Application of Contract Law Principles in Three Scenarios

Question 1
Issue: The issue in this question is if Daniel can be considered as a partner according to the
principles of partnership law and therefore if he can be held liable to pay for the tyres that were
ordered by Madison.
Rule: According to the partnership law, partnership can be described as a relationship iron
Association that exists between two or more persons and that has been created with a view to
earn profit. The persons can be individuals or corporations. As in the case of a company, a
partnership is not incorporated under the law (Lang v James, 1911). As a result the partnership
agreement governs the rights and liabilities of the parties. Such partnership agreement could have
been created in writing, orally or implication. The provisions of Partnership Act are applicable
(Smith v Anderson, 1880).
The law provides that a partnership enters into an agreement with others in the name of its
partners. Generally each partner is jointly liable for the responsibilities that have been created by
an agreement entered into by the partnership (Re Griffin; Ex parte Board of Trade, 1890).
The partnership relationship can exist between the parties when persons are “carrying on
business in common with a view to profit”. Therefore partnership involves an agreement that has
been created between two or more persons for legally enforceable relationship. This relationship
is essentially contractual in nature. In Green v Beesley (1835), it was stated by the code that the
definition of partnership has always been considered as a mutual participation but in this case the
participants do not form a legal entity while entering into a partnership.

The elements that are necessary for the creation of a partnership are as follows
The carrying on of a business
 In common
 With a view to profit
In case any of the elements mentioned above is not present, the relationship cannot be described
as a partnership.
Application: The law provides that everything in of a partnership is shared by the partners
according to the shareholding of each partner. The share of each partner is mentioned in the
partnership agreement. In the same way, the Assets and liabilities of the partnership are also
shared by the partners according to holding of each partner. At this point it is worth mentioning
that unlike corporations, there is unlimited liability in case of partnerships. The result is that if
one partner has been found liable for doing something, all the other partners will be held
personally liable. This is not the case in a corporation where the liability of the shareholder is
limited to the extent of their shareholding. Therefore in this case, the shareholders can lose the
amount equal to the value of shares held by them at the most. This is not the case in a
partnership. The law of partnership does not prescribe any limit on the potential liability of the
partners. The reason is that as is the case with Seoul traders, the partnership is not a distinct
entity, separate from its operators.
In the present case, it is clear that a partnership has been formed by Madison and Daniel. For this
purpose they have also entered into a written agreement. According to the agreement, the profit

made by the business was going to be divided 50-50 buy Madison and Daniel.
Under these circumstances, Madison given order to Fast Bikes for 250 tyres. After giving the
order, she leaves for a month long voyage to Antarctica. Now Fast Bikes want to recover the
price of the tyres from Daniel. By applying the laws of partnership that have been discussed
above, it can be stated that individually liable for the liabilities of the partnership. As a result in
the present case also, Fast Bikes can sue Daniel for the recovery of the price of the tyres.
Conclusion: In the present case, it can be concluded that Daniel is partner in the business. As a
result, he can be held liable for paying the $5000 that were owed by the business to Fast Bikes.
Question 2
Answer:
Issue: The issue in this question is related with the fact If the part payment by Rupert can be
considered as the full final payment of amount due bruce can claim the rest of the amount that
was 2 under the landscaping contract.
Rule: The law provides in such cases that when part payment of the debt has been accepted by
the seller that was owed under the contract, the general rule is that there is nothing to prevent the
seller from the rest of the amount at a later date. This rule has been found in Pinnel's case (1602)
and later on held by the court in Foalkes v Beers (1882). This rule is applicable where the buyer
has not provided any consideration for enforcing the promise made by the seller to accept the full
satisfaction of the contract. It was held in Pinnels case that the agreement according to which