Partnership in Business Law

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

1BUSINESS LAW
Partnership depicts structure of business that is formed for the purpose of operating a
business with a view to generate profit. With respect to the business operations the structure
and function of a partnership is identical to other structures including companies and sole
proprietorship. In the territory of Australia there are several legislations that has been enacted
for the purpose of regulating the relationship of partnership. The running of the partnership
business is regulated and defined under the under the Partnership Act 1958 (Vic)1 (PA 1958).
However, the definition provided by all the legislations prevailing in Australia comes down
to a certain essentials relating to partnership. One of the basic essentials of a partnership
business is the presence of at least two partners carrying out the business on behalf of the
firm. There needs to be an agreement between the partners for the purpose of carrying out the
business on behalf of the farm and that agreement needs to have the status of a valid contract.
The motive of the partners needs to be the earning of profit from the running of the business
of partnership. The joint ownership of the business and its properties as well as the running of
the business in a common capacity is another requisite of a partnership business. It also needs
to be stated in this regard that an agency relationship is required to be present in a
relationship between the partners to be rendered as a partnership business.
Issue
The facts of the case presents and issue that waiter Rose, Violet, Mary and Sonny can be
treated as partners or the relationship between them can be treated as a partnership
relationship u/s 5 of the Partnership Act 1963 (Cth)2.this existence of the partnership between
these partners are required to be assessed for the purpose of assessing there liabilities as well
as status under the given set of circumstances. For the purpose of such determination all the
essentials of a partnership needs to be applied to a particular situation to arrive at a
1 The Partnership Act 1958 (Vic)
2 The Partnership Act 1958 (Cth), s. 5

2BUSINESS LAW
conclusion regarding the existence of the partnership between certain partners as well as their
liabilities under section 13 of the PA 19583.
Rule
As per the definition provided by the common law partnership implies relationship
between two or more individuals acting in a comment capacity while running a business
which has been continued for the reason of generating profit. This relation requires a contract
between the parties that can be enforced legally and is binding upon the parties. As per the
definition provided in the case of Kendall v. Hamilton, 4 App. Cas. 504, 544 (1879)4 a
partnership is said to have formed when there is a mutual participation existing between the
partners while running the business in the absence of any formation of an entity of legal
nature. On the other hand, the principles established in the case of Re Ruddock (1879) 5 VLR
(IP & M) 515, points towards a relationship where atleast two persons r associated with each
other under a contractual obligation to carry out a business mutually with a motive of
generating profit or loss, which needs to be shared among them with respect to the agreement
between them. On the other hand limited partnership is formed as per the requirements
provided under the Corporations Act 2001 (Cth)6 and the number of partners permissible is
also determined accordingly. As held in the case of Elkin & Co Pty Ltd v Specialised
Television Installations Pty Ltd [1961] SR (NSW) 1657, in a partnership relationship the
partners are treated as agents of the partnership as well as agents of each other and all the acts
carried out by them is required to be treated as binding upon the partnership as a whole as
well as other partners as per section 9 and section 10 of the PA 19588.
3 The Partnership Act 1958 (Vic), s. 13
4 Kendall v. Hamilton, 4 App. Cas. 504, 544 (1879)
5 Re Ruddock (1879) 5 VLR (IP & M) 51
6 The Corporations Act 2001 (Cth)
7 Elkin & Co Pty Ltd v Specialised Television Installations Pty Ltd [1961] SR (NSW) 165
8 The Partnership Act 1958 (Vic), s.9,10