v Vabu Pry Ltd I 2002 I 830, 831
Homestake Gold ofAustralia Ltd v Peninsula Gold Pry
Ltd [ 1996 } 17 1
Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Lid
[1962] 232
Hoover (Ar.1st) Pry Ltd v Email Ltd, Re [ I 99 1J 4 18
Hopkins v Tanq11e1·ay ( I 854) 222, 223
Hospital Products Lid v United Stares Surgical
Corpora,ion ( 1984] 487-488
Houghton v Arms (2006 J 4 12- 4 13
Howe v Teej'y ( 1927) 287
Hoyt's Pry ltd v Spencer ( 1919) 226, 227
Hugltes v Lord Advocate ( 1963 J 338
Hyde v Wrench ( I 840) 120
Imbree v McNeilly; McNeilly v Imb1·ee (2008]
326-327
Industrial Equity ltd v Blackburn I I 9771 513
Ingram v Lillie ( 1960 J I 82
Insight Vacations Pry Ltd v Young (20 11 ] 247. 372, 373
Insurance Exchange v Dooley (2000] 323
Integrated Comp11te1· Services Pry ltd v Digiwl
Equipment Corp (Aust) Pry Ltd ( 1988) I 07
Inre,foto Picrure Lib1·a,y Ltd v Stille/lo Vinual
P1·ogra111111es ltd ( 1988 ] 243 - 244
Jarvis v Swans Tours l td I I 972 I 290
JC Williamson lid v lukey & Nlulholland
I 193 1J 293-294
JJ Savage and Sons Pry ltd v Blakney ( 1970] 226
John Mccann & Co v Pow [ I 975J 465
Johnson v Bu111·ess ( 1936] 196
Jones v Banleu (2000 J 361
Jones v Vernon's Pools ltd ( 1938 } I 37
Kakavas v Crown Nlelbourne ltd (2013 J 421
Keigltley, Maxstead and Co v Durant ( 1901] 471
Keith Spice,· Lid v Nla11sell ( 1970] 484
Kleimvon Benson ltd,, Malaysian Mining
Corpora,ion Bhd I I 9881 14 I
Koowarta v Bjelke-Pete1·sen & Ors I I 982 I 18- 19
Koscius,ko Tl11·edbo Pry Lid v ThredboNer Marketing
Pty l1d[20 14J 415
Koufos ,, C c,arnikow Ltd ( 1969] 285
Krell v Henry ( I 903 ] 270
TABLE OF CASES xxxi
 Lampleigh v Braithwait ( 1615) I 5 1- 152
Law v Law (1 905 J 466, 500
Le Mans Grand Prix Circuits Pry Ltd v //iadis
I I 9981 240, 241
Leaf,, International Galleries I19501 178, 179
Lee v Knapp I I 96 71 82
Lee Road Pty ltd v Catanzariti & Allot' (2005 ] 103- 104
Leichhat·dt Municipal Council v /Honrgomety
120071 36 1-362
L'Estt·ange v Gt·aucob Ltd ( 1934] 240
Liaweena (NSW) Pty Ltd,, McWilliams Wines Pty
United I I 9901 393
Lister v Romford Jee and Cold Stot·age Co Ltd
11 9571 359-360
Lloyd v Grace, Smith & Co ( 19 12 ] 472
Lochgelly Iron and Coal,, IH'Mullan ( 1934 ] 309
Louth v Diprose I I 992] I 98- 199
LumleyvGye( l853) 258
Lumley v Wagner ( 1852) 294
Luna Park (NSW) Ltd v Tramways Adven ising Pty Ltd
I I 9381 288, 289
Lunghi v Sinclair ( 19661 466, 467
/Habo v Queensland ( No I ) ( I 9881 14
/Habo v Queensland ( No 2) ( I 9921 73
Nlareva Compania Naviera SA v International Bulk
Carriers SA ( 19801 295
Niastet's v Cameron I I 954 I 117, 126, I 3 7- I 38
Nlatthews v Ausmer EleC1ricity Services Pty ltd (20 14] 64
NlcCracken v Melbo11n1e Storm Rugby l eague Football
Club & 2 Ors (2007] 343
NlcHale v Warson ( 1966] 327
NlcRae v Commomvealth Disposals Commission
II95I I I 79, 180, 284
NlcWilliams Wines ltd v liaweena (NSW) Pry Ltd
I I 9881 392-393
NlcWilliam's Wi11es Pty Ltd v /HcDonald's System of
AustlYllia Pty Ltd I I 980 I 4 15
Nle11delsso/111 v Normand Ltd ( 1970J 22 7
Nlercantile Credit Co ltd v Garrod ( 1962) 462,496
Niemi Roofing & Cladding Pty ltd v Amcor Trading
Pty Ltd I I 9991 395
Nlild111·a Office Equipment & Supplies Pty Ltd v Canon
Fina11ce Australia Ltd (2006 J I 16
Nii/es v Genesys Wealth Advisers l imited (2009 J 21 I
Nlilirrp11m v Nabalco Pty Ltd ( 1971) 73
Nii/fer & Associates Insurance Broking Pty Ltd v BMW
AUStlYllia Fi11a11ce ltd (20 I OJ 4 12
Nlinister of State for Immigration & Etlmic Affail's v
Ah Hill Teoh ( I995 ] I 9
Nlitor Investments Pty Ltd v General Accident Fire &
Life Assura11ce Cotp I I 984 I 465
Nlodbury Triangle Shopping Centre Pty Ltd v Anzil
120001 374
The Moorcock ( 1889) 236
Nloore and Co ltd and Landauer and Co, Re
11 921 1 26 1,396
Nlorley v Statewide Tobacco Services Ltd ( I 992 ) 528
The Mountain Cau/e Nlen's Association of\licroria Inc
v Barl'on ( 1997) 323
xxxtt TABLE OF CASES
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Mulligan v Coffs Harbour City Cou11cil (2005] 324
Mummery v Jrvings Pty Ltd ( 1956 J 33 2, 333
Musumeci v Winadell Pty Ltd ( 1994 I 155
Mutual Life & Citizens' Assurance Co Ltd v Evatt
( 1968] 352
Mutual Life & Citizens' Assurance Co Ltd v Evatt
( 1971] 352
Nadet· v Urban Transit Authority of New South Wales
( 1985) 338
Nagle v Rounest Island Authority ( 1993 } 324
National Can·iers Ltd v Pa11alpi11a (Nonhen1) Ltd
( 1981] 271
Nei11do1fv Jtmkovic (2005 J 369-370
Not·denfelr v Nlaxim Nordenfelt Guns and
Ammunition Company Ltd ( 1894J 21 0, 212, 2 I 5-
2 16, 2 l 8
Nonhen1 Sandblasting Pry ltd v Harl'is ( 1997 ] 361
O'Connot· ,, Han [ 1985 ] 174
Olley ,, Mal'lborough Coun Ltd ( 1949 ] 243, 244
Oscar Chess v Williams I I 9571 223- 224
O'Sullivan v Noarlunga Meat Ltd ( No I ) I I 954 I 17
Pacific Dunlop Ltd v Paul Hogan, Re: Rimfire Films
Ltd and B11n1s Philip Trustee Co Ltd I I 989 I 419
Paciocco v Australia and New Zealand Banking Group
Ltdl20 16J 291
Panayiorou v Sony Music ( 1994] 2 13
Panot·ama Developments (Guildford) Ltd v Fide/is
Furnishings Fabrics ( 1971] 463
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty
Ltd 11982] 413, 416-4 17
Parramaua City Council v L11t, ( 1988) 322
Partridge v Ct'iuenden ( 1968] 113
Pavey v Mauhews Pty Ltd v Paul ( 1987] 279-280
Pelly v Royal Exchange Ass11t·ance ( 1757) 236
Perri v Coolangatta Investments Pty ltd ( 1982] 233, 234
Pete/in v Cullen ( 1975 ] 185
Pham v Doan (2005] 204
Pharmaceutical Society of Great Britain v Boors Cash
Chemists (Southern) ltd I I 953 I 112- 113
Phillips v Brooks (19 19 J 181, 182, 19 1. 279
Pioneet· Concrete Services Ltd v Yelnah Pty Ltd
( 1987) 5 14, 515
Polkinghon1e v Holland ( 1934] 495
Popiw v Popiw I I 959 J I 54
Poussard v Spiers & Bond I I 876 I 23 I
Powell v Lee ( 1908) 111
Pt·ast v Town oJCouesloe 120001 323,3 24
Pl'itchat·d v Mel'chant's and Tradesman's Mutual Life
Assurance Society ( 1858) 179
Public Set·vice Employees Ct·edit Union Co-Operative
Ltd,, Campion ( 1984) 207
Pym v Campbell ( 1856) 233-234
Pyrenees Shire Council v Day ( 1998 J 354
R v Ann Harl'iS ( 1836) 86
R v BBD (2006 } 376, 377
R v Clark 12007] 377
R vC/arke 11927] 117, 12 3, 124
 RvXiao(2016} 59
Raffles v Wichelhaus ( 1864) 180
Ragu, vSul/i van& Ors (2000] 109, 125
Renrokil Pry Ltd v Chatmon ( 1990] 355
Renrokil Pry Ltd v Lee ( 1995) 2 12, 2 I 8
Roads and Tr·affic Authority of NSW v Dederer·
(2007] 329, 342
Robson and Sha,pe v Drummond ( 183 1) 2 59
Rogers v Whitaker ( I 992] 321. 329
Roscorla v Thomas ( I 842] I 5 1
Rose & Frank Company v JR Crompton & Bros Ltd
( 1925] 137
Rosenberg v Percival ( 200 I ] 32 1
Rowland v Diva/I ( I 923 I 388, 389
Ryan v Grear Lakes Council ( 1999] 387, 392
Rylands v Fletcher ( 18661 360
s & Y I nvestments (No 2) Pty Ltd,, Commer·cial Union
Assurance Co ofAusu·alia Ltd ( 1986) 375
Salomon v Salomon and Co Ltd [ I897) 513
San Sebastian Pry Ltd v The Minister· Responsiblef or
Administering the Environmental Planning and
Assessment Act ( 1986] 353-354
SC Johnson & Son Pty Ltd v Recki11 Benckiser·
(Ausu·alia)Pty lrd (20 12J 4 17
Scn11tons v /Hid/ands Silicones Ltd I I 9621 250
Secretary ro the Depanmenr of Natural Resources and
Energy v Harper [2000] 323
Seear· vCohen ( l 88I) 193
Seeley l nreniational Pry Ltd v Newtronics Pty Ltd
(200 1 J 386
Seivewright v Brennan (2005] 114
Sellars v Adelaide Petroleum NL ( 1994 J 287
Shaddock & Associates Ltd v Par·ramatta City Council
(No l ) (l981J 352, 353
Shahid v The Ausrralian College ofDermarologisrs
(2007] 140
Shellhar·bour City Council v Rig by (2006] 36 7
Shipron, Anderson & Co v Weill Brother s and Co
( 1912] 26 1
Shon a/Iv White [2007 1 144
Sidhu v Van Dyke [20 14] 161
Smith vA11derson ( 1880) 484
Smith v Hughes I 1960] 83
Smith v Leu,-s ( 1945 J 320
Solle v Butcher· ( 1950 J 184
Sopov & Anor· v Kane Consu·ucrions Pry Ltd ( No 2)
(2009] 296, 297
Southen1 Cross Homes (Broken Hill) I nc v Chapman
( I999] 393. 394
Spencer· v Hanling ( I870) I I 5
Stare of Queensland v Kelly (20 13] 324
Steinberg v Scala (Leeds) Lrd I I 923 I I 70
Ste/lard Pry Ltd v Nonh Queensland Fuel Pry Ltd
( 2015] I I 7
Stevenson Jacques & Co v Mclean ( I880) 120
Stilk v Myrick ( I809) I 54
Streller v Albu,y City Counc,l (20 13J 324
Strong v Woolwonhs Ltd (2012] 335-336, 369. 370
Summers v Solomon ( 1857) 462
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Sumpter v Hedges I I 898 I 296, 297
Swain v Waverly Municipal Council ( 2005] 315-3 16
Taco Company ofAusu·alia Inc v Taco Bell Pry Ltd
[1982] 414
Ta/max Pry Ltd v Telsrra Corporation Ltd ( 1996 ] 4 19
Tame v New South Wales; Annets v Ausrralian
Starions Pry Lrd I 2002 I 317, 324
Taylor v Caldwell ( 1863) 269
TaylorvJohnso11 ( 1983 ) 184
Teen Ranch Pry Ltd v Brown ( 1995) I 46
Telsu·a Corporation Ltd,, Bisley (2005] 329
Thomas v Southcorp Ausu·alia Ltd (2004 J 440
Thonuon v Shoe Lane Par·king Ltd ( 197 1J 243, 245
Timber·land Proper ty Holdings Pty Ltd v Julie Bundy
[2005] 342
Tinn v Hoffinan and Co ( I 873) 125-126
Toll (FGCT) Pty Ltd v Alphapharm Pry Ltd (2004] 241
Toorh & Co v La ws ( 1888) 463
Tridenr General I nsurance Co Ltd v McNiece Bros Pty
Lrd [ 1988 ) 256, 257
Unired Dominions Corpor·ario11 Lrd v Br·ian Pry Ltd
I 1985 J 488-489
Universe Tankships Inc ofNlonrovia ,, l nrernational
Transport Wor·ker·s Federation ( 1983] I 94
Vairy v Wyong Shire Council [2005 1 324
Van Den Esschen v Chappell ( 1960 J 224, 225, 226
Vicror·ia Laundry ( Windsor') Ltd v Newman I ndustries
Lrd( l949 ) 284
Walker v Eu1opean Elecnonics Pty Ltd (in liq) ( I 990) 496
Wallis v Downar·d-Pickford (North Queensland) Pty
Lrd ( 1994 ] I 7
Walrons Stores (l nrersrate) Ltd v Maher ( 1988 ) I 25.
159-160, 16 1. 257
Warlow v Han·ison ( 1859) 474
Warumungu Land Claim, Re: Ex pane A11or11ey
Gener·al (NT) ( 1988) 84. 85
Waverley Council v Fen·eira I 2005 I 330, 33 1, 340
Whire vB/ue/1 (1 853 ) 157
Whire v John Warwick and Co Ltd [ I 953 I 245-246
Whirehouse v Car·lron Hotel Pty Ltd ( 1987] 523
Whi11ingron ,, Seal-Hayne ( 1900) I 89
Wicks v Srare Rail Aurhor·iry ofNew Sourh Wales;
Sheehan v Stare Rail Authority of New South Wales
[20 10] 317-3 18, 334
Wigan v English and Scottish Law Life Assurance
Association ( I 909] I 58
Wilkinson v Osbon1e ( 1915 ] 208
Williams v Pisano I 2015 I 41 I
Wilson v Horne ( 1999] 307, 308-309
Woods v Nlulri-Sporr Holdings Pty Ltd (2002] 323, 329
Woolworths v Banks (2007] 2 17
Woolworths Ltd v Grimshaw ( 20 16) 325
Woolworths Ltd v Mark Conrad Olson [ 2004 J 2 I 7
Wor·ldplay Ser·vices Pty Ltd v ACCC [ 2005 J 434
Yango Pasroral Co Pry Lrd v First Chicago Australia
Lrd [ 1978 ) 205
Yates v Jones ( 1990) 337
TABLE OF CASES xxxiii
 COMMONWEALTH Stevedo1-ing Jnduslly Act I 956 322
Acts /11te1pretatio11 Act I 90 I 84 Syd11ey 2000 Games ( Jndicia and Images) P1·otectio11
Adminis11-ative Appeals Tribunal Act I 975 54 Act /9 96 79
Adminis11-ative Decisions (Judicial Review) Trade iv/arks Act /995 6,558
Act 1977 45 Trade Practices Act I 974 17, 18. 383-384, 386, 387,
Australia/I Consumer Law 6, 7, 38. 45, 77, 79, 87. 94, 400,4 12,415,436 (see also Competition and
108,113.114. 116. 119, 125,1 42, 177-179, Consumer Act 20 JO )
I 86-188, 190-193, I99-20 I, 206. 222. 225. 228. World Heritage Properties Conservation Act /983 19
229. 232-233, 235, 236, 239, 240, 248-251 , 258,
260, 268, 272-273, 276,278, 291, 293, 305, 315, AUSTRALIAN CAPITAL TERRITORY
323. 350-351, 355,381, 383-402,406-449. 558 Age ofi'tlajority Act I 974 16 7
Australia/I Human Rights Commission Act I 986 45 Agents Act 2003 468
Australia/I Securities and /11vestme11ts Commission Associations /J1co1-poration Act 1991 539
Act 200 I 200, 29 I, 355, 406, 4 1I, 42 1, 426, 51 I, Civil Lmv(Property)Act 2006 102
531-532 Civil Lmv(Wrongs)Act 2002 191,249,251,
Banki11g Act I 959 205 310, 368
BankntptcyAct /966 45, 173,474 C1·iminal Code 2002 58
BillsofExcltangeAct 1909 76,102,257 LegislatiOII Act 200/ 84
Busi11ess Names Registratio11 Act 201 I 6, 506, 556- 557 Limitation Act I 985 298, 308
CltequesAct /986 77, 79,102,257 Mercantile Law Act /962 16 7,475
Competition and Consumer Act 2010 6, 45. 54, 59, 77, Par111ersltip Act I 963 482-506
79, 86-87, 94. 152. 209,210,213,216, 2 17, 239, Road Transport (Third Party /11su,-ance)
248. 278,305,343.373, 383-385,402,406,409, Act 2008 363
41 4. 417. 447. 553-554, 556, 558 (see also Sale of Goods Act I 954 174, 384, 388-397
Australia/I Consumer Law) Trustee Act I 925 550
Copyright Act I 968 6, 45
Cot-porotions Act 2001 6, 59, 166, 173,481,483, 504, NEW SOUTH WALES
505, 5 11 -539, 546,552,557 Associations /J1co1-poration Act 2009 539
Criminal Code Act /995 468 City and Subu1·ban Railways (Ame11dme11t)
Desig11s Act 2003 6 Act /967 271
Electronic Tt-ansactio11s Act I 999 I I 3. I 27. Civil Liability Act 2002 77,3 10,3 18. 330. 340. 357.
129. I 31 372, 373
Fait Work Act 2009 6. 45, 49,213, 554 Civil Procedure Act 2005 49,493
Fait Work Amendment (Protecting Vulnerable Co11tracts Review Act / 980 200- 20 1, 249, 251
Workers) Act 2017 554 Co11veyancing Act 1919 102
Family Law Act I 975 45 Ctimes Act I 900 58, 468
Federal Circuit Court ofAustralia Act I 999 45 Disll-iCI Court Act I 973 293, 294
Federal Court ofAustralia Act 1976 45 Employees Liability Act / 991 359
Income Tax Assessment Act I 936 177 Factors (i'tlerca11tile Agents) Act /923 475
Jns111·ance Contracts Act /984 251, 257 F1·ustroted Cot11racts Act I 978 268. 273
International Arbi11-atio11 Act I 974 51 Home Buildi11g Act I 989 269
i'tlan·iage Act 1961 20 Jndus11-ial Relations Act I 996 217
National Co11sumer C1·edit Protectio11 Act 2009 6, 45, I nterpretation Act I 987 84
200, 29 1 Limitation Act I 969 298, 308
National Credit Code 102, 200 Minors (Propeny and Contracts) Act I 970 167,
Patents Act I 990 6 171,492
Plant Breeder~ Rights Act I 994 6 J\1otor Accidents Act I 988 363
Racial Discriminatio11Act /975 14. 18 J\1otor Accidents Compensation Act /99 9 363
Statute of F1·auds 293 Par111ersltip Act /892 482-506

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 Profe ssional Standatds Act / 994 355 MotO/' Vehicles Act /959 364
Restraints of Trade Act 1976 209, 2 13, 21 6-2 17 Partnership Act I 89 I 482- 506
Roads Act 1993 361 Professional Standards Act 2004 355
Safe of Goods Act 1923 174,384, 388- 397 Safe of Goods Act /895 174, 350,384,
Tn1stee Act I 925 550 388-397, 436
r,,ustee Act 1936 550
NORTHERN TERRITORY
A/Jo,,iginal Land Rights (Nonhen, Te1,rito1y) TASMANIA
Act 1976 85 Acts Jnte,,pretation Act I 93 I 84
Ageof1WajoriryAct /98/ 167 Age of Majority Act 1973 167
Associations Act 2003 539 Associations Incorporation Act /964 539
c,,iminal Code Act 1983 58,468 Civil l iability Act 2002 3 JO, 340
Cross-Border Justice Act 2009 35 Conveyancing and law of Property Act /884 102
lnterptetation Act I 998 84 Criminal Code 1924 58. 468
Law of Property Act 2000 102, 258 Factors Act I 89 I 4 75
Law Reform (1Wiscellaneous Provisions) Act /956 Limitation Act /974 298, 308, 309
340, 359 Mercantile Law Act I 935 I 02
Limitation Act 1981 298,308 Mino,,s Contracts Act /988 167
Motor Accidents ( Compensation) Act I 979 363 Moto,, Accidents (liabilities and Compensation)
Par111ership Act I 997 482- 506 Act 1973 364
Personal /11)111,ies ( Liabilities and Damages) Partnership Act I 89 I 482- 506
Act 2003 310, 340 Professional Standards Act 2005 355
Profe ssional Standatds Act 2004 355 Safe of Goods Act /896 103,174, 384, 388-397
Sale of Goods Act I 972 174, 384, 388- 397. 475 r,,ustee Act I 898 5 50
Tn1steeAct 1893 550 Wrongs Act I 954 340

QUEENSLAND VICTORIA
Acts Interpretation Act /954 8 4 Age of Majority Act 1977 167
Associations lnco,,poration Act 198 1 539 Associations Incorporation Reform
Carriage of Goods by land (Ca,,rier~ Liabilities) Act 2012 539
Act/9671 7 Australian Consumer Law and Fair
Civil Liabiliry Act 2003 310, 340 r,,ading Act 20 I 2 19 I
c,,iminal Code 1899 58, 376, 468 Crimes Act 1958 58, 468
Factors Act 1892 475 Esra,e Agents Act I 980 468
law Reform Act /995 167 Factories and Shops Act 1928 332
l imitation ofActions Act 1974 298, 308 Fair Trading Act 2012 268, 272- 273
Motor Accident Jns111,a11ce Act 1994 364 Goods Act 1958 174, 475
Par111ership Act I 89/ 482- 506 Instruments Act /958 102
Prope,,ry Law Act /974 I02, 258 Jnte1pretation of legislation Act I 984 84
Queensland Coast Islands Declarato1y Limitations ofActions Act /958 298, 308
Act / 985 14 Magistrates Court Act I 989 49
Safe of Goods Act 1896 174,384, 388- 397 Partnership Act /958 482- 506
Trusts Act 1973 550 Professional Standards Act 2003 355
Sup,,eme Court Act I 986 I 6 7, I 71
SOUTH AUSTRALIA r,,anspon Accide111 Act /986 364
Acts Interpretation Act /9/5 8 4 r,,ustee Act 1958 550
Age of1Wajoriry (Reduction) Act I 971 167 Wrongs Act I 958 3 10. 340. 368
Associations lnco,,poration Act 1985 539
Civil LiabiliryAct / 936 310,340,359,364,368 WESTERN AUSTRALIA
c,,imes Act 58 Age of Majority Act 1972 167
c,,iminal Law Consolidation Act /935 468 Associations Incorporation Act 2015 539
Cross-Border Justice Act 2009 35 Civil l iability Act 2002 3 JO, 340
FnJstrated Contracts Act I 988 268. 273 Criminal Code Act Compilation Act 1913 58, 468
Law of Property Act 1936 102,103,459 Cross-Border Justice Act 2008 35
l imitation ofActions Act 1936 298, 308 Factors' Acts Amendment Act I 878 475
Mercamile Law Act 1936 475 Jnte1pretation Act 1984 84, 87
Minors Contracts (Nliscellaneous Provisions) Law Reform (Statute of Frauds) Act / 962 102
Act 1979 167, 172 Limitation Act 2005 298, 308
Mis,,epresentation Act I 972 191, 249, 251 Limited Pannersltips Act 2016 504

TABLE OF STATUTES XXXV

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 i'tlotor Vehicle (Catastl'ophic /nj111-ies) Act 2016 364 UNITED KINGDOM
i'tlotor Vehicle (Third Party /ns111-a11ce) Aus11-alian Courts Act 1828 9
Act /943 364 Companies Act / 862 484
Occupier's Liability Act 1985 368 Judicature Act I 873 I 0
Panne1-shipAct 1895 482- 506 Pharmacy Poisons Act 1933 I I 2
Professional Standards Act 1997 355 Pl'otection of Bil-ds Act I 954 I I 3
Propeny Law Act I 969 I 02, 2 58 Restriction of Offensive Weapons Act 1959 8 1
Sale of Goods Act 1895 103. 174. 384, 388- 397 Road r,,ajjic Act 1960 82
Tn1srees Act I 962 550 s11-eet Offences Act 1959 83

xxxvi TABLE OF STATUTES

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 Part I provides the reader with a basic understanding of what
'law' is, the n1ain sources of la,v, and the role of parlian1ents
(federal, state and territory) as law-n1akers and the courts
as adn1inistrators of the law in the law-111aking process.
This will provide a fra111ework in the following chapters for
understanding ho,v business lmv helps regulate business
and the community.

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 LEARNING OBJECTIVES
On completion of this chapter, you should be able to:

Explain the importance of the law as a regulatory tool in society and business

Identify and explain the characteristics of a legal system and the main sources of Australian law

Identify and explain the main types of laws in Australia

Explain the division of powers under the Commonwealth Constitution

Explain the ways in which the High Court has expanded Commonwealth powers at the expense of the
states

Define the doctrine of the separation of powers and explain its purpose

KEY TERMS
The following key terms are highlighted in the text and the accompanying definition can be found in the
margin:
common law judicature statute law
concurrent powers native title terra nullius
equity plaintiff ultra vi res
exclusive powers resid ual powers writ
executive separation of powers

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 This chapter provides an introduction to what is meant by the word 'law: how laws may be classified, the
types of laws that make up the Australian legal system, Commonwealth and state powers and the growth of
federal power, and the doctrine of separation of powers.

WHAT IS 'LAW' ?
Law is basica lly a device to regu late the economic and social behaviour of the peop le who
live in a society. If people lived in con1ple te iso lation, and did not carry on any economic
activity o r recognise any superior authority, there wou ld be no need for laws to ex ist because
the re wou ld be nothing to regu late or control. However, the reali ty is othe rwise. People do
not live in con1plete isolation and econon1 ic activity is carried on regard less of whethe r peo-
ple li ke it o r not.
The law, as a regulato ry device, provides the n1echan isn1 for society to function by priori-
tising needs and desires through tools such as legislation (Acts and regulations of Parliament)
and, in the case of a con1 mo n law system such as in Australia, case law (decisions of the
courtsJ.

CAN WE DEFINE 'THE LAW'?

There have been nun1erous unsuccessfu l atten1pts to produce a universally acceptable defini-
tion of 'law' over the centu ries. All writers have their own views, in large part due to the fact
that any defini tion of 'law' wi ll be shaped by the writer's mora l, politica l, rel igious and ethical
views, as well as being in fluenced by the society in which the write r lives. Notwithstanding
this lack of agreen1ent on a p recise defi niti on of 'law', it is sti ll possible to ident ify two con1mon
then1es:
> control by humans; and
) human conduct, regula ted by a superior authority or power-usually the state.
Given the difficu lty in p rovid ing a precise defi nition of 'law', a usefu l general definition of
law is that it is:
... a set ofrules developed over a long period of time regulating people's interactions with
each othe,~ which sets standards of conduct between individuals and other individuals, and
individuals and the government, and that are enforceable through sanction.
It is wo,th noting at this point that when a reference is made to 'the law', it is a reference
to the body of law generally, whi le a reference to 'a law' is a reference to a particula r legal rule.

ARE RULES ALWAYS LAW?

While it is generally true to say that the law is a set of rules, do not assunte that all ru les a re (o r
will be) a u tomatically 'law'. There are nunterous exa mples of rules governing dai ly behaviou r
that are not laws and, as a genera l ru le, will not become laws; for exan1ple, rules controlling
sport, games, social behaviou r, fam ily behaviour, or how a person shou ld behave at school
and university. The reason for understa nding the distinction between the two te rn1s is found
in the consequences associated with breaking the m. Breach of a law genera ll y carries heavier
sa nctions than breach of a rule.
To determin e whe n a rule becomes law is not always an easy task. Where did the rule con1e
from; that is, who made it? As Figure 1.1 shows, the two main sources of legal ru les in Australia

LEGAL FOUNDATIONS CHAPTER 1 3

Copyright~ Pearson Australia (a division of Pearson Australia Group Ply ltd) 2020 - 9781488620737 - Gibson & Osborne/Business Law l l e
 FIGURE 1 . 1 Sources of law

Common law Statute law &

del~ated leglslat,on

are laws made by the Commonwea lth, state and territory parl ia1nents (Acts or statutes of pa r-
liaments) and the comn1on law (decisions of the cou rts). These ru les are recogn ised as lega l
ru les (or the lawJ because they govern o r regu late all c01111nunity behaviou r and n1ust be
obeyed by everyone. The consequences for breaking the1n are enforced through the judicial
system.
On the other hand, ru les 1nade by persons (includ ing organisa ti ons) apply on ly as gu ide-
lines for people be longing to a particu lar group or o rganisation. For example, the rules of
the va rious sports codes apply only to participants who agree to be bound by then1 when
participating in the sport, not to the con11nunity in gene ral. In this type of case, rules are
enforced by the organisation that n1akes the rules, usua lly though a tribuna l system, and the
consequences for a breach of the ru les will often produce different outcon1es frmn those you
might get in the judicial syste,n, such as the suspension of a player.
Even though a rule may not be law, the law can still become invo lved in the ,nanner
in which 'the rule" of a club o r association is appl ied and enforced. Under an area of law
known as ad1n inistrative law, the courts expect disci plinary t ri buna ls to fo llow t hei r own
rules (what is known as procedura l fai rn ess) and give an accused a fa ir hearing (what is
known as natura l justice). Failure of a tribuna l to follow the rules for a fai r hearing, or give
the accused player a fai r hearing, could resu lt in an accused player see king the inte rvention
of the Supreme Cou rt to have the orig ina l decision of the tribunal decla red null and void
and struck down, o r the matter being sent back to the tribunal for a re-hearing.

LO 1 Law as a regulatory tool

In society genera lly, the law as a regu latory too l not only prescribes what people cannot do,
Explain the it a lso in forms people of what they can do and what they n1ust do. For example, you cannot
importance
of the law as a commit a crime, but you can own property, and you n1ust pay taxes. In Australia, the law also
regulatory tool plays a number of other roles, such as guaranteeing ou r freedoms, permitting free enterprise
insociety and and providing a means to settle disputes peacefully.
business

Could business exist without a legal system?

Business, as we know it, cou ld not exist without the law. To operate effectively and efficiently,
business needs la ws to regu late business activities, to facilitate business transactions and to
settle disputes that can arise between manufacturers, wholesalers, reta ilers and consumers of
goods or se rvices.
News stories involving business and the law appear frequently in the 1nedia, but often the
stories a re newsworthy on ly because they are extraordina ry o r controversial and they create
the impression in the minds of many people that the law is largely removed from their every-
day lives; for example:
4 PART I THE LEGAL f RA"E'rlORK

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 ) the proposed takeover or ,ne rgers of Australian companies by foreign-owned co,npanies;
) crimina l investigations of insider trading and other ma rket manipu lation by those involved
in mergers and acquisitions;
> corporate collapses;
) invest,nent fraud (fraud is what is ca lled a 'dishonesty offence' and involves the obtain ing
of a benefi t by deception with no inten tion of ever giving it back-fraud can extend beyond
money to stealing information, e.g. credit card details, status, knowledge o r position); and
) corporate fraud-while high-profi le Australians attract the majority of media attention,
internal fraud is by fa r the bigger p roblem for corpora te Austral ia, includ ing asset and cash
theft, cybercrime, procurement fraud, accounting fraud, bribery and co rruption.
However, there are very few aspects of life-persona l or business-that are not regu lated by
law, either directly o r ind irectly. For exa,nple, laws shape every stage of com,nercial enterprise.
Because people are constantly e ngaged in business transactions, business law is relevant to all
members of society. Fo r example, the p rinciples of contract law enable both ind ividua ls and
businesses to rely on agree,nents:

> of e mployment;
) to p urchase raw ,nateria ls;
) for the pu rchase and sa le of goods o r services;
> for the pu rchase of a home o r a business;
> to insu re p roperty; and
> for the appointment of an agent
by providing a re1ned y to persons inju red by another"s fa ilure to perform an agree1nent.

BUSINESS RISK MANAGEMENT ALERT

To understand how contract law, and for that matter the law in general, operates, it is in the inter-
ests of everyone to have some understanding of the nature and sources of law, to be aware of what
actions society as represented by government will take, why those actions have been taken, and
how they will affect business and the community.

WHERE IS THE LAW FOUND?

The two ,na in sources of law a re as shown in Figure 1. 1.

Ill BRIEF

The two main sources of law in this country are found in:
case law or common law, which is found in the decisions of federal and state superior courts
(and which forms the basis of precedent); and
the laws made by the Commonwealth, state and territory parliaments in the form of Acts or
statutes of Parliament.
Note that in the event of a conflict between statute law and common law, statute law prevails,

LEGAL FOUNDATIONS CHAPTER I 5

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 Common law
common law Common law is the law created through the reported decisions of judges (the doctrin e of
That pa,tof precedent) in the higher courts. It is non-statutory law, as it is law made by the courts. Common
English law law is also known as:
developed from
the common > case law;
customof the
country as
> precedent; o r
administered ) unwritten law.
by the common
lawcouru: The term 'common law' usually includes the principles of equ ity or equity law, which are
discussed below.

Statute law
statute law Statute law is la w made by federal, state and territory parlian1ents in the form of statutes
laws passed by or legislation (a lso known as enacted Ja,v), or by other governn1ent bodies in the form of
Parliament by-laws, o rders, rules and regu lations, and known as delegated legislation.
Today, legisla tion is the major sou rce of law in Australia for business and its impact on busi-
ness should never be underestimated. Some of the more impo rtant legisla tio n that in1pacts on
business includes the following:
) The Competition and Consumer Act 2010 (Cth)-wh ile this legisla tion has far-reaching impli -
ca tions for how businesses interact with each other, it also regu lates how business does
business with consun1ers (the consumer protection provisio ns of the Act are found in
Schedule 2 as the Australian Cons11111er Law or ACL).
) The Co,porations Act 2001 (Cth)-this Act sets out the laws regulati ng what business enti ties
such as compa nies and n1anaged investment schemes can do in Australia.
) The Business Names Registration Act 2011 (Cth)-this Act allows a person o r other lega l
entity to register a nan1e or title to identify their business to customers and competitors.
) The National Consumer Credit Protection Act 2009 (Cth)-this Act regulates the provision of
cred it in Australia.
) Intellectual property legisla tion-this includes pro tection of patents (Patents Act 1990
(Cth)), trade marks (Trade 1Warks Act 1995 (Cth )), designs (Designs Act 2003 (Cth )) and
plant breeders· rights (Plant Breeder's Rights Act 1994 (Cth )) in Australia. Th e legislation
also protects new ideas and provides the legal holder with exclu sive rights to se ll, pro-
mote or develop their product while lin1iting the ability of other businesses to compete
with it.
Intellectua l property also has an importan t role to play in the area of franch ising. It
allows the owner to license (and con trol the use of) in tellectual property rights to franchi-
sees by way of a franchising agreement.
Copyright protection under the Copyright Act 1968 (Cth) provides protection to both
individuals and busi nesses over creative work they have created in electronic o r hard-copy
fonn.
) Employment law-th is includes the Con1 mo nwealth Fair Work Act 2009 (Cth) governing
employer-employee relationships and minimum entitlemen ts of employees, flexible work-
ing relationsh ips, fairness at work and prevention of discrimination. There is also state and
territory discrim ination legislation as well as work health and safety legislatio n and work-
ers' compensation.

6 PART I THE LEGAL FRA"E'l!ORK

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 WHAT ARE THE CHARACTERISTICS LO 2
OF A LEGAL SYSTEM? Identify and
If the legal system under which we live is to be effective and have widespread community explain the
characteristics
accepta nce, then a nun1ber of characteristics n1ust be present, including:
ofa legal
> clarity and ce1tainty; system and the
mam sources
> flexibility; of Australian
) fai rness; and law

> accessibility.

Clarity and certainty

The law needs to be as clea r and ce1tain as possible (it can never be absolute, but it should be
predictable and flexible) so that people and businesses can conduct t hei r affairs knowing what
the law is, or being able to find out what it is, and what the conseq uences of their actio ns will be.
In part, this need for certa inty helps to expla in why parlia ments are reluctant to pass retrospec-
tive laws, as such laws can have the effect of maki ng an act that was lawful at the tin1e it was
do ne su bsequently unlawful. This, in turn, can prod uce an element of unce1tainty or unpre-
dictability in the legal system. On the other hand, it is interesting to note that parlia ments have
been prepared to grant j udges a wide discretio n to determine, for exan1ple, what sort of conduct
is ·,nisleading or deceptive' under a law such as the Australian C-0nsumer Law (see Chapter I 0),
creating a degree of unpredictability for businesses as they grapple with the n1eaning of those
words in the ACL and what they ca n and cannot do in the context of their bu siness activities.

Flexibility
If there is to be widespread comn1un ity acceptance of t he law, then the law must be seen as
responsive, and adaptable, to changing circumstances; that is, it must be flexible. If the law can-
not respond or adapt to change in a ti mely fashion, then there is a real risk t hat it will becon1e
redundant because it is not n1eeting the needs of the comn1unity it serves. Consider, fo r exam -
ple, how the law ha s responded to the rapid ad vancement of technology or adj usted to changes
in n1oral values within the con1 munity.

Fairness
The law n1ust be seen to be fa ir, at least by n1ost members of the co mmu nity. If the law is seen
as inequitable, unfair o r unreasonable, then it wi ll not be accepted o r obeyed by the comn1u-
nity. Widespread comm un ity rejectio n of the law inevitably leads to civil unrest, with n1en1bers
of the comn1un ity ta king it on themselves to enforce what t hey perceive the law to be. In other
words, they take the law into their own hand s.
A concept that is closely iden ti fied with the law is justice. It is highly desirable that there be
some sort of relationsh ip between law and justice, but are '.j ustice' and 'fa irness' syno ny1nous?
Unfortunately, as when t rying to give a precise definition of 'law', '.justi ce' can be a difficult tern1
to define. As Lord Denning, o ne of England's greatest judges, suggested:
It {justice] is not a product of intellect but ofspirit. The
nearest we can go to defining justice is
to say that it is what right-minded members of the community-those who have the right spirit
1<1ithi11 the111-believe to be fair.
The legal systen1 en1bodies what society believes is right or fa ir. In si mplistic terms. j ustice
in our society n1eans that everyone is entitled to be t reated fai rly. Thi s means that if son1eone

LEGAL FOUNDATIONS CHAPTER 1 7

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 breaks the law, the pun ish,nen t they receive should they be caught will be perceived by the
com,nun ity to be fai r. {Note tha t often neither the victim nor the offender will th ink that is
the case.) Similarly, if a person is inju red because of the actions of anothe r-for exa mple,
because of a person's negligence o r a breach of contract-the co,n munity assumes that the
plaintiff lega l system wi ll ensu re tha t the plaintiff (the injured party) will receive fa ir compensation
The party for the damage they have suffered. It is assu,ned by the co,nmu nity and the pa rt ies that
commencinga they will receive a fa ir tri al. Bu t it is also unrealistic to believe that our lega l system is abso-
civil action in
lutely foolproof and just, because it isn·t. Humans are no t foolproof, and as laws are made by
a court of first
instance humans, they will no t be foo lproof ei the r. As society evo lves, it is to be hoped that the lega l
system will also evolve and that existing injustices will gradually d isappea r and be replaced
by fai rness.

Accessi.bi.li.ty
The lega l system is based o n the p remise that everyone is expected to know the law, which
expla ins why it is not possible, in a cou rt of law, to argue ignora nce of the law as an excuse for
breaking the law. Bu t given the co,nplexity of the legal system, is thi s expectation realistic? The
fact is that no one knows it all. Bu t it ca n be assumed that everyone has access to the law. This
can be through textua l copies of legislation (e.g. obta inable th rough the federal and state gov-
ernmen t printers and Government Gazettes) and cases ( e.g. law reports), electronic tech no logy
such as the In ternet (sites such as AustLll- the website of the Austra lasia n Legal Information
Institute at www.austli i.edu.au-as well as Commo nwea lth, state and territory government
sites), or th rough a solicitor or barrister.
Solving the proble,n of accessibil ity does not solve the proble,n of knowledge; that is, that
everyone is expected to know the law. Accessibility does no t equate with knowledge o r under-
standing of the legal syste,n. That only comes when a person o r a business can:

> identify the legal issue;

) determine what area of law ma y apply;
) know whe re to find in fonna tio n about the relevant area of law;
) understand the relevan t eleme nts of legislation o r a case;
) be able to understand and interpret what was read; and
) apply the relevant legal rules to the facts.
A basic understanding of how the lega l system operates reduces the possibil ity of a serious
legal issue arisi ng. But if such a p roblem arises anyway, an understanding of so,ne basic lega l
skills will resu lt in dea ling with the p roblem in a mo re timely manner, and hopefully produc-
ing a better result.

REVIEW QUESTIONS
1 . 1 If you were asked to provide a definition of 'law; how would you define it?
1 . 2 In what ways, if any, does the law impact on your personal life?
1. 3 In what ways does the law impact on business? Do you think that the law is sufficiently certain
for business purposes?
1. 4 Is the decision of a national sporting organisation such as the National Rugby League or the
Australian Football League to suspend a player for an offence under the 'ru les of the game' a
rule or a law? Discuss.

8 PART I THE LEGAL FRA"Ell!ORK

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Another random document with
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possessions in Canada along the Gulf and River of St. Lawrence.
They succeeded in gaining a foothold on the south shore of
Newfoundland, and from there frequently attacked the English
settlements to the north, until the Treaty of Utrecht compelled them
to give up their holdings. All that remains of French possessions in
this part of the world are the islands of Miquelon and St. Pierre just
south of Newfoundland. With the prohibition wave that swept over
North America, the port of St. Pierre has had a great boom as
headquarters of the bootlegging fleets of the North Atlantic. It has
grown rich by taxing the liquor traffic, so much so, in fact, that St.
John’s is casting envious eyes at its island neighbour, and making
plans to get into this profitable trade.
I had my first glimpse of the native cod as I entered St. John’s
harbour. Just as our steamer passed a motor dory lying off shore,
one of the men in her caught a big fish. He pulled it out of the water,
and after holding it up to our view, clubbed it on the head and threw it
into the boat. To-day I visited one of the fishing villages, where I saw
the day’s catches landed and talked with the fishermen.
I took a motor in St. John’s and drove out to Waterford Valley, up
over the gray rocky hills into the back country. On the heights I found
a blue pond, just below it another, and then another, like so many
steps leading from the heights down to the sea. The last pond ended
in a great wooden flume running down the rocky gorge to a little
power station that supplies electricity to the city of St. John’s.
Here I stopped to take in the view. Before me was a little bay,
perhaps a half mile long and a quarter of a mile wide, where the
stream from the hill ponds empties into the ocean. This was Petty
Harbour, a typical Newfoundland “outport.” On both sides of the
harbour rocky walls rose almost straight up to a height of three or
four hundred feet. The only outlets were the waters of the tiny bay
and the gorge through which I came. There was literally no level
land, only a few narrow shelves and terraces along the sides of the
hills. There were no streets, only a winding roadway down the slope.
The lower portion was too narrow for our motor, so that I had to go
part of the way down on foot. The houses were placed every which
way on the steep hillsides. Most of them had tiny dooryards, with a
patch of grass and sometimes a few flowers in front. Behind them, or
at the sides, were other patches of green, on some of which small
black and white goats, wearing pokes about their necks, were
feeding. Small as were the houses, each was neatness itself and
shiny with paint. Every one of the hundred or so houses was built by
its occupant or his father before him. Indeed, I am prepared to
believe, after what I have seen, that the Newfoundland fisherman is
the world’s greatest “handy man.” He builds not only his house, but
also his boats, landing stages, and fish-drying platforms; he makes
his own nets, raises his own vegetables, and often has a sheep or
two to furnish wool, which his wife will spin and weave into a suit of
clothes or a jersey.
Walk along with me the rest of the way down to the waterside.
You must step carefully on the path that leads over and between the
ridges of out-cropping rock. Behind us a troop of youngsters are
proving themselves true citizens of the kingdom of boyhood by
tooting the horn of our motor. I notice many children playing about,
and I ask where they go to school. In reply two little frame buildings
are pointed out on the hillsides, one the Church of England school,
and the other maintained by the Catholics. The children we see look
happy and well fed, and the little girls especially are neatly dressed
and attractive.
But here is a fisherman, drying cod, who offers to show us about.
With him we clamber down to the nearest stage, built out over the
rocks, its far end resting in water that is deep enough for the boats.
The stages are built of spruce poles and look like cliff-dwellers’
homes. At the end nearest the water is a little landing platform, with
steps leading down to the motor dory moored alongside.
A boat has come in with a load of fish. They are speared one by
one and tossed up to the landing stage, while one of the men starts
cleaning them to show us how it is done. He first cuts the throat to
the backbone, breaks off the head against the edge of the bench,
and then rips open the belly. He tosses the liver to the table and the
other organs to the floor, cuts out the greater part of the backbone,
and throws the split, flattened-out cod into a tub at his feet. It is all
done in a few seconds.
 Outside there is now a great heap of cod. This fish has a gray-
greenish back, a white belly, and a great gaping mouth lined with a
broad band of teeth so fine that to the touch they feel like a file. One
big fellow a yard long weighs, we are told, perhaps twenty-five
pounds, but most of them will average but ten or twelve pounds.
These fish were caught in a net, or trap. When set in the water
the cod trap measures about sixty feet square. It is moored in the
sea near the shore. The fish swim into the enclosure, are caught
within its walls, and cannot make their way out. The size of the
meshes is limited by law, so that the young fish may escape. Three
fourths of the Newfoundland cod are taken in this manner. Fish traps
may cost from six hundred to one thousand dollars each, and
making them is the chief winter job of the fishermen.
Sometimes the cod are caught with trawls, or lines, perhaps
three or four thousand feet long, with short lines tied on at every six
feet. The short lines carry hooks, which are baited one by one, and
the whole is then set in the ocean with mooring buoys at each end.
The trawls are hauled up every day to remove the fish that have
been caught, and to bait up again.
I had thought a fisherman’s work done when he brought in his
catch, but that is really only the beginning. The Newfoundland
fisherman has nothing he can turn into money until his fish are salted
and dried. The drying process may take a month or longer if the
weather is bad. It is called “making” the fish. The flat split fish are
spread out upon platforms called “flakes.” The sun works the salt
down into the flesh, at the same time removing the moisture. Every
evening each fish must be picked up and put in a pile under cover,
and then re-spread on the flakes in the morning. The children are a
great help in this part of the work.
 Wherever there is a slight indentation on the high
rock-faced coast you will find a fishing village with its
landing stages and drying “flakes,” built of spruce
poles and boughs, clinging to the steep shore.
It is in the perfection of the drying, rather than by size, that fish
are graded for the market. At one of the fish packing wharves in St.
John’s, I saw tons of dried cod stacked up like so much cord wood.
They all looked alike to me, but the manager said:
“Now, the fish in this pile are for Naples, those in that for Spain,
and those on the other side of the room will be sent to Brazil. It
would never do to mix them, as our customers in each country have
their own taste. Some like their fish hard, and some soft, and there
are other differences we have to keep in mind as we sort the fish and
grade them for export. The poorest fish, those you see in the corner,
are for the West Indies. The people there nearly live on our fish,
which will keep in their hot climate, but they can’t afford to buy the
best quality.”

Arrived at the ice fields, the seal hunters armed

with spiked poles scatter over the pack. They kill for
their hides and fat the baby seals which every spring
are born on the ice of the far north Atlantic.
 Caribou are plentiful in Newfoundland. They are
often seen from the train on the railroad journey
across the country. The interior has thousands of
lakes, one third of the island lying under water.
Newfoundland exports more than one hundred and twenty
million pounds of dried cod every year. Brazil, Italy, Spain, and
Portugal take about ninety million pounds, while the West Indies,
Canada, Greece, and the United States absorb the balance. The fish
are exported in casks each containing about two and a half quintals,
or two hundred and eighty pounds.
While the shore fisheries account for most of the annual
Newfoundland catch, there are two other ways of taking cod. The
first is the “bank fishery,” in which schooners go off to the Grand
Banks where they put out men in small boats to fish with hook and
line until a shipload is caught. The fish are cleaned and salted on
board, but are dried on shore. The crews of the schooners usually
share in the catch, as in our own Gloucester fishing fleets. The third
kind is the Labrador fishery. Sometimes as many as nine hundred
schooners will spend the summer on the Labrador coast, fishing off
shore, and drying the catches on the beach. Whole families take part
in this annual migration. Labrador fish do not, however, bring as
good a price as Banks or offshore fish.
The prosperity of the Newfoundlanders depends every year on
the price of cod. This may range from three dollars a quintal to the
record prices of fourteen and fifteen dollars during the World War.
Just now the price is depressed, and Newfoundland is feeling
competition from the Norwegians, who are underselling them in the
western European and Mediterranean markets. Consequently, many
Newfoundlanders, especially the young people, are emigrating to the
United States. Some of the men go to New England and engage in
the Massachusetts fisheries. Others ship on merchant vessels, while
the girls are attracted by high wages paid in our stores, offices, and
factories.
I have made some inquiries about the earnings of the
Newfoundland fisherman, and find his net cash income amounts to
but three or four hundred dollars a year. While he builds his own
boat, he has to buy his engine, gasoline, and oil. He must buy twine
and pitch for his nets, cord and hooks for his baited lines, and salt for
pickling. A fisherman usually figures on making enough from the cod
livers and their oil to pay his salt bill. The bones and entrails and also
the livers after the oil has been removed are used as fertilizer.
The fisherman usually has no other source of income than his
catch, and during the winter he does little except prepare for the next
season. He goes in debt to the merchant who furnishes his outfit and
the supplies for his family. His catch for the year may or may not
bring as much as the amount he owes, but he must deliver it, at the
current price, to the firm that gave him credit. This system accounts
for the big stores in St. John’s, some of which have made a great
deal of money. The merchants render a real service in financing the
fishermen, whom they carry through the lean years, but there are
those who believe the credit system has outlived its usefulness.
Some years ago a farmer-fisherman-mechanic named William
Coaker organized the Fishermen’s Protective Union, with local
councils in the outports. The union organized coöperative companies
that now buy and sell fish, build ships, and handle supplies of all
kinds. It even built a water-power plant to furnish electricity at cost to
light the men’s homes. A new town, called Port Union, was
developed on the northeast coast. This has become the centre of the
Union activities, and there its organizer, now Sir William Coaker,
spends his time. The Union publishes a daily paper in St. John’s. Its
editor tells me that in the last ten years the dividend rate paid by the
F. P. U. companies was ten per cent. for eight years, eight per cent.
for one year, and none at all for only one year. The Union went into
politics, and for three elections has had eleven members in the lower
house. By combination with other groups this bloc has held the
balance of power. While the Union has a strong voice in the
government, the conservative business houses seem to be the
dominant influence here in St. John’s, where, quite naturally, the
fishermen’s organization finds little favour.
St. John’s is the centre for the Newfoundland sealing industry.
This is not the seal that yields my lady’s fine furs, but the hair seal,
which is killed chiefly for its fat, although the skin is used to make
bags, pocketbooks, and other articles of leather. The oil made from
the fat is used as an illuminant, a lubricant, and also for some grades
of margarine.
The annual seal hunt starts from St. John’s on March 13th. The
sealing steamers carry from two hundred to three hundred and fifty
men each, packed aboard like sardines in a can. The vessels make
for the great ice floes off the northeast coast, and it is on the ice that
the seals are taken. The animals spend the winter in waters farther
south, but assemble in enormous herds each January and start north
toward the ice. Within forty-eight hours after reaching the ice-field,
some three hundred thousand mother seals give birth to as many
babies. The baby seals gain weight at the rate of four pounds a day,
and rapidly take on a coating of fat about two and a half inches thick.
When they are six weeks old, they leave their parents and start
swimming north. It is a matter of record that the parents reach the ice
and the young are born in almost the same spot in the ocean, and on
almost the same day, year after year.
I visited one of the sealers. It happened to be the Terra Nova, the
ship in which Captain Scott explored the Antarctic. It was a black
craft, designed to work in the ice-fields and carry the maximum
number of men and seals. I held in my hands one of the six-foot
poles, called “bats,” with which the seals are clubbed to death on the
ice. Once the ship reaches the ice-pack, the hunting parties
scramble overboard and make a strike for the seals. The ice is
usually rough and broken, and a man must make sure that he can
get back to his ship. Each hunter kills as many seals as he can,
strips off the skin and layer of fat, and leaves the carcass on the ice.
The skins and fat are brought back to the ship. The baby seals are
the ones that are preferred, for since they feed only on their mothers’
milk, the oil from their fat is the best. Seal hunting is exciting and
dangerous work while it lasts, though from a sporting standpoint
baby seals can hardly be considered big game.
 During the winter season the red iron ore from the
Wabana mines is stored in huge piles. In the summer
it is shipped by steamer to the company’s steel mills
in Nova Scotia.
 The annual race between schooners of the rival
fleets from Nova Scotia and Gloucester,
Massachusetts, is a unique sporting event. Every
other year the contenders meet on a course off
Halifax harbour.
 The start of the annual seal hunt is a great occasion for St.
John’s. Two thirds of the proceeds of each catch are divided among
the crew, the steamer owner taking the balance. It is an old saying in
Newfoundland that “a man will go hunting seals when gold will not
draw him.” The ships usually return by the middle of April. In a good
year each man may get about one hundred and fifty dollars as his
share.
From one hundred and fifty to three hundred thousand seals are
brought into St. John’s every year. At the factories gangs of skinners
strip off the fat from the hides as fast as they are landed. Sometimes
one man will strip as many as six hundred and forty skins in a day.
The fat is chopped up and steam cooked, and the oil drawn off into
casks. The skins are salt dressed.
One might think the seals would be wiped out by such methods,
but the herd does not decrease and remains at about one million
from year to year. The seals live largely on codfish, each one eating
an average of four every day. The estimated consumption of cod by
the seals is fourteen times greater than the number caught by the
fishermen.
 CHAPTER V
IRON MINES UNDER THE SEA

I have just returned from a trip through caves richer than those of
Aladdin. They lie far under the ocean, and their treasures surpass
the wildest dreams of the Arabian Nights. The treasures are in iron
ore, from forty nine to fifty two per cent. pure, and so abundant that
they will be feeding steel mills for many generations to come.
I am speaking of the Wabana iron mines, located on, or rather
under, Conception Bay on the southeast coast of Newfoundland.
They are on an island seven miles long, three miles in width, and
three hundred feet high. Along about a generation ago deposits of
rich hematite ores were discovered in veins that ran down under the
water with a slope of about fifteen degrees. They were gradually
developed and within the last thirty years millions of tons of ore have
been taken out. The under-sea workshops have been extended
more than two miles out from the shore and it is believed that the
great ore body crosses the bay. The capacity yield at this time
averages about five thousand tons for every working day of the year,
and the location is such that the ore can be put on the steamers for
export almost at the mouth of the mines. The property is owned by
the British Empire Steel Company, made up of British, American,
and Canadian capital.
But let me tell you of my trip. I left my hotel in St. John’s in the
early morning. The rocky promontories that form the narrow entrance
to the harbour were canopied in light fog, under which fishing
schooners could be seen tacking back and forth, beating their way
out to the open sea beyond. As we drove out over the hills the
moisture gathered on the windshield of the motor-car so that we had
to raise it and take the fog-soaked air full in our faces. We went
through King’s Road, where many of the aristocracy of St. John’s
reside in big frame houses with many bay windows and much
gingerbread decoration. They were set well back from the street,
and, in contrast with most of the houses of the town, were
surrounded by trees.
As we reached the open country, rolling hills stretched away in
the mist. They were gray with rock or red-brown with scrub. Here
and there were patches of bright green, marking vegetable gardens
or tiny pastures for a cow or goat. The growing season in
Newfoundland is short, and the number of vegetables that can be
successfully raised is limited. I saw patches of cabbages, turnips,
and beets, and several fields of an acre or more that had yielded
crops of potatoes. Most of the fields were small, and some no bigger
than dooryards. All were fenced in with spruce sticks. The houses
were painted white, and had stones or turf banked up around their
foundations. A few farms had fairly large barns, but most had no
outbuildings except a vegetable cellar built into a hillside or half-sunk
in the ground.
Newfoundlanders follow the English fashion of driving on the left-
hand side of the road. It made me a bit nervous, at first, whenever
we approached another vehicle. It seemed certain that we would run
into it unless we swung to the right, but of course it always moved to
the left, giving us room on what an American thinks of as the “wrong
side of the road.”
We met an occasional motor-car, and many buggies, but every
few minutes we passed the universal vehicle of Newfoundland, the
two-wheeled “long cart,” as it is called. Strictly speaking, it is not a
cart at all, in our sense of the word, as it has no floor or sides. It
consists of a flat, rectangular frame of rough-hewn poles, balanced
like a see-saw across an axle joining two large wooden wheels. The
long cart is the common carrier of all Newfoundland. It is used on the
farms, in the towns, and in the fishing villages. One of these carts
was carrying barrels of cod liver oil to the refinery at St. John’s, while
on another, a farmer and his wife sat sidewise, balancing themselves
on the tilting frame.
 After a drive of ten miles we reached Portugal Cove, where I
waited on the wharf for the little steamer that was to take me to Bell
Island, three miles out in the Bay. The men of the village were pulling
ashore the boat of one of their number who had left the day before to
try his luck in the States. The boat was heavy, and seemed beyond
their strength. Some one called out: “Come on, Mr. Chantey Man,
give us Johnny Poker,” whereupon one of the men led in a song. On
the last word, they gave a mighty shout and a mighty pull. The boat
moved, and in a moment was high and dry on the beach.
This was the chantey they sang:

Oh, me Johnny Poker,

And we’ll work to roll her over,
And it’s Oh me Johnny Poker all.

The big pull comes with a shout on the final word “all.”
After a few minutes on the little mine steamer, I saw Bell Island
loom up out of the fog. Its precipitous shore rose up as high and
steep as the side of a skyscraper, but black and forbidding through
the gray mist. I was wondering how I could ever reach the top of the
island when I saw a tiny box car resting on tracks laid against the cliff
side, steeper than the most thrilling roller coaster. The car is hauled
up the incline by a cable operated by an electric hoist at the top of
the hill. I stepped inside, and by holding on to a rail overhead was
able to keep my feet all the way up. Nearly everybody and
everything coming to Bell Island is carried up and down in this cable
car.
From the top of the cliff, I drove across the island toward the
mines, and had all the way a fine view of the property. The mine
workings are spread out over an area about five miles long and two
miles in width. The houses of the miners are little box-like affairs,
with tiny yards. Those owned by the company are alike, but those
built by the miners themselves are in varying patterns.
 The miners are nearly all native Newfoundlanders. They are paid
a minimum wage, with a bonus for production over a given amount,
so that the average earnings at present are about three dollars and
fifty cents a day. When the mines are working at capacity, about
eighteen hundred men are employed.
The offices of the company occupy a large frame structure. In
one side of the manager’s room is a great window that commands a
view of the works. Looking out, my eye was caught first by a storage
pile of red ore higher than a six- or seven-story building. No ore is
shipped during the winter because of the ice in the Bay, and the
heavy snows that block the narrow gauge cable railway from the
mines to the pier. Also, since the ore is wet as it comes out of the
mine, it freezes during the three-mile trip across the island. This
makes it hard to dump and load. Another difficulty about winter
operations above ground comes from the high winds that sweep
over the island, sometimes with a velocity of eighty miles an hour.
With the manager I walked through the village, passing several
ore piles, to one of the shaft houses. Trains of cars are hauled by
cable from the depths of the mine to the top of the shaft house,
where their contents are dumped into the crusher. From the crusher
the broken rock is loaded by gravity into other cars and run off to the
storage piles or down to the pier. The cable railways and crushers
are operated by electricity, generated with coal from the company’s
mines at Sydney, Nova Scotia. The same power is used to operate
the fans that drive streams of fresh air into the mines and to work the
pumps that lift the water out of the tunnels.
At the shaft house I put on a miner’s working outfit, consisting of
a suit of blue overalls, rubber boots, and a cap with its socket above
the visor for holding a lamp. These miners’ lamps are like the old
bicycle lanterns, only smaller. The lower part is filled with broken
carbide, on which water drips from a reservoir above and forms
acetylene gas.
I was amazed at the ore trains that came shooting up out of the
mine at from thirty to forty miles an hour, and trembled at the thought
of sliding down into the earth at such speed, but my guide gave the
“slow” signal and we began our descent at a more moderate rate.
I sat on the red, muddy bottom of an empty ore car. My feet
reached almost to the front and I could just comfortably grasp the
tops of the sides with my hands. It was like sitting upright in a
bathtub. As we plunged into the darkness, the car wheels roared and
rattled like those of a train in a subway. My guide shouted in my ear
that the shaft was fifteen feet wide, and about eight feet from ceiling
to floor. I noticed that some of the timber props were covered with a
sort of fungus that looked like frost or white cotton, while here and
there water trickling out of the rock glistened in the light of our lamps.
As we descended the air grew colder. It had a damp chill that bit
to the bone, and though our speed kept increasing there seemed to
be no end to the journey. Suddenly, out of the darkness I saw three
dancing lights. Were they signals to us of some danger ahead?
Another moment, and the lights proved to be lamps in the caps of
three miners, drillers who had finished their work for the day and
were toiling their way up the steep grade to the world of fresh air and
warm sunshine.
Another light appeared ahead. Our train slowed up and stopped
on a narrow shelf deep down in the earth and far under the ocean.
Just ahead, the track plunged steeply down again into the darkness.
We were at the station where the underground trains are controlled
by electric signals. On each side curved rails and switches led off
into branching tunnels.
For an hour or more we walked about in the under-sea workings.
At times we were in rock-walled rooms where not a sound could be
heard but the crunch of the slippery red ore under our rubber-booted
feet, or the sound of water rushing down the steep inclines. At other
times the rock chambers reverberated with the chugging and
pounding of the compressed air drills boring their way into the rock.
We went to the head of a new chamber where a gang was
loading ore into the cars. There was a great scraping and grinding of
shovels against the flinty rock as the men bent their backs to their
work. The miners’ faces were streaked with sweat and grimy with
smears of the red ore. I picked up a piece. It was not as big as a
dinner plate, but was almost as heavy as lead.
We rode out of the mine at top speed. Upon reaching the
surface, the air of the chilly foggy day felt positively hot, while the
sunlight seemed almost unreal after the dampness below.
 Halifax has a fine natural harbour well protected
by islands and with sufficient deep water anchorage
for great fleets. The port is handicapped, however, by
the long rail haul from such centres of population as
Montreal and Toronto.
 Cape Breton Island has a French name, but it is
really the land of the Scotch, where village pastors
often preach in Gaelic, and the names in their flocks
sound like a gathering of the clans.