LST5CCL: Company and Commercial Law
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Company and Commercial Law (LST5CCL)
Added on 2020-05-04
LST5CCL: Company and Commercial Law
Company and Commercial Law (LST5CCL)
Added on 2020-05-04
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1Cover SheetName of the studentStudentIDword count
2Contents1a)....................................................................................................................................................3Issue.............................................................................................................................................3Law and Application....................................................................................................................3Conclusion...................................................................................................................................41b)....................................................................................................................................................4Issue.............................................................................................................................................4Law and Application....................................................................................................................4Conclusion...................................................................................................................................71c)....................................................................................................................................................7Law and Application....................................................................................................................7Conclusion...................................................................................................................................82a)....................................................................................................................................................8Issue.............................................................................................................................................8Law and application.....................................................................................................................8Conclusion...................................................................................................................................92b)....................................................................................................................................................9Issue.............................................................................................................................................9Law and application...................................................................................................................10Conclusion.................................................................................................................................11Bibliography..................................................................................................................................11
31a)IssueUnder what type of business structure are Mary, Fred and Chris running the business?Law and ApplicationTo run any business effectively, the main kinds of business structures are sole trade ship,partnership and a company.A sole trader ship requires a single person who owns and manages the business. However, since,there are three parties involve, that is, Mary, Fred and Chris, thus, sole trader ship is notthe business structure they have entered into. A company is a structure which is established only when the same is registered as per therequirements mentioned under the Corporation Act 2001 and the guidelines of ASIC.Since, Mary, Fred and Chris have written down their rules in the form of an agreement ona serviette, thus, there is no registration and thus they are not operating as a company.Now, as per section 5 of the Partnership Act (vic) 1958, a partnership is the simplest form ofstructure wherein two or more persons join together to run a business activity of acontinuous nature with the main aim to earn profits. Thus, the main elements to run anybusiness as a partnership are:[ CITATION Ste17 \l 1033 ]i.There must be two or more than two persons – In order to run any partnership it isnecessary that there must be two persons. It is submitted that there are three people with intent to run the business in the form of apartnership, that is, Mary, Fred and Chris. Thus, they are more than two persons andthus satisfy the first requirement of a partnership. ii.They must run a business activity with common intention – All the partners must carry onthe business of the firm with a common intention. In [ CITATION ReR00 \l 1033 ], the courtssubmitted that to constitute a partnership the intention of all the partners must be commonand it makes not difference whether all the partners are taking part in the firm activities ornot.All Mary, Fred and Chris started business to provide bespoke service to people wanting to enterinto the property market. All the three are involve in the management of the business.Thus, there is common intention amid all Mary, Fred and Chris.
4iii.The business activity must be of continuous nature –In [ CITATION Fer79 \l 1033 ] the courtheld that a business must be distinguished from a hobby and to constitute a partnershipthe business must be of continuous nature. But in [ CITATION Can74 \l 1033 ]a singleventure with the common intention and with the aim to share profits held to be apartnership relationship.All Mary, Fred and Chris were carrying on the business in a continuous manner. Thus, there iscontinuity of the business. iv.The parties must aim to share profits and losses –In [ CITATION Plu14 \l 1033 ], P and Tentered into a partnership with no aim to share profits. The court held that it is necessarythat all the partners must aim to share profits and losses in order to constitute partnership.It was also agreed as per their written agreement that all Mary, Fred and Chris will equallyinvest in the business and will share the profits equally. Thus, they were sharing theprofits.Conclusion It is thus submitted that all the three, Mary, Fred and Chris, were acting in such manner so thatthe entire essential to establish a partnership are met. Thus, there is a partnership formof business structure that is run by Mary, Fred and Chris. 1b)Issue Whether Fred and his business partners are liable for the damages suffered by the customer X? Law and Application When any partnership is established then the partners are the agent of the firm, that is, thepartners represent each other and the partnership firm and vice versa. However, thepartner will only bind the other partners and the partnership firm provided the acts thatare undertaken by the partner are within his authority. In [ CITATION Gol89 \l 1033 ] thepartner borrowed money @ 60% whereas the rate was normally 6%-8%. It was held thatthe act of the partner is out of the scope of his usual authority and is thus non binding onthe other partners.
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