LAW 6000 Business and Corporate Law

Running head: BUSINESS AND CORPORATE LAW
Business and Corporate Law
Name of the Student
Name of the University
Author Note

BUSINESS AND CORPORATE LAW1
Case study 1
Issue
The issue is to ascertain whether the partnership involving Lance and his two other
partner is bound by the contract of sale with Mighty Motors Pty Ltd. In addition, it needs to be
ascertained whether the pother partners can take action against Lance for not abiding by the
instruction.
Rule
The Partnership Act 1963 is the federal law dealing with partnerships and it disputes in
Australia (Business.gov.au, 2018). Section 10 of the Partnership Act states that the partnership
shall be bound by the act of one of the partners acted on behalf of the firm, authorized to do so.
Section 10(1) lays down that an act or instrument that is related to a business of the firm (other
than incorporated limited partnership) is binding upon the firm. Therefore, the partners shall be
liable to abide by it for a person who has the authorization to execute the instrument or to do the
act in the name of the firm or in any other way has executed it. Section 10(2) lays down a
similar directive for an incorporated limited partnership and states that the firm shall be bound by
the acts and instruments executed by a person authorized to do so. While, Section 12 of the
above-mentioned Act states that if there is a mutual agreement between the partners of the firm,
both incorporated limited partnership and otherwise, which restrict the power of one or more
partners to bind the firm. However, the section mentions that the person with whom the
contravening act is to be contract must have the knowledge of the restriction of the power of the
partner (Business.gov.au 2018).

BUSINESS AND CORPORATE LAW2
Section 13 of the Partnership Act 1963 lays down the provision for penalty that needs to
be incurred from a partner of the firm in case the firm incurs an injury or loss from the act of
such partner. The other partners shall be liable to bring charges against such partner under this
section (Business.gov.au 2018).
Application
In the given case, Lance was restricted to spend no more than $20,000 instructed by the
other partners. However, Lynton, the salesperson had no idea about such restriction on Lance.
Lance spend $25000 for buying the Ute. Therefore, section 12 of the Partnership Act would not
be applicable on the contract agreement. As per section 10 of the Act, the partnership firm would
be liable to the contract executed by Lance with Mighty Motors Pty Ltd on behalf of the firm. In
addition, the other partners shall be liable to hold Lance for the loss of the firm as per section 13
of the Act.
Conclusion
Therefore, the partnership between the firm and Mighty Motors Pty Ltd would stand
valid and the firm would be bound by the contract. The other partners would be able to take
action against Lance.