Business and Corporate Laws

This document discusses the principles of business and corporate laws, focusing on liability for contract performance and partnership obligations. It explores the rules and applications of these laws in various scenarios. The document also provides references to relevant cases and legislation.

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

1BUSINESS AND CORPORATE LAWS
Part A
Issue
Whether Gary can be held liable for the performance of the contract to supply the
apartment developer.
Rule
A contract that has been validly formed creates a legally enforceable obligation of the
parties to the contract to perform their part of the terms of the contract. Termination or
discharge in relation to a contract implies a situation under which these obligation that have
accrued because of the contract may be extinguished or ended. The contract law provides for
six ways that can enable a termination of the obligation and the rights of the parties that has
evolve owing to a contract. A contract can be discharged or terminated by the performance,
for a term of the contract, express agreement, breach, operation of law and frustration
(Fitzpatrick et al. 2017).
A contract will become automatically discharged and all the obligations and the rights of
the parties to the same can be brought to an end if the parties make performance of their part
of the contract. However, such a performance needs to be complete and unqualified. This can
be illustrated with the case of Cutter v Powell (1795) 6 TR 320.
A discharge of a contract can also be effected in case a term of the has contained any
condition for the discharge of the contract. Generally such conditional terms are inserted to
discharge the contract on certain condition being satisfied. These conditions may include any
happening or non-happening of an event.
Contracts are formed by virtue of agreements that has been made between the parties. If
both the parties to the contract can come to an agreement for the discharge of the same, they

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are entitled to terminate the same and will be discharged from liability of performing the
contract. This can be effected in two ways, firstly the contract has provided for a term which
confers the right to the parties to terminate the contract on mutual agreement and secondly,
the parties may alter a separate contract by agreeing on altered terms that they have mutually
agred upon afterwards.
A contract can also be discharged by breach of the any condition or term contained in the
contract by a party to the contract. However, such a termination of the contract lies on the
discretion of the aggrieved party. The aggrieved party may also enforce the performance of
the contract. The same can be illustrated with the case of Hochster v De la Tour (1853) 2 E &
B 678.
There are certain statutory restrictions that may discharge a contract by rendering the same
to be in violation of the law. This may include the laws relating to bankruptcy. In such a case
all the rights and obligation of the parties under the contract comes to an end. This can be
illustrated with the case of Croockewit v Fletcher (1857) l H & N 893.
A contract can also be discharged by the operation of law under the doctrine of frustration.
This doctrine has found place in the opinion of the judges by the case of Taylor v Caldwell
(1863) 3 B & S 826. However, under this doctrine the event that has rendered the contract
discharged needs to be an outside event that has the parties to the contract has no control
upon. However, to claim a contract to be extinguished under this doctrine there are certain
essentials that is required to be fulfilled. Firstly, a supervening event must have occurred.
Secondly, the event must not have occurred for the fault of the parties. Thirdly, the contract
must not deal with the event and the event has brought considerable alterations in the
obligations and rights of the parties under the contract. These essentials has evolved in the
case of National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675. It has been held in

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the case of Paradine v Jane (1647) Aleyn 26, 82 ER 897 that the event that has caused the
discharge needs to be unpredictable or unforeseeable.
Application
In the instant situation, Gary has been running a business of metal fabrication within the
inner city of Melbourne, which has been holding a lease for its factory and the lease was for a
long term. He has availed a tender for the supply with respect to metal frames, which is
required for the construction of a high rise apartment development. This contract under the
tender has been proposed to begin within six months and the work under the contract is
supposed to be carried out for another eighteen months. It has been assessed to last for two
and a half years. One month prior to the commencement of the work under the contract it has
been informed to Gary by his landlord that the state government has acquired the property
that Gary has been holding on lease for their new East-West Tunnel Link project owing to
which the premises needs to be vacated within six months. This has made Gary to have
consider other place to set up his factory, which will require him another three to six months
to set up the factory. Prior to the setup of the factory he would not be able to produce the
metal frames as required under the contract. This can be treated to be an event, which would
not have been foreseen by the parties. The event has also made the performance of the
contract by Gary to be impossible. As the manufacture of the metal frames will be impossible
without the factory being setup. This would require render the contract to be frustrated by the
operation of law and the same will be discharged. However, a new contract can be formed
between Gary and the other person if a extension of time be allowed.
Conclusion
Gary cannot be held liable for the performance of the contract to supply the apartment
developer.

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Part B
Issue
Whether Lucy, Koo and Seamus are running a partnership business.
Whether Koo and Lucy will be liable to make contribution towards the purchase with
respect to the ride-on mower.
Whether Lucy has breached any of her duties as a partner owing to her weekend work that
she has been continuing.
Whether the individuals under the business name LuSeKo can be identified by FastCut for
proceeding with legal action.
Whether the partnership will be affected in any way for the demise of Seamus.
Rule
In Australia, the laws governing partnership is regulated by the Partnership Act 1963.
Section 6 of this Act defines the term partnership. It mentions the partnership to be a
relationship that exists between two or more persons who are running a business common to
all of them and has the motive of earning profit. The definition of partnership under this
section includes incorporated limited partnership. The definition of partnership has been
defined in the case of Wang v Rong [2015] NSWSC 1419.
The powers in relation to make binding transactions for the firm by any of the partners has
been provided under section 9 of this Act. The relationship between a partner and the firm is
similar to an agency relationship. The acts of the partners are binding upon the firm and all
other partners. However, to hold the all the partners liable for the acts of any partner, the acts
needs to be effected under the name of the firm. Again, there are certain circumstances under

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which a partner may not be able to bind the firm or other partner by his acts. Any partner who
has been acting beyond the scope of his authority under the agency relationship with the
partnership will not bind the firm or the partners by his act. However, any third party whose
interest is involved in such act need to have the awareness of the lack of authority of that
partner for rendering the act not binding upon the firm and other partners (Clarke et al. 2017).
A partner is under an obligation to disclose genuine and appropriate information and
account that may affect the firm or any other partners under section 33 of the Act. Every
partner are under an obligation to make disclosure of any personal benefit that he might have
accrued without the authorisation of the firm or without the knowledge of other partners
utilising the property belonging to the firm or the business of the firm or the name of the firm
under section 34.
A restriction has been imposed upon a partner from running a business identical to the
firm for the purpose of competition under section 35 and any profit accruing from such
business needs to be shifted to the name of the firm.
The consequence of the demise of a partner has been contained in section 38 of the Act. in
the absence of any contradictory agreement, the demise of a partner results in the dissolution
of the firm. The common law construes any property that has been owned as a joint property
by the partner as a property of the firm.
Application
In the given scenario, Koo, Lucy and Seamus have registered a business under the firm
name of LuSeKo to run a business. They advertised their business by way of flyers that has
been distributed within the neighbourhood. The business started making regular clients. All
the partners were participating in the business. Seamus has the responsibility of cutting the
grass, Lucy has been removing the clippings with her truck and Koo was liable to maintain

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the accounts. This can be construed to be a partnership under the definition provided in the
Act.
A contract has been instituted by Seamus with FastCut for the purchase of ride-on mower
with a view to be used in the business. This contract can be treated to be instituted under the
name of the firm and hence will bind both the firm and the partners.
A separate business has been run by Lucy and she has been serving the regular clients of
LuSeKo. The business was identical to the business of the firm. In addition, Lucy has been
shifting the profits of her separate business in a private account and was not transferring the
same in the account of the firm. This renders Lucy to be in breach of her partnership duties
that has been imposed upon her by virtue of the Act.
In Australia, every business is regulated by the ASIC. Hence, FastCut can decipher the
identity of the individuals indulged under the cover of LuSeKo with the help of ASIC for
availing legal action against them.
Seamus has died and there has been no contract among the partners of LuSeKo in relation
to any arrangement to be followed on the demise of any of the partners. In case of absence of
any contract with respect to the same, the said demise will have the effect of the dissolution
of the firm. In this case, the firm will be dissolved for the death of Seamus.
Conclusion
Lucy, Koo and Seamus are running a partnership business.
Koo and Lucy will be liable to make contribution towards the purchase with respect to the
ride-on mower.
Lucy has breached any of her duties as a partner owing to her weekend work that she has
been continuing.

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The individuals under the business name LuSeKo can be identified by FastCut for
proceeding with legal action.
The partnership will be affected for the demise of Seamus.
Koo and Lucy may identify the property belonging to the partnership by enquiring their
purpose for which the same has been used and whether those properties has been used by the
firm and owned under the name of the firm. These properties belonging to the firm can be
utilised to mitigate the losses incurred under the name of LuSeKo.

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Reference
Clarke, M. A., Hooley, R. J., Munday, R. J., Sealy, L. S., Tettenborn, A. M., & Turner, P. G.
(2017). Commercial law: Text, cases, and materials. Oxford University Press.
Croockewit v Fletcher (1857) l H & N 893
Cutter v Powell (1795) 6 TR 320
Fitzpatrick, J., Symes, C., Veljanovski, A. and Parker, D. (n.d.). (2017) Business and
corporations law. LexisNexis Butterworths Australia
Hochster v De la Tour (1853) 2 E & B 678
National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675
Paradine v Jane (1647) Aleyn 26, 82 ER 897
Taylor v Caldwell (1863) 3 B & S 826
The Partnership Act 1963
Wang v Rong [2015] NSWSC 1419