Legal Issues and Relevant Laws in Australian Business Law

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Contents
Case Study 1....................................................................................................................................2
Issue.............................................................................................................................................2
Relevant Law...............................................................................................................................2
Application of law........................................................................................................................2
Conclusion...................................................................................................................................3
Case Study 2....................................................................................................................................3
Issue.............................................................................................................................................3
Relevant Law...............................................................................................................................3
Application of law........................................................................................................................3
Conclusion...................................................................................................................................4
Case Study 3....................................................................................................................................4
Issue.............................................................................................................................................4
Relevant Law...............................................................................................................................4
Application of law........................................................................................................................4
Conclusion...................................................................................................................................4
Bibliography....................................................................................................................................5

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Case Study 1
Issue
There are two issues involved:
i. Can Lynton bind the herbal partnership business with the contract established by
Lance on behalf of the firm?
ii. Can lance be held personally liable for exceeding his authority to the firm and the
other partners?
Relevant Law
There are several ways in which business can be carried on in Australia, for instance, by a
company, sole trade ship, trust or by partnership. Partnership is a form of business which can be
carried on with the help of more than one person who are sharing common motive/intention
while carrying on the business activity with the sole intent to share the earned profit and losses
amongst themselves. These are the core elements required for partnership formation and are held
in (Wang v Rong, 2015). (Lawyers 2017)
The persons who form the partnership are the partners and as per (Re Agriculturist Cattle
Insurance Co, 1870), they are agents of each other and the form, that is, an act by one will bind
the others and the firm. (Egert 2007)
Every partner must duly cater their duties, that is they must not make any secret profits, avoid
conflicting interest, must act fiduciary, etc. if any agent exceeds his authority then it is nothing
but an act of breach of duty and he can be thus held personally liable for the loss that is incurred
by the firm because of such excessive use of authority.
The agents carry on the acts for the firm within the power which is attributed to them. This
attribution of power can be in two manners, that is, firstly, actual authority which is delegated to
the agents of the firm directly by the firm itself and is evaluated in (Hely-Hutchinson v Brayhead
Ltd , 1968). This can be done by the firm wither in written or oral form called the express
authority or by implication called the implied authority; Secondly, apparent authority is a kind of
authority wherein a presumption is raised by the third party that the person with whom he is
dealing is the agent of the firm. The presumption is raised based on the representation made by
the agent of the firm clarifying that such person has the power to enter into contract on behalf of
the firm. Thus, any contract amid the third party and such representative is valid and is bind upon
the firm provided the third party is acting in good faith and is held in (Freeman & Lockyer (A
Firm) v Buckhurst Park Properties (Mangal) Ltd , 1964). (Latimer 2012)
Application of law
The law is now applied.
i. Lance is one of the partners of Herbal Product Business (there are three partners in
total). The firm has granted him power to establish contract on firm behalf but only to
the value of $20,000. This authority is expressly granted to lance by the firm. Any
contract up to the value of $20,000 is binding on the firm and the partners and they
must honor the same.
But, lance exceeded his authority and enters into a contract with Lynton who was the sale person
of Mighty Motors, He bought a uite @ $25,000. At this stage it is submitted that since Lance has
undertaken a contract beyond his authority thus, the same must be non enforceable.