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Entrepreneurship Level-7
Year 2013



Submitted To: Mr. Ujjwal Sharma

(Business Tutor)
Submitted By: Shilpa Sharma

Law Test One

Question 1
a) The law of New Zealand comprise laws and rules made informally by citizens of
New Zealand.
This statement is false because the law of New Zealand comprise laws and rules made
formally by citizens of New Zealand. New Zealand law is based on the three principals:
Parliamentary sovereignty
The rule of law
The separation of powers.
There are two main processes by which law is made in this country that is
New Zealand Parliament
Decisions of Court
More ever, The New Zealand legal system is heavily based on the English law, and
remains similar in many respects. There are also important differences, which reflect the
unique legal culture that has developed in New Zealand.
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b) Describe the two primary or main processes by which law in New Zealand is made.
New Zealand law is heavily based on English law. The two primary processes by which
law in New Zealand is made as following:
New Zealand Parliament
Decisions of Court
New Zealand Parliament:
The New Zealand Parliament consists of the Queen of New Zealand and the New Zealand
House of Representatives. The Parliament building is known as House of Representatives
which is located in capitol of the country Willington. The House of Representatives
usually consists of 120 Members of Parliament. The form of New Zealand government
essentially follows the Westminster system. Laws are initially proposed in Parliament as
bills. These are the stages in which law in New Zealand made as follow:


First reading

Bill Introduce
No debate

Initial Debate

Hear public Submission

Recommended reformation

Report about reformation


Main debate on the principal of bill.

Select committee reformation adopted.

Committee of
the whole

Detail discussion on each part or clause.

Further amendments can be made

Third reading

Finial Debate

Royal assent.

The Bill become an act of the



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Decision of Court:
Decision of court or Case Law is the essential part of New Zealand law system. Case law
is the set of existing rulings which have made new interpretations of law and, therefore,
can be cited as precedent. This term is applied to any set of rulings on law which is
guided by previous rulings, for example, previous decisions of a government agency that
is precedential case law can arise from either a judicial ruling or a ruling of adjudication
within an executive branch agency. There are many different types of courts like Supreme
Court, high court, family court etc which help people to solve issues belong to different
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Question 2
a) What is (i) International Law and Domestic Law.
International Law:
International law is the set of rules generally regarded and accepted as binding in relations
between states and nations. It serves as a framework for the practice of stable and
organized international relations. As a small international player New Zealand places great
importance on the international rule of law, supported by mechanisms to hold States to
their international legal obligations and peacefully settle international disputes. New
Zealand has sought assistance in settling international disputes from the International
Court of Justice, International Tribunal for the Law of the Sea and the World Trade
New Zealand was one of the key proponents in establishing the International Criminal
Tribunal for Rwanda, and has also been a consistently strong supporter of the permanent
International Criminal Court.
23 March. Retrieved from:

Domestic Law:

Domestic law or Family law is an area of the law that deals with domestic relations. This
law includes not only law at the national level, but law at the state, provincial, territorial,
regional or local levels. The law of the state is concerned and these may be distinct
categories of law. It deals with the pertaining to the internal affairs or products of a
country relating to matters of the family.
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b) What is (i) Public law and (ii) Private (or civil) law?
Public Law:
Public law is the branch of law that deals with the state or government and its relationships
with individuals or other governments. Public laws are those laws that are relevant to
matters affecting the entire community like laws about criminal activity or the
environment. This law involves interrelations between the state and the general
population. It is that area of the politics governing the relationship between individuals
like citizens, companies and the state. The sub-divisions of public law are:
Constitutional law
Administrative law
Criminal law
West's Encyclopaedia of American Law, edition 2. Retrieved From:
http://legal Law

Private Law:
Private Law is an act that deals with the particular interest or benefits of an identified
person or a body, such as law of contracts and torts. This act is the part of civil law legal
system. Private law is diverse from the public law. This law is involves with the
interactions between private citizens or persons like organisations.
Private law consist the following laws:
Contract Law
Law of Torts
Property Law
Family Law
Law of Agency
Labour Law
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c) List of two examples of public law and briefly explain what each is?
The examples of the public law are defined as following:
A. Constitutional Law:
Constitutional law is a body of law dealing with the distributions and exercises of
government power. In New Zealand, Constitutional law consist of collection of status that
is Act of Parliament, Treaty of Waitangi, Order in Council and Decision of court. New
Zealand is a constitutional monarchy with a parliamentary system of government. This
system is known as Westminster system.
The elements of Constitutional Law: According to the constitution act 1852 and
Constitution act 1986 there are three branches of government in New Zealand are as
1. The executive or The Cabinet: The Head of Government of New Zealand is the Prime
Minister. The Prime Minister, as the leader of the political party or coalition of parties

holding or having the support of a majority of seats in the House of Representatives, leads
the Cabinet.
2. The Legislature: New Zealand has a unicameral parliament and house of repetitive,
which have at least 120 Members. New Zealand has used the mixed member proportional
3. The Judiciary or Courts: New Zealand's judiciary is a hierarchy consisting of
the Supreme Court of New Zealand, the Court of Appeal of New Zealand, the High Court
of New Zealand, and the District Courts. These courts are all of general jurisdiction.
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B. Criminal Law:
Criminal law governs the relationships between an individual, or organisation, and the
state. It is contained in statutes. Criminal law involves conduct that society has outlawed
as a threat to the safety or welfare of the public and that is therefore investigated,
prosecuted and punished by the state through the police and the courts.
Most criminal proceedings are brought less than one of the following statutes:
I. Crimes Act 1961: This includes serious crimes such as murder, manslaughter, burglary and
sexual offences.
II. Land Transport Act 1998: This includes traffic offences.
III. Summary Offences Act 1981: This includes offences against public orders which are usually
less serious; for example, fighting in a public place, trespass and wilful damage.
IV. Misuse of Drugs Act 1975: This includes offences relating to the possession, use and supply
of controlled drugs.
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d) List two examples of Private (or civil) law and briefly explain what each is.
The examples of private law or civil law are as follow:
A) Contract Law:
A contract is an agreement with the specifics terms between two or more persons or
entities in which there is a promise to do something in return for a valuable befits known
as a consideration. In New Zealand, Contract law is initially drives from English Law.
This law is largely distinct from other jurisdiction. The main distinction is the wide
discretionary power given to the courts in grating relief.
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B) Family Law:
Family law is an area of the law that deals with family-related matters and domestic
relations, including:
Marriage, civil unions, and domestic partnerships;
Adoption and surrogacy
Child abuse and child abduction
The termination of relationships and ancillary matters.
Juvenile adjudication
Paternity testing and paternity fraud

It has primary responsibility on behalf of the Society in all areas of family law and has a
strong and active voice in relation to such issues as Family Courts management, the
independence of the Family Court, Lawyer for Child rates, legal aid rates, and education.
The Family Court deals with proceedings under the following the few numbers of family
law Acts:
1. Adoption Act 1955
2. Births Deaths and Marriages Registration Act 1995
3. Children Young Persons and Their Families Act 1989
4. Family Protection Act 1955
5. Family Courts Act 1980
6. Marriage Act 1955
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Question 3:
The New Zealand Constitution is derived from 6 legal sources- list these sources.
The New Zealand constitution is to be found in formal legal documents, in decisions of the
courts. It reflects and establishes that New Zealand is a monarchy, that it has a
parliamentary system of government, and that it is a democratic system. There are six
legal sources for which New Zealand Constitution is derived as follows:
1. Legislation:
Legislation refers to Acts, Bills, Regulations, Deemed Regulations, and Supplementary
Order Papers. New Zealand's Parliament has developed from the British parliamentary
system known as the Westminster system of government and is the highest law-making
body in New Zealand. Parliament has two parts:
The Head of State of New Zealand who is represented by the Governor-General:
The Governor-General is appointed by the Sovereign on the Prime Minister's
recommendation for a term of five years. The Governor-General is also able to make
regulations and his or her assent is required for all Bills passed by the House of
Representatives before they can become law.
The House of Representatives: The New Zealand Parliament has one chamber, called the
House of Representatives. The House's responsibilities are to debate and pass legislation,
provide a Government, supervise the Government's administration by requiring it to
explain policies and actions, supply money, and represent the views of the people of New
Zealand. It has a number of Select Committees which examine proposed legislation in
detail often hearing submissions from interested members of the public.
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Decision of Court:
Courts have a wide variety of roles including enforcing the criminal law, resolving civil
disputes and upholding the rights of individuals or ensuring that government agencies stay
within the law and explaining the law. New Zealand courts have following structure:
A) Supreme Court
B) Court of appeal
C) High Court
D) District Court
These are courts of general jurisdiction. They are the main courts in our justice system.
Courts are independent and impartial and the decisions of individual judges sitting in
courts are subject only to law. A jury is made of 12 ordinary people selected at random

from the jury roll and its role is to decide questions of fact. A jury is made of 12 ordinary
people selected at random from the jury roll and its role is to decide questions of fact.
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3. Treaty of Waitangi:
The Treaty of Waitangi was signed in 1840, as an agreement between the British Crown
and a large number of the Maori of New Zealand. Today the Treaty is widely accepted to
be a constitutional document, which establishes and guides relationships between the
Crown in New Zealand and Maori. The Treaty of Waitangi had at its heart a promise to
protect a living Maori culture. This means that the Treaty relationships between the
Government and Maori are ongoing and dynamic. Under the Treaty of Waitangi Act 1975,
any Maori may take a claim to the Tribunal that he or she has been prejudicially affected
by any legislation, policy or practice of the Crown since 1840. The Tribunal has the power
to make recommendations to the Government.
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4. Acts of New Zealand Parliament:

An Act of Parliament is a statute enacted as primary legislation by a national or subnational parliament. Acts are bills that have been passed by Parliament and have received
the Royal assent. There are five types of Acts:
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5. Constitutional Conversation:
A constitution is central to a country's legal system because it defines the principles on
which the system is based. It sets up the most important institutions of government, states
their principal powers and makes broad rules about how those powers can be used. New
Zealand's constitution, which is the foundation of our legal system, is drawn from a
number of important statutes, judicial decisions, and customary rules known as
constitutional conventions. New Zealand's constitutional arrangements can be found in a
number of key documents. Key written sources include the Constitution Act 1986, the
New Zealand Bill Of Rights Act 1990, the Electoral Act 1993, the Treaty of Waitangi and
the Standing Orders of the House of Representatives.
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6. Decision of courts on common wealth countries:

The common wealth countries are held under the Judicial Committee of The Privy
Council. This is the court of final appeal for the UK overseas territories and crown
dependencies and for those Commonwealth countries that have retained and appeal to her
majesty in council. Legislation enacted in New Zealand in October 2003 abolished appeals
from New Zealand to the Privacy Council in respect of all cases heard by the court of
Appeal of New Zealand.
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The RT Hon Sir Kenneth Keith, 1990, updated 2008 Retrieved from
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Question 4:

What is the significance of the Treaty of Waitangi for business in New Zealand today?
The Treaty of Waitangi was an agreement made between Maori and the British Crown in
1840. Today it is considered to be New Zealands founding document. The Treaty is
relevant and provides a huge amount of opportunities for the business sector and
ultimately the nation as whole.
HRINZ 2011.Retrieved from


The Treaty of Waitangi for Business:

Using Treaty in business has incredible positive impact on Maori and on New Zealand. In
the business sector there are numerous opportunities for the Maori people to looking
forwards and focusing on their future.
In New Zealand the number of organisations gets success after doing business with Maori
organisations. In business sector Treaty of Waitangi used for:
Working alongside Maori
Working on issues that affect Maori
Maori protocol is recognised in your workplace
Maori health, economics and politics are points for discussion
James Johnston, 13 July 2005.Retrieved from

Question 5:
Briefly describe the following constitutional features: The sovereignty of Parliament;
The separation of power; and the rule of law.
The Sovereignty of Parliament:
Parliamentary sovereignty is also called parliamentary supremacy or legislative supremacy
is a concept in the constitutional law of some parliamentary democracies. The concept of
parliamentary sovereignty in New Zealand is derived from that in the United Kingdom. It
holds that the legislative body has absolute sovereignty and is supreme over all other
government institutions including executive or judicial bodies. The concept also holds that
the parliamentary body may change or repeal any previous legislation, and so that it is not
bound by written law or by precedent. Parliamentary sovereignty may be contrasted with
the doctrines of separation of powers which limits the legislature's scope often to general
law making and judicial review where laws passed by the legislature may be declared
invalid in certain circumstances.
a. The Sovereigns role in Parliament:
b. Call Parliament to meet
c. Dissolve Parliament
d. Grant Royal assent to bills passed in the House so that they become laws.
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The Separation of Powers:

The separation of powers, often imprecisely used interchangeably with the tries
political principle is a model for the governance of a state. The model was first developed
in Ancient Greece and Rome. Under this model, the state is divided into branches and each
with separate and independent powers and areas of responsibility so that no branch has
more power than the other branches. The normal division of branches is into
1. A Legislature
2. An Executive
3. A Judiciary

New Zealand's constitution is based on the principle of separation of powers through a

series of constitutional safeguards, many of which are unstated. The Executive's ability to
carry out decisions often depends on the Legislature which is elected under the Mixed
Member Proportional system. This means the government is rarely a single party but a
coalition of parties. The Judiciary is also free of government interference.
The Rule of Law:
The Rule of Law is the principle that no one is above the law. The rule follows logically
from the idea that truth and law is based upon fundamental principles which can be
discovered but which cannot be created through an act of will.

The most important application of the rule of law is the principle that governmental
authority is legitimately exercised only in accordance with written and publicly disclosed
laws adopted and enforced in accordance with established procedural steps that are
referred to as due process.
The rule of law also forms a significant part of the New Zealand constitution. The
principles of the rule of law are not easily defined, but encompass ideas such as:
The powers exercised by parliamentarians and officials are based on legal authority
There are minimum standards of justice to which the law must conform like laws affecting
individual liberty should be reasonably certain and clear.
The law should have safeguards against the abuse of wide discretionary powers.
Unfair discrimination should not be allowed by the law.
A person should not be deprived of his or her liberty, status or other substantial interest
without the opportunity of a fair hearing before an impartial court or tribunal.
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Question 6:
(i) How could decisions made under this by-law be legally challenged?
This decision can be legally challenged in High Court. According to this law students are
only use the public transport. Students may be suffering because they dont have
permission to use their own vehicles as per this law. This is the negative side of the law. So
as per the students convinces they have to appeal against this law in High Court.
(ii) On what grounds could the power of the City Council to make such a by-law be
City council has no power to make new law for the people. Only Parliament has a right to
make any bill to become a law in the House of Reprehensive.
Question 7:
Discuss and explain whether the following statements are true or false:
A Sole trader has a separate legal identity from the business.
This statement is false because a sole trader is liable for every loss and profit of the
business. A sole trader is the owner for his business. But it does not mean that legally is
associated with the chain of business. He does not need any legal process for his business.
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A partnership is not conducted for the purpose of making a profit.


This statement is false because in every business people invest for making profit only.
A partner owes fiduciary duty to all other partners.
The given statement is true because Partners in a partnership are fiduciaries.
A fiduciary is a person who is bound to act for other benefits in circumstances which give
rise to a relationship of trust and confidence. All the tasks performed under the fiduciary
duty for the advantage of receiver.
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A company is a separate legal identity from its directors.

This statement is true because a company is a separate legal entity as distinct from its
members. So it is separate at law from its shareholders, directors, promoters.
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A company is not separate from its members- which mean the shareholders are
responsible for the debts of the company.
Yes this given statement is true because the shareholders are responsible for the profits and
debts of the company.
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Question 8:
By referring to the characteristics advantages and disadvantages, compare and contrast
between the three forms of business ownership.
A business is an organization involved in the trade of goods, services or both
to consumers. There are three types of business ownership which are as follows:
Nature Of

A sole proprietorship is a
business that has a single
owner who is responsible for
making desiccation for the
In this, when a single person
decided to open a business.


The sole proprietor is

liable personally for the
debts of the business and
for negligence and other
personal liability.


A sole proprietorship files

taxes on Schedule C of
the owner's personal tax
return, and the income
from the sole prop is
taxed at the owner's
personal rate.

A partnership consists of two

or more individuals who
share the responsibility of
running the company.

A corporation is one of the most

recognizable business structures and
has a separate identity from the
owners of the company.

In partnership, there are two

people involved in one

Businesses are required to file

articles of incorporation, also
known as a certificate of formation,
to legally form a corporation in any

Partners in a partnership
business have unlimited
liability for all debts and
liabilities that occur while
operating the business.

If assets are insufficient to

cover the companys debts. It
company with limited liability
protection against business
Corporations pays taxes on the
company's profits at the
business level, shareholders pay
taxes on income received from
corporation on their personal
tax return.

The tax structure is the

same as proprietorship
except in the profits and
losses of the partnership
are divided by an agreed


Sole proprietors have full

control over every aspect
of their business and there
is no need of any


Legal Formalities



Partnerships have a more

informal structure that
does not require the
selection of officers and

Corporations have a structure

consisting of shareholders,
directors and employees. The
board of directors is responsible
for allocating the company's
resources and increasing the
shareholders' profits.
Sole proprietorships have There are also less legal There are required to hold at
far less paperwork and formalities
the least one annual meeting,
fewer ongoing formalities organisation.
corporation must keep strict
financial records and keep a
ledger detailing how the

Question 9:
There are eight primary duties that an agent has towards there principals. List six of
these duties.
In commercial law, a principal is a person, legal or natural, who authorizes an agent to act
to create one or more legal relationships with a third party. This branch of law is
called agency. And an agent is person who is employed by the principle in order to
represent the business dealings. His primary duties towards their principles are as follows:
To act in the best interest of the principle:
According to principles, the agent to use his due diligence and skill to negotiate terms of a
transaction on the behalf of his principle with a third party to the greatest advantages of his
principle in the situation.
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No secret Profits:
An agent should not make any profit or acquire any benefit in the course and in the matter
of his agency without the knowledge and consent of his principal. Such profit, generally
known as secret profit, is not restricted to money but may include anything of value. For
example an interest-free loan, a club membership. An agent who has made secret profit is
liable to account to the principal for such profit in addition to any other remedies available
to the principal for the agent's breach of duty. The following situations are some examples
of secret profit:
Use of position
Use of property
Use of information
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Duty of Confidentially:
Relationship between a principal and his agent, the agent shall not disclose any
information concerning the principal or any confidential information entrusted to him by
the principal to any third party in the absence of the principal's consent. Confidential
information entrusted to an agent includes any information which is not readily available
to the public. An agent has implied authority to disclose information concerning the

principal if to do so is necessary for the agent to carry out the duties entrusted to him by
the principal. For example, an estate agent may disclose to the appointed solicitors of the
purchaser such information relating to the purchase as will enable the solicitors to handle
the transaction on behalf of the purchaser.
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Duty to use care and skill:

Common law requires an agent to act with due care and skill in performing his duties.
Agents who fail to meet this standard are prima facie negligent. An agent in a certain
profession, trade or calling who performs his duty with the degree of care and skill
expected of a reasonable, average member of the relevant profession, trade or calling
meets the essential standard.
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Duty to Account:
An agent who receives any property for his principal or from his principal is bound to
keep such property separate from his own and he is to be treated as a trustee of such
property. And also an agent has a duty to keep proper accounts of the property received by
him in the course of the agency and to render such account to the principal on request. The
agent is obliged to return to his principal all documents and property originally given to
the agent by the principal and documents prepared by the agent on the instruction and at
the expense of the principal.
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Duty of obedience:
Agents are under a duty to obey the lawful and reasonable instructions of the principal.
Where the principal's instructions are clear, the agent does not normally have any
judgment and must follow those instructions, unless an agent is a professional and the
principal relies on the agent to exercise his professional skill and discretion in
accomplishing the tasks he has been appointed to accomplish. If the principal's instructions
are unclear or if the agent is not certain as to their meanings so the agent should clarify
such instructions with the principal before acting.
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Question 10:
(a) Where the agent makes a contract with a third party on behalf of the principle who is
liable on the contract?
When an agent makes a contract with the third party on behalf of the principle, agent is not
liable for the contract. The third party is only liable for the contract. An agent is not a
party to the contract. Because when an agent entered into the agreement he was acting in a
representative capacity only, not in his personal capacity. So as per law when an agent
who enters into a contract on behalf of another person does not give any promise that his


principal is willing and able to perform his obligations under the contract. Only the third
party is liable for all activities which are written in a contract.
Roodt Inc. 2013. Retrieved from

(b)What does rectification in the context of agency mean?

Ratification is a principal's approval of an act of its agent where the agent lacked authority
to legally bind the principal. The term applies to private contract law, international treaties
and constitutionals like in United State and Canada.
There are following points where the ratification in agency:
Agency by ratification arises when a person ratifies an act which has already been done in
his name and on his behalf by the agent who in fact, had no actual authority to act on his
principal's behalf when the act was done.
Ratification by itself only creates an agency relationship between the principal and the
agent in respect of the act ratified by the principal, but not in respect of any other act,
whether past or future.
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(c)In what two circumstances may an agent be personally liable on the contract?
There are two following situations in which an agent is personally liable for the contract:
(a)When an agent sign a negotiable instrument on its own name:
If an agent signs a flexible implement without making it clear that he is signing it
as an agent only. He may be held personally liable on the same. He would be personally
liable as the maker of the note, even though he may be described in the body of the note as
the agent.
Scribd inc.

(2013). Retrieved from

(b) When an agent is not been appointed:

If the agent has acted without actual authority, but the principal is nevertheless bound
because the agent had apparent authority, the agent is liable to indemnify the principal for
any resulting loss or damage.
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Question 11
(a) On what legal basis might Nigel and Jeremy be able to claim the costs of moving the
cattle from Cindy and Tom?
Nigel and Jeremy have spent their money to save the life of cattle from the flooding. They
did this because the owner of the cattle is not there. According to situation they decide to
move the cattle to safer area. As per law of connivance Nigel and Jeremy are able to claim
the costs of moving the cattle because in absent of owner they want to secure the life of
cattle from the flood.
(b)What will Nigel and Jeremy have to prove to be able to claim these costs from
Cindy and Tom?
Nigel and Jeremy hired four trucks from a transport company to move the cattle to safer
area. So they can show the invoice and payment slips as legal proof to Cindy and Tom for
Question 12

What can Huia do about constitution of ABC Ltd?

Huia is a shareholder and she cannot be fired without agreed vote of the shareholders. But
after the argument with board members, Huia dismiss from the directorship without
submitting the issue in shareholder which is wrong. As per my opinion Huia can arrange
the meeting with shareholder and discuss his problem with them. He also discusses all the
matter with the HR department of the company.
Question 13
Are Issac, Rangi or Lois Liable as directors of Alpha Ltd?
According to case study, Issac, Rangi or Lois are not accountable for position of director
in Alpha Ltd because:
Issac was sentence of manufacturing counterfeit currency. She was not trustworthy for
In case of Rangi, she is a director and major shareholder in Omega Ltd. So she is also not
occupied in the directors of Alpha ltd.
At the end, Lois is just an employee of the company. She can make the decision regarding
the marketing of companys product but she cannot be a part of boards of directors in
Alpha Ltd.
Question 14
What are Leahs opinions for extracting payment from Wedgewood Ltd?
For drawn out money from Wedgewood Ltd, Leah might be hire a lawyer for file a case
against the company.
Question 15
Explain the following situations- either explain why do not think it has breached the
Privacy Act 1993 or explain which principle/principles of the privacy Act 1993 have
been breached.
(a) According to the Principal 2 in Privacy Act 1993, nobody can use the personal information
of any person. As per this case study, Devious Ltd breached the act because they obtained
the personal information of Gormless on the Herman details. Devious did not allow
accessing the personal information of third party without their permission.
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(b) In this case, Marry do not break the Privacy act because she only wishes to use the
information database for collecting the data on Law of commerce. So, she want only
access the data on Law which is not erroneous according to the Privacy Act.
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(c) As per this situation, you are not label for read the information of other students on the
receptionists computer. It is breach the principal 4 in Privacy Act1993 because you are not
stealing the information of others in any situation.
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(d) There are no breaches the Privacy Act in this case. Because there are need some correction
in official work. According to Principle 7 in Privacy Act, this under the law to correct your
personal information.
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(e) As per Principle 3 in Privacy Act, any agency or company can be liable to collect the
personal information directly from the persons. So, there is no breach the any kind of
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