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Assignment

Question 1:

Bookkeeping is a method to record all financial transactions on the books for daily

recording for business transactions which are forwarded to the accounting

department of the company. In this case, as can be seen in given information that

there are three people namely Li-You, Lawrence and Benedict, who want start up

together a book-keeping business. So they can choose one of various types of

business structure that are existed in Australia for their business. In my opinion,

these people in the case can choose the business structure namely partnerships

because of its suitability and advantages.

According to Schweizer and Kobras (2010), partnership is a form that allows two

or more individuals together to contribute capital and establish an enterprise. They

have equal rights and obligations to this business. In this case there are 3

individuals who want to establish an enterprise, so they can choose partnership –

the most the most appropriate business structure for their proposed book-keeping

business, not sole trader. In addition, all three have the same goal is to build a

small business first, and then develop it into a big business, providing book-

keeping services for both large and small domestic businesses. Moreover, their

business is established based on the properties of individual contributions: money

of Li-You’s parents, a book-keeping computer software program of Lawrence, and

Benedict’s experience. Especially, according to the new rules for all book-keeping

businesses in Schedule 2, Part 1, Division 2, item 103 of TAS Regulations (2009),

owners have to prove that they have at least 14,000 hours of work in related areas

within the preceding 3 years, which is one of the conditions for the establishment

of book-keeping business.

Regarding the advantage of partnership, first of all, this business structure is set up

easier and cheaper than companies, and all partners can manage the business under

a trading business name which has to be registered with Consumer Affair Victoria

(CAV). Next, the Partnership Act 1958 (amendment in 2000) is the management

agency of partnership. Accordingly, the terms of size, the establishment,… of the

partnership is stated very clearly. Secondly, this business structure is quite easy to

manage, because profits and losses are shared among each contributing members

of their share capital (as specified in the Partnership Agreement). Finally,

partnership creates more favorable conditions than sole traders do in having more

flexibility in holidays, sick leave; than companies do in profit sharing which is not

required to open to the public, so partnership has better privacy policy.

Question 2:

According to Heller and Dubber (2010, p. 59), ‘the most serious offense of

criminal negligence is manslaughter, which is recognized in all Australian

jurisdictions. Negligence under the common law is defined in terms of a great

falling short of the standard care that a reasonable person would have

exercised…’. This suggests that criminal negligence, which is defined very clearly

in Australian law, is interested by the government.

Criminal negligence has three parts (Continuing Legal Education 2003, p. 1), they

are: the defendant must have a duty of care to the plaintiff; the plaintiff is careless

in the discharge and the last, the damage caused by the breach. In this case, LLB

Book-keeping Pty Company had a mistake which led to the death of a person, an

accountant of old client. Although the person who made error directly was

Lawrence, he did not take full responsibility, because the business structure of

their company was Pty Ltd, so the responsibility was shared equally to three

owners, including Li-You, Lawrence and Benedict (Corporations Act Law 2001).

The book-keeping computer software program the program, which was made by

Lawrence, contained some malicious code but he did not know about that. Only

after the accident, he and the company knew that. It’s actually their negligence,

but the consequence was the death, which was so serious because of loss of life.

Therefore, LLB Book-keeping Pty Company was still responsible for their

involuntary manslaughter judged by the court.

According to the Civil Liability Act 1936 (2013), three owners of LLB Book-

keeping Pty Company would have to face the negligent acts on their part. In

Article 23 (Part 5) - Liability for death caused wrongfully, the law provides that:

‘Whenever the death of a person is caused by a wrongful act, neglect, or default,

and the act, neglect, or default is such as would (if death had not ensued) have

entitled the party injured to maintain an action and recover damages in respect

thereof, the person who would have been liable if death had not ensued, shall be

liable to an action for damages, notwithstanding the death of the person injured,

and although the death was caused under such circumstances as amount in law to

an indictable offence’. In this case, obviously, there was a violation of the law,

despite not intentionally, this company (particularly, the software designed by

Lawrence) indirectly caused the death of an accountant. Therefore, in the case the

company was sued by the relatives of the accountant, under the Civil Liability Act

1936, three owners had to bear the entire cost of the loss of human life and spirit.

If the accountant had parents still live, the company must pay compensation to

them a certain amount, but that number was less than $10,000. In addition, under

the laws of Australia, people who committed manslaughter could have to go to jail

or not, depending on the situation. In this case, although the company’s mistake

caused the death of the accountant, the court could only administrative penalties

against the company’s three owners without forcing them to go to jail. Obviously,

they were totally unaware of the consequences of the incident before it occurred.

Therefore, their acts could be reasonable, in other way, their duty of cares were not

breached the law. To sum up, if the plaintiff sued LLB Book-keeping Pty

Company, they could have to pay the fine and not go to jail, according to

Australian laws.