Year 9 Commerce Notes

Key terms:
Liquidity – Available funds on a day-to-day basis.
Liability – The degree of financial responsibility for any loss a business or individual comes
across.
Complimentary Goods – Goods that are purchased and consumed with another
Capital Gain- Is the increase in a capital asset's value and is realised when the asset is sold.
Gross Income – Total income before expenses + tax.
Net Income – Income after deducting costs & tax.
Contractor – entities that perform goods/services to another party under a contract
Trade Unions – Organised associations of workers in an industry that represent and
advocate for rights, interests and welfare including their working conditions and pay.
Industrial Disputes – a state of disagreement over an issue between an employer and its
employees, which results in employees ceasing work. (eg: teacher strikes)

What influences our quality of life?

Depending on income and time spent at work, people will earn different incomes, and in
return, have different standards of living. Some people work longer hours to enjoy the
lifestyle they are used to, while some will work for less hours to enjoy more leisure-related
activities.

Types of Decisions
Financial Decisions
- Purchasing decisions (where to purchase products for the best deal, whether to
purchase now or later, etc)
Employment Decisions
- Depending on an individual’s occupation, people will have more disposable income.
Legal Decisions
- Depending on the country one resides in, different opportunities will be open for
financial growth.
Environmental Decisions
- Depending on the environment, there will be a wider variety of work opportunities,
which allow for income to be spent.
Key Factors Affecting Consumer and Financial Decisions
Service
- makes consumers feel special and wanted, which may push consumers to purchase
more products.
- Businesses are becoming more flexible to suit demand.
Price
- Consumers constantly want to get the best value for their money.
- [Cost per unit = price / weight]
Convenience
- Consumers want businesses to be as convenient as possible.
Marketing
- Consumers feel the need to purchase and help the business to produce revenue.
Environmental
 - consumers care about whether their products are environmentally friendly or not.
Having a business known as one that, for example, animal tests can put strain on the
company and less revenue.
Finance
- When consumers wish to buy more expensive products; such as a car or home, they
will most likely need to take out finance or a loan.
- Higher interest rates may keep consumers away from trying to take out such big
loans.
- Disposable income (net income) = total (gross) income - tax
Age
- As we grow older, our wants change.
Gender
- have different interests, and therefore will spend their money on other items.
(example; feminine products & cosmetics – items men don’t normally want)
Social Media
- Social media influencers may be sponsored to talk about a certain product, which
then convinces to this influencers’ fans that this item is a need.
Cultural Factors
- Depending on where and what an individual grew up around, they will have different
spending decisions.

Spending & Saving Income

Fixed Expenditure –
Recurring (repeating) expenses (eg; rent, food, phone, insurance)
Variable Expenditure –
Expenses that do not happen regularly (eg; buying a ticket to a movie, vacation)
Payment Options
Different Payment Methods- Cash, card, store credit, PayPal, EFTPOS, BPay, Cheque, Direct
Debit, Lay-by, Book Up, AfterPay

Store credit -> Store credit cards for “rewards and deals”. Usually racks up higher intrest.
BPay -> Uses internet to transfer funds to a business. Needs special customer reference
number.
Direct Debit -> Automatic payments from credit/debit card to a company.
Lay-by -> Pay deposits and instalments for products. Once the final instalment is payed, you
can keep the item.
Book Up -> Credit provided by the retailer to purchase items, and you repay the company at
a later date.

The Need for Consumer Protection

Common Scams:
Pyramid Schemes: Pay a fee to join and “earn money” selling new items and recruting new
members. Most end up losing money.
False and Misleading Advertising: When a cheap, sale item runs out and consumers are
offered expensive items. Another example is when products are falsely advertised, claiming
to have a specific feature when they do not.
Referral Selling: Offering consumers special deals, and getting the names of other potential
customers in return.
Unordered Goods: When goods that you have not ordered are delivered, and you are
forced to pay. You do not need to pay for these products, and become your property after a
few months.
Special prizes/offers: When one is offered a prize, but need to purchase a certain amount of
items before they can receive said gift.
Get rich quick schemes: You get an invitation to “win money fast” by transferring money
from overseas, and are promised to receive a percentage of the money, but end up having
to hand over your bank details to do so.

Features of a Simple Contract

Offer: The offeror (consumer) makes an offer to the offeree (seller) to purchase a good.
Acceptance: The offeree agrees to the offer.
Consideration: Each party gives up something. [Example: Money for a new phone.]

Six essential parts of a contract

- Legal object- Whatever the contract is agreeing to must be legal.
- Possible to perform- Both parties must be able to stick to their sides of the contract.
- Consideration- Each party benefits in some way.
- Legal right- Unless someone is mentally ill or underage, consumers have a legal right
to enter a contract.
- Intention- Both parties must intend & agree to enter a contract.
- Offer and acceptance- Each party needs to offer something, and accept the other
party’s decision.

Legal Rights and Responsibilities as a Consumer

Consumers have access to four basic rights:
- Safe products
- Accurate product information and descriptions
- Full disclosure of the terms and sales
- Warranties and guarantees
There are two types of warranties:
- Voluntary warranties- Additional warranties on top of statutory warranties.
- Statutory warranties- Provided by law.

Protective Legislation:
1) Trade Practices Act 1974
This act protects consumers against undesirable business practices, such as
businesses lying about where a product was manufactured.
2) Fair Trading Act 1987
This act prohibits unfair trade practices (eg: deceptive conduct and false claims.)
Organisations for Consumer Protection
1) NSW Fair Trading
- Provides assistance to help resolve complaints and ensure businesses are providing
fair, acceptable quality to their customers.
2) Ombudsman
 - Individuals who investigate and report on complaints.
3) ASIC (Australian Security and Investments Commission)
- Helps to reduce fraud within investment-related accounts.
4) ACCC (Australian Competition & Consumer Commission)
5) Acts as a watchdog, and ensures businesses are complying by the law.
6) CHOICE
- A consumer watchdog, educating the public about their rights as a consumer.
7) Media outlets
- informs consumers on rip-offs & scams, and the business resolves the issue.

How to get Consumer Redress

1) Figure out the problem, and make sure it has not been caused by the consumer.
2) Contact the business and explain the situation.
3) (Possibly) Fill in a written application form.
4) Contact the NSW Office of Fair Trading and ask for advice, and lodge for a formal
written complaint
5) Take it to the Consumer, Trade, Tenancy Tribunal
Consequences of Poor Financial Management
Excessive Debt:
If someone fails to make their repayments, creditors are able to recover the money they
have lent out. If a debtor is unable to make their repayments, they may apply for a
hardship variation. A hardship variation helps the debtor make their repayments by
either:
1) Reducing the instalment amount
2) Postponing repayments for a certain period
These may not work if the debt is too excessive.

Personal Consequences:
- Illness & Stress
- Unable to satisfy needs and wants & maintain lifestyle
- Bankruptcy
Social Consequences:
- Relationship breakdown/tension
- Social isolation
- Inability to interact with others
Legal Consequences:
- Employer/bank can take money from your account and send it to the creditor.
- The court can seize and sell your assets.
- Bankruptcy

Long Term Financial Goals

Superannuation
- a mandatory savings account, where each time you are paid, 10.5% of your income is
automatically added to your account in order to help save up for retirement.
Investing
Reasons to Invest
Businesses
 - Invest to maximise profits by investing in new machinery, technologies and higher-
quality items in order to boost productivity.
Individuals
- Invest savings to achieve future goals
- To prove/maintain standard of living

Types of Investments
Investing with Savings: Leftover funds from budget can be transferred to a savings account
and earn higher interest.
Investing with a Loan: Getting a loan from the bank with repayments you can pay off to use
to invest. Make sure to look around for the best rate.
Superannuation: A compulsory investment funded by the employer, who pays a minimum of
10.5% into this savings account. This money can be accessed after retirement.

Forms of Investing
Shares:
- Buying shares means you buy a part of ownership of a company.
- As the value of the shares a shareholder owns goes up or down, so does their
investment, meaning they can either earn or lose money.
- A share of the company profit is given as dividends.
Property:
- An investor can own and rent out a property, which gives the investor a steady
stream of income.
- The land/house can be sold for more than it was bought.
Managed Funds:
- A pool of money comes from multiple people with similar investment goals. This
pool of money is then invested in by a professional fund manager in property and
shares.
Debentures & unsecured notes:
- A debenture is lending out money to a company which they pay back as a loan
including with interest. This money is guaranteed to be paid back even if the
company fails.
- Unsecured notes are similar but are not secure, but attract higher rates of interest.
Cryptocurrency:
- Digital-based currencies, created as an alternative
to normal currencies which are controlled by
banks and governments. Has a high risk.

Rate of Return
The amount of profit you receive from investment = end
price – starting price

When investing, you are looking to make the best

return/most profit possible.

Categories of Investment
Growth Assets (eg; shares and property)
 - Provide a higher return over a long period of time
- Prices can change quickly, meaning these investment options are risky.
Income/Defensive Assets (eg; government bonds & term deposits)
- Lower return, but are lower risk
- Value does not change dramatically in the short term

What factors influence investment risk?

- Investor confidence
- Interest rate uncertainty
- Unexpected changes in the market
What is an investment portfolio?
- A record of all the investments an individual has.
What is ethical investment?
- Only investing in companies that have certain beliefs or standards and work
towards/follow these standards.

Why do people work?

Working provides individuals with both financial and non-financial benefits. These include..
Financial benefits:
- Earning an income
- Being a consumer
- Creating and maintaining a good standard of living
- To exchange your money for goods and services
- Adding to your superannuation
- Having disposable income
Non-financial benefits:
- Using your skills positively
- Meeting new people & making friends
- Work experience
- Contributing to the economy
- To be happy
- Developing natural strengths and talents
- Being part of a team
- Increasing your confidence/self-esteem
- Doing something you are passionate about and love
The relationship between work and quality of life
Maintaining a healthy work-life balance is important for the following reasons..
- To maintain mental health
- To prevent burnout (chronic stress)
- You only get one life, enjoy it
- Becoming a well-rounded individual (having interests inside and outside of work)
- Increases productivity (the more hours you work, your quality of work decreases)
- Ensures physical health and wellbeing

Participants in the workforce

There are different types of participants in the workforce, which include..
- Employers
 - Employees
- Contractors
- Trade unions
- Governments

Types of employees:
Full time
 continuing, ongoing employment
 scheduled to work 38 or more hours weekly
 receive a range of entitlements such as medical insurance and annual leave.
Part time
 ongoing employment, though they work for less than 38 hours per week.
 Their hours may be fixed or variable.
 Entitlements are given on a pro-rata basis. (Depending on the amount of days
worked, they will receive a fraction of the entitlements full-time employees receive)
Casual
 employed on an hourly or ‘as needed’ basis, and have no permanent weekly roster.
 may need to work for more than one employer.
 They do not receive entitlements, but receive a loading (higher hourly pay) to
compensate
Trade Unions & Employer Association
Trade Unions – look after workers in a particular job/industry, where members pay a fee
to finance the union’s operations. Unions aim to..
- Protect the interests of members.
- Improve the working conditions of its members
- Ensure fair treatment of employees at work
- Promote quality of life issues
Employer Association – where employers join together to protect their common
interests. Their key aims include..
- Advocate for their industry to be a career of choice
- To represent employers in dealings with trade unions
- Give advice and assistance on a wide range of issues (eg: tax & employment
legislation)
- Lobby governments with their memberships’ views.

Different Types of Industries

Industry – a group of businesses involved in similar or related work.
Primary Industry – produces raw materials from what nature has provided. 60% of all
Australia’s exports are primary industry products. (eg: fresh fruit, mining, wood)
Secondary Industry – includes all workers involved in turning raw materials into finished or
semi-finished products. (eg: turning wood into a table)
Tertiary Industry – provide a service to others. (eg: retailers, dentists, bankers & solicitors)
This industry can be broken into quaternary and quinary industries.
Quaternary Industry – made up of service industries that deal with processing information
and knowledge. (eg: jobs in IT/technology)
Quinary Industry – made up of domestic services many of which were once carried out by
people in their own homes. (eg: childcare, hospitality, domestic cleaning.)
Patterns of Employment
Participation rates:
- It has become common for both parents to start working, which has increased the
rate of participation.
- The value on finding the right person for a particular role has been emphasised.
Changing roles of women and men:
- Women would normally stay at home while men would work, however this is no
longer the case.
- Women now take up 41% of the workforce, with 61.1% of females working.
Career lengths:
- The average tenure in a job is 3.3 years.
- People may change their job for the following reasons
 social reasons (kids, response to life events)
 economic reasons
 security
 convenience
 feeling valued in a role
Globalisation as a changing factor:
- Businesses are now operating to a global audience, rather than being contained to
local towns.
- This increases ease in operations, reduces cost for consumers and assists with
international trade success.
Employment Contracts
Employment Awards – a legally binding, formal agreement between an employee and an
employer. (the idea of offer, acceptance & consideration applies.)
Types of employment contracts:
- Awards
- Enterprise agreement
- Common law contract
Awards:
- the legally enforceable minimum terms and conditions that apply to a
business/industry.
Pros Cons
Sets a minimum standard for employers Inflexible – may not suit all employees
Covers all employees doing a similar job Prevents recognition of individual
initiative
Employees receive a higher pay when working late night shifts, early morning shifts,
overtime, on public holidays or weekends.
Allowances – extra payments made to employees who do certain tasks/have a skill, use
their own tools or work in unpleasant conditions.

Enterprise agreement:
- A negotiated agreement about pay and conditions made at a workplace/enterprise
level between an employee(s)/union.
Pros Cons
Envolvement of employees Possibility of job losses
Possibility of improved pay & conditions Greater inequity in wage rates
 Access to training & more flexibility Undermining award standards (working
longer hours)
Common Law contracts:
- Covers employees who are not under awards/enterprise agreements. These
contracts are signed individually and are kept secret. (eg: professional athletes)
Pros Cons
Right to sue for compensation Offers less protection
Flexibility to suit the needs of a person Possible exploitation of employees due
to unfair bargaining
Individual initiative required Expense of any court case if they sue

Moving From Home

Government organisations:
- Department of Social Services: developing & delivering programs to ensure a fair
society for all
- Centerlink: specialist staff who work with young people in greatest need
- Department of Communities and Justice: delivers services to disadvantaged people
Religious organisations
- Salvation Army & Muslim Care Australia
Community organisations:
- Community housing; temporary accommodation to young people
Why do people leave home?
- Work opportunities
- Education
- Freedom
- Conflict with parents/being kicked out
Accommodation options for young people moving out of home:
- Set up your own flat
- Move into a share house
- Set up your own share house (expenses are shared)
- University accommodation (dorms)
- Live at a hostel or youth refuge
Steps to take when getting a lease:
1) Determine what features you require in a property
2) Obtain a copy of the residential tenancy agreement from the agent
3) Complete the conditions report
4) Pay the reservation fee (1 week rent)
5) Pay a rental bond (4 weeks rent)
6) Pay the rent in advance from the first day of tenancy
7) Take possession of the house

Checklist for new tenants:

- A copy of the new tenant checklist
- Copy of your lease (tenant agreement)
- 2 copies of the premises conditions report
- A bond lodgement form to sign to be lodged with NSW Fair Trading
- Keys to your new house
Insurance as a contract:
1) A person receives quotes from a range of insurance companies and compares the
features of the cover that each company offers & the premiums charged.
2) Proposal (form you fill once you have selected and are applying to a company) must
be completed in the utmost good faith in disclosing relevant details.
3) The policy is issued by the insurance company once the proposal has been approved.
It contains the information regarding the contract (items included & excluded)
4) The renewal notice is sent yearly, informing you to pay to receive cover
5) A claim form must be submitted to the insurance company to receive the
compensation you are entitled to.
Household Insurance:
- Covers home against damage from storms, fires, accidental damages, etc.
- Home contents insurance - Provides compensation if your home contents are
damaged/stolen.
Personal Insurance:
- Life insurance: if a person dies within the timespan of coverage, they will pay a
specified amount to the nominated person.
- Sickness & accidental insurance: usually taken out by self-employed people who
aren’t covered by workers compensation. Provides cover if a person cannot work
and receive their regular income.
- Health insurance – private health insurance covers special benefits & less wait times
Motor vehicle insurance:
- Compulsory third-party insurance: protects drivers of motor vehicles in the case of
serious injury or death in an accident. This insurance is compulsory and is obtained
when receiving your green slip.
- Third party property damage: covers the cost of damaged caused by a driver with
regards to property owned by other people
- Comprehensive car insurance- covers the costs of repairs of the replacement of your
vehicle (sometimes) and other vehicles involved in an accident.
Other types of insurance:
- Workers insurance (provides money for employees injured at work)
- Public liability (covers the high costs incurred if they are used by members of the
public who suffered injury or property damage as a result of their business)
- Marine insurance (covers boats and ships from accidents/damages)
- Pet insurance (cover the cost if your pet gets sick and needs to see a veterinarian)