Business and Corporate Law: Partnership Act 1963 and Contract Law

This article discusses the Partnership Act 1963 and Contract Law in relation to business and corporate law. It includes case studies and rules regarding partnership structure, liability, misrepresentation, and contractual obligations.

Business and Corporate Law

Table of Contents
Case Study 1....................................................................................................................................3
Case Study 2....................................................................................................................................4
Case Study 3....................................................................................................................................6
References........................................................................................................................................8

Case Study 1
Issue:Will partnership between the partners be bound by this contract? If yes, can other partners
take action against Lance?
Rule: Major aspects of partnership structure in Australia involve liability of all the business
partners for debts of a business. Business partners share control and management of business
altogether. Under Section 9 (1) of the Partnership Act 1963, a partner in a business except in
incorporated limited partnership, is considered as an agent of the firm as well as of other partners
for the purpose of business by the firm. Section 1 (2) binds the firm and other partners for the act
done by a partner in a firm except in incorporated limited partnership, for carrying out business
in unusual way. Similarly, Section 9 (4) states that the act done by a general partner in an
incorporated limited partnership, for recommencement in the usual way business of the kind
carried on by the partnership, binds the partnership and the other general partners in the
partnership (AustlII, 2018).
Furthermore, according to Section 7 (4) of the Act states that the receipt by a person of a share of
profits of a business exhibits that the individual is a partner in the business.
Application: Taking the Partnership Act 1963 into consideration, it can be stated that the general
partners are held liable for the act done by a partner and the partnership between the three
partners is bound by the contract done between Lance and Lyton. The Partnership Act 1963
establishes partnership between the three and it becomes the duty of each of them to be binding
to the contract made between Lyton and Lance. However, when Lance was instructed to
purchase the car within $20,000, he purchased the car in $25,000. So, it will be the responsibility
to compensate the remaining amount or he should have informed the other partners about the

costs of the car, as it was instructed not to pay more amounts for the car purchase for the
business purpose.
Conclusion: So, the partnership will be bound by this contract. Other partners can only take
action against Lance if, the instructions given to him were in written form. If he has not been
given the instructions in writing, the responsibility will lie on all the partners.
Case Study 2
Issue: Will Saqlaim be bound by the contract?
Will consumers have remedy regarding the claims made for the moisturizer?
Rule: The Partnership Act 1963 binds the partners to a contract made on behalf of the company.
The partners have to follow the decisions taken by them collectively and instructions regarding
any contract need to be provided to each and every partner in writing to be held liable for such
contract (AustlII, 2018). It becomes the liability of each and every partner to remain bound to the
contract made on behalf of any partner with others, with the consent and written agreement of all
other partners.
However, in order to establish a contract with external people, the contract law provides that the
contractual obligations and terms and conditions should be clear and unambiguous before the
parties making contract. There should be no confusions and ambiguity in the terms and
conditions of the contract and agreement should also be in the written form.
In addition to it, Contract Law also binds the business not to misrepresent or provide fraudulent
information to the consumers through advertisements or promotions so as to increase the number
of consumers (Australian Government, 2018). The business is required to provide clear,
complete and true information about their products and services so that the consumers can decide

about considering the products or services (ACCC, 2018). There should be no ambiguity and all
the information should be provided to the consumers about the quality, amount, ingredients,
expiry and manufacturing and all such details as well.
Application: It has been found that the moisturizer being offered by the company of herbal
products did not have any such ingredients that ensure slowing down the impact of ageing. The
information provided by the business in their advertisements, stating that the moisturizer would
reduce the impact of ageing was all false and it was just to mislead the consumers. The business
has no right to claim such things which are impossible and their products did not have such
quality, in this case, it is considered as misrepresenting the consumers just to sell their products.
It was a false representation of their products and the consumers can take action against the
business which will be held liable under the contract law and ACCC of Australia (Rule of Law,
2018).
Secondly, the contract was made between Saqlaim and the finance company and he will have to
be bind by the contract of the company, because he was under discussion with Lance for the
purchase of car and has not provided him the consent in written to purchase the car. On the other
hand, he entered into a contract with the Finance company, which means that understanding all
the terms and conditions of the contract; he would have signed the contractual agreement.
Discussing the sale or purchase of products by just communicating the terms and conditions of
the contract, does not establish contract (Australian contract law, 2018). So, Saqlaim will be
bound by the contract under the finance company.
Conclusion: Saqlaim will be bound by the contract with the finance company, as he had
properly entered into the contract with that company. On the other hand, with Lance he was just

under communication process regarding purchase of car. So, binding contract has been made
only with the finance company.
The consumers will have the opportunity to claim for remedy as the business has misrepresented
the products being offered by them and it is an act of misrepresentation and misleading the
consumers to sell the products.
Case Study 3
Issue: Can Flexi sue Xiaozing for $100 promised by her.
Rule: The employment of a worker on certain specific wages comes under contract formation
between an employer and an employee. The employer employs an employee to do a certain work
for which, certain amount of money is to be paid by the employer (Fenwick, 2018). It is referred
to as formation of a contract where, the contract establishes between the two parties, wherein one
party is obligated to perform in a certain manner or to perform certain kind of work, in return of
which, he or she needs to be paid by the other party. Such a type of contract is so specific that
when one party performs accordingly and accomplishes the given task, it becomes the
responsibility of the other one to pay for the same.
When two parties under contract, remain under certain obligations, it becomes their liability to
fulfill such obligations. Instead of it, if they agree on other obligations and payments, it is their
own personal concern if they prefer to fulfill them or not. The contracting parties have to
perform in accordance with the contract and other promises made by them outside their contract
cannot bind them under contract to fulfill such promises. Such promises are considered to be as
their personal mutual agreements and it is upon their discretion if, they prefer to implement them
or to revoke them. The contracting parties can be held legally liable for the terms and conditions

within the contract and not for the promises made by them outside the contract, as it is not under
their legal obligation of contract. The promises are considered as mutual agreements between
two parties but not in the written form and verbally, which cannot be bound legally.
Application: Felix was employed as a casual worker to pick lavenders by Xiajozing and he was
to be paid $25 cash on each bag of lavender. It was the contract between Felix and Xiajozing,
under which, on performing certain specific act, he was to be paid $25 by Xiajozing. He was
under no obligation to other things except picking lavender flowers from the garden. When it
was noticed by Xiajozing that he cleared the garden beds, she promised him to pay $100 extra
for he had done extra work and cleared the garden beds as well. It was just a promise made by
her and that too for the work, which was not under the responsibility of Felix. He cleared the
garden beds for which he was not employed by her and instead he did not even asked if he
should do it and will he be paid extra for this. Furthermore, Xiajozing too had not asked him to
do extra work, for which he should be paid.
The contract was made between Xiajozing and Felix to pick the flowers for which he can
demand $25 only. If he works extra without being asked for and without informing her, she is
not under liability to pay her even if she promised. There is no value of promise if the promisor
does not want to fulfill it because, it is not in writing and explicit that extra amount is required to
be paid if the other party does extra work intentionally.
Conclusion: As she broke her promise of giving extra $100 for the work he did, Felix cannot sue
her because it was not under contractual obligation to perform extra work and to get extra
money.

References
ACCC, 2018. Contracts & agreements. [Online] Available at:
https://www.accc.gov.au/consumers/contracts-agreements [Accessed 21 November 2018].
AustlII, 2018. Partnership Act 1963. [Online] Available at:
http://www8.austlii.edu.au/cgi-bin/viewdb/au/legis/act/consol_act/pa1963154/ [Accessed 21
November 2018].
AustlII, 2018. Partnership Act 1963 - SECT 7 Rules for determining existence of partnership.
[Online] Available at: http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/act/consol_act/
pa1963154/s7.html [Accessed 21 November 2018].
Australian contract law, 2018. Australian contract and consumer law. [Online] Available at:
https://www.australiancontractlaw.com/ [Accessed 21 November 2018].
Australian Government, 2018. Partnership. [Online] Available at:
https://www.business.gov.au/planning/business-structures-and-types/business-structures/
partnership [Accessed 21 November 2018].
Fenwick, C., 2018. National Labour Law Profile: Australia. [Online] Available at:
https://www.ilo.org/ifpdial/information-resources/national-labour-law-profiles/WCMS_158892/
lang--en/index.htm [Accessed 21 November 2018].
Rule of Law, 2018. Case Note – Contract Law. [Online] Available at:
https://www.ruleoflaw.org.au/contract-law/ [Accessed 21 November 2018].