Business Law

This Business Law assignment discusses the concepts of Sole Proprietorship and Partnership. It also explains the liability of partners in a partnership firm.

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

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Question 1
For the purpose of this situation, sole proprietorship is the recommended business
structure that is suggested to Felix for his business plan as he is the only member as of now,
investing in the business with the necessary gadgets and capital along with the administrative
skill of convincing real estate businesses to buy his drone shots of the properties in Adelaide.
Sole proprietorship form of business will be apt for him at the moment as he would be
running the business single handedly, without ant demarcation of the owner and the business
entity1. He would be the one to derive all kinds of profit as well as loss from the sole
proprietorship.
Question 2
In this scenario, Felix and Oberlisk is suggested to opt for a partnership form of
business which involves the engagement of two people who intends to carry out a business
relations together in order to earn profit. Partnership is simple and inexpensive business set
up which holds the partners collectively as well as severally responsible for any business
transaction2. The partners are to decide among themselves the share of the profit that they
would be deriving from the business revenue. Every partner is a principal as well as an agent
working for the partnership firm. A partnership form of business, however, holds the partners
unlimitedly liable, which means the partners shall be held personally liable to pay for the debt
of the business, if the business fails to make the payment3. This often affects the personal
property of the partners when the firm is bankrupt. In addition, each and every partner is to be
1 Nithman, Robert W. "Business Entity Selection: Why It Matters to Healthcare Practitioners: Part I-Conceptual
Framework, Sole Proprietorships, and Partnerships." (2015) 30.5 The Journal of medical practice management:
MPM 358.
2 Iyer, Easwar. "Theory of alliances: partnership and partner characteristics." 2013 Nonprofit and Business
Sector Collaboration. Routledge. 48-64.
3 Lewis, Winnifred A. "Waiving Fiduciary Duties in Delaware Limited Partnerships and Limited Liability
Companies." (2013) 82 Fordham L. Rev. 1017.

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held liable for the act or omission of one another. Therefore, a partner shall be held
responsible for the debt incurred by another partner4.
In this regard, Felix and Oberlisk is recommended to opt for the partnership form of
business as they are less in numbers and it would be easier for them to run a partnership form
of business that does not require complex business administrative processes like annual
general meeting, annual auditing of books of records, et cetera. It would only hold Felix and
Oberlisk responsible for their day to day business transaction of taking drone shots and
convincing the real estate businesses to buy them.
Question 3
Issue
To determine who shall be held liable to pay compensation to Mrs Bucket.
Rule
Section 9(1) of the Partnership Act 1891 states that the partners of a partnership firm,
other than a limited partnership shall be held responsible for the conduct of one anothe5r.
They are jointly liable with other partners in respect of the debts and obligation of the firm.
Section 9(2) of the Act states that every partner in a limited partnership will be held liable
jointly with such partnership business for any kinds of debts and obligations of the business,
even if incurred by any one of the partners6.
Application
In the given scenario, while Felix was flying the drones, one of the drones
accidentally landed in Mrs Bucket’s garden and ruined the award winning roses. Here, it has
been argues by Oberlisk that as Felix was the one flying the drones, he should be held liable
4 Iyer, Easwar. "Theory of alliances: partnership and partner characteristics." 2013 Nonprofit and Business
Sector Collaboration. Routledge. 48-64.
5 Partnership Act 1891, s 9(1).
6 Partnership Act 1891, s 9(2).

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to pay the compensation to Mrs Bucket. However, as per the provisions of the Partnership
Act 1891, all the Partners to a partnership business shall be held liable for any act or omission
of on the partners, conducted in the course of business. This makes both the partners liable
for the damage done to Mrs Bucket
Conclusion
Therefore, Both Felix and Oberlisk shall be held liable to pay the compensation to
Mrs Bucket.

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References
Books/Journals
Iyer, Easwar. "Theory of alliances: partnership and partner characteristics." 2013 Nonprofit
and Business Sector Collaboration. Routledge. 48-64
Lewis, Winnifred A. "Waiving Fiduciary Duties in Delaware Limited Partnerships and
Limited Liability Companies." (2013) 82 Fordham L. Rev. 1017
Nithman, Robert W. "Business Entity Selection: Why It Matters to Healthcare Practitioners:
Part I-Conceptual Framework, Sole Proprietorships, and Partnerships." (2015) 30.5 The
Journal of medical practice management: MPM 358
Legislation
Partnership Act 1891