Business Law

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

1BUSINESS LAW
Issue 1
Whether Ben, Jenny and Sue are in a partnership.
Rule
Section 5 of the Partnership Act 1958 defines the term partnership. The term partnership
implies a relationship existing among two or more persons who are conducting a business
common to each of them and the business is conducted with the sole perspective of earning
profit. This includes a limited partnership, which has been incorporated. However, companies
are excluded from the purview of the definition of partnership (Cohen, 2017).
Section 6 of the Partnership Act 1958 contains the provisions that enables the
determination of whether a partnership exists between persons conducting a common
business. This section provides for certain aspects of the business that are required to be
considered for the purpose of bringing the same under the purview of partnership. The
definition of partnership does not include tenancy in common, part ownership, joint tenancy,
common property or joint property irrespective of any profits being accrued to the property or
shared amongst the tenants. Gross returns being shared, which has been accrued from the use
of a common interest or joint right existing over a property does not create the relationship of
partnership (English, 2006).
The prima facie evidence that is required for the purpose of identification of a venture as a
partnership is the sharing of profits by persons that has been accrued in that venture.
However, this cannot be treated to be a conclusive proof of the existence of the relationship
of partnership. Due consideration needs to be given to the contingencies upon which the
accruing of the shares are depending upon. An amount that has been received by a person in
instalments toward the repayment of a liquidated amount or debt will not make him a partner
in the business. An agent or a servant of a business who has been hired through a contract to

2BUSINESS LAW
be paid remuneration in accordance to the profit incurred by the business cannot be treated to
be partner. A payment of interest on a loan or a payment of the portion of annuity on a
regular basis does not render a person to be partner under this Act (CHARLES, 1983).
There are certain elements that are common to all the forms of partnership and are
essential for the purpose of creating a partnership. For a partnership to exist, a firstly a valid
agreement between the parties with respect to the partnership is required. Secondly, there
must be a business that has been carried out by the persons so rendered to be partners. The
carrying out of a single transaction or a few transaction can be construed to be more of a joint
venture and not partnership. The continuity of the business is necessary for the purpose of
achieving the status of partnership. Thirdly, there needs to be common rights, obligations and
interest of the partners, which are available mutually. There must be a relationship of agency
between the partners themselves and with the firm. Fourthly, the main purpose for which a
partnership business is carried on is the view to earn profits. The associations, which are not
concerned with the objective of earning profits are not considered to be partnership (Regan,
Smith & Love, 2015).
A partnership is required to be construed as a joint ownership. All the partners are required
to have participated in the business, by virtue of which the profit or returns has been accrued.
The sharing of the profits that has been earned from the partnership is the chief objective of
the partnership business. The losses of the business is also an essential characteristic of a
partnership business.
Application
In the present scenario, Ben, Jenny and Sue operate a creative writing and music festival in
Western Victoria each year. The festival is held on the last weekend in November. The
operating of the creative writing and music festival sounds more of a venture than that of a