Law for Management
Question 1 10 marks 500 words
Engineers Australia’s National Congress approved a new Code of Ethics and Guidelines on Professional Conduct in 2010. The Code explains:
‘In the course of engineering profession we will:
Demonstrate Integrity
Practise Competently
Exercise Leadership
Promote Sustainability
(http://www.engineersaustralia.org.au)
[Note: The 2010 Code is also upoaded to Moodle]
Choose an ethical dilemma confronted by mangers in a culturally diverse organisation and critically appraise the utility of the above ethical framework to assist managers to respond to that dilemma. Comment on the importance of securing ethical values and principles through an appropriate regulatory framework.
Note: You are required to refer to the 2010 Engineers Code of Ethics and the concepts in Chapter 13, L Griggs, E Clarke and I Iredale, Manager and the Law, 3rd ed, Lawbook Co Thompson Reuters, 2009.
Question 2 10 marks 500 words
‘The law reflects the changes that are occurring in society and can be an instrument for change, such as in the area of law reform. Recognising that legal rules are changeable, managers should be active in bringing about beneficial changes that enhance business activity. Managers should also utilise the law as a valuable tool to carry out and achieve management goals.’
(L Griggs, E Clarke and I Iredale, Manager and the Law, 3rd ed, Lawbook Co Thompson Reuters, 2009, p 15.)
Discuss the above statement in terms of a manager’s role in contractual disputes in modern business organisations.
Question 3 30 marks 1,200 words
Messi Corporation Ltd (Messi) is a global corporation involved in various large infrastructure projects in different countries around the world. Although its Head Office is located in London, it has branch offices to oversee it operations in various countries. Its Australian office is located in Sydney. While its board of directors usually meets in London, they do occasionally hold board meetings and make decisions involving local projects in countries where they have significant interests. Messi has a significant presence in Australia with mining and natural gas operations currently underway in Queensland and Victoria.
Messi has recently been made aware by its research division of the prospect of substantial coal seam natural gas deposits within metropolitan Melbourne, Australia. As an initial step to confirm the nature and size of these deposits, Messi must conduct test drills into the gas deposits and take some samples. The undertaking of this project will require engaging local private contractors to undertake various aspects of the drilling project. As well, negotiation, licenses and agreements will need to be entered into with the Victorian government as well as needing to work co-operatively with relevant local councils. The Board of Messi also appreciates that significant community consultation will also be necessary for such a potentially sensitive project.
The Victorian state government is very keen to push ahead with the initial stage of this project despite significant opposition from various groups. Accordingly, the Victorian Department of Planning and Mining granted an exploration license to Messi. However, the terms of the license state that Messi must not drill or prospect within 400 metres of inhabited houses or within 100 metres of gardens or orchards, without written consent from the owners. A site of particular interest to Messi is located in inner western Melbourne. The area designated for drilling is an open area south of a large recreational park and wetlands and alongside a canal, mostly surrounded by unoccupied industrial buildings. Drilling would involve a mobile drill rig, about the height of a power pole, and trucks to move water and chemicals used in the drilling process in and out of the site.
In January 2014 Messi entered into ‘Heads of Agreement’ with the Victorian state government as a public private partnership in relation to the development of the project and for sharing profits on sale of gas should the project prove to be commercially viable and profitable. As a first step, Messi has entered into a further written agreement with Chavez Consultants, a consulting firm comprising engineers, geologists surveyors and a team of experienced management consultants who will project manage the operation on behalf of Messi. However, in order that their bid to manage the project should be successful, Chavez, in their meetings and through e-mail and text messages with representatives of Messi, had exaggerated their level of experience in managing such projects. They told Messi that they had considerable experience when in fact, while they had managed several major construction projects, they had never managed a gas exploration and drilling project and never in a built up metropolitan area. But as the representatives of both the Messi Melbourne office and Chavez were old university friends, a full due diligence on Chavez was not undertaken, even though this was a requirement under Messi’s own contract management policy. Furthermore, due diligence was also specifically required under the heads of agreement with the Victorian government concerning the engagement of any sub-contractors for the project. As part of their agreement with Messi, Chavez is required to liaise with various government agencies. A specific term of the agreement between Messi and Chavez is that Chavez will engage in appropriate community consultation at every stage of the project.
Chavez has contracted with Robben Pty Ltd, a local drill operator in order to commence the test drills. The contract with Robben specifies that the drill must be delivered and installed by the end of April 2014 so that drilling can commence in May. Robben has agreed to this time-line by email only. The particular drill required for this project is unusually long and Robben has had to arrange special permits to give it road clearance to transport the drill to the site. This has caused considerable traffic congestion on surrounding roads. Added to this, as Robben were getting the drill onto the site it got tangled up in overhead power wires and brought these down. This caused a power failure in the surrounding area including to Melbourne’s second airport, for several hours. This also directly affected some local businesses including a small goods wholesaler who had a consignment of small goods go bad due to shutdown of it refrigeration units during the power failure caused by Robben. The small goods wholesaler couldn’t complete some of its supply contracts as a result.
In the meantime, it has also become clear that Chavez has done little by way of community consultation and there is mounting community anger over the whole project. As a result, a group of local residents have applied for an injunction in the Victorian Supreme Court requesting that all work at the site stop until there is an independent review of the entire project and the involvement of the Victorian government.
Required
(a) 5 marks
Discuss the legal status of the agreement between Messi and the Victorian government.
(b) 10 marks
Analyse the contract between Messi and Chavez. Is there any basis for arguing that it maybe unenforceable? Explain the contractual and commercial implications if the injunction requested by the group of local residents is successful.
(c) 15 marks
Consider the contract between Chavez and Robben and the conduct of Robben. Is there any basis under Australian contract law for legal action to be taken against Robben by anyone?
