Business Law: Partnership Contracts, Misleading Conduct, and Verbal Agreements

This article discusses partnership contracts, misleading conduct, and verbal agreements in business law. It explains the legal principles, rules, and applications through case studies. The article covers the Partnership Act, 1958, Australian Consumer Law, and the requirements for a contract to be binding.

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

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Case 1
Issue: is partnership bound by contract and can the other partners take an action against Lance?
Legal principles:
Partnership can be defined as a legal principle governing the relations in a business organization
and the aim is to make profits with the help of two or more individuals. The Partnership Act, 1958 Each
partner in the partnership is responsible for the profits and losses of the undertaking. The objective of the
partnership act is to ensure that each partner is responsible and liable for the profit and loss of the
company and they have to individually bear the debt of the loss. A partnership is created with the help of
a contract and the partners in the undertaking are bound by contractual obligations. The partnership
agreement has to be written and the written obligations of the contract mandate that the partners are
bound by the contracts to implement the terms and in case the partners do not perform in accordance with
the terms of the contract, the onus is on the courts to decide if the contract was breached or not. In cases
when the contract is not written, the parties have to make a written submission in that regard to ensure
that the other parties withdraw from the written submission. The Partnership Act talks about the
definitions of the partners and how they are related to the firm. The partner is the authority in the firm and
according to section 9 of the Act, it is essential to prove that it is his duty to act in accordance with the
requirements of the firm.
Application: In the present case, Mighty Motors Pty Limited is a party and Lance has purchased a new
ute. Lyton was told by the car salesperson that he is a partner in a herbal products business and Lyton was
also aware of the business from an article on the newspaper which he read. Lyton was not aware that he
had a purchasing limit and the partnership agreement shall be binding it if it written and the parties were
aware of the terms of the contract. In the present case, Lance being unaware of the terms of the contract
but having read about the terms on the newspaper. After having read the newspaper Lyton made the deal

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and therefore he cannot be said to be unaware of the terms. Though, the terms of the contract were not
written and therefore Lyton can make a submission to that effect. In this case, though the parties are not
aware of the exact facts of the case, it is essential to state that Lynton cannot claim that he was not aware
of the terms of the agreement and did not know about the purchasing limit. It was held in the case of that
a clause in the agreement was not enforceable as the amount that was mentioned in the object clause was
not clear and the terms were unambiguous. To be held to be bound by the terms of the agreement, it is
essential to prove that while the partners were entering into the contract, they were aware of the terms of
the agreement and having known them well in advance, the parties entered into the contract. The partner
is the agent of the firm and he is responsible for carrying out the business of the firm. The three partners
in the business were aware of the terms of the contract and Lance was given orders by the other partners
to not spend a certain amount of money. Lance being a partner in the herbal products business notified
Lynton about the agreement but Lynton did not know about the purchasing limit that Lance. In this case,
though the information was availed from the newspaper, it cannot be said that Lynton had all the
information. Therefore, as was discussed in the case of Laferrier v Entretiens Servi-pro inc, it is essential
for the recovery of the money that there was an effective contractual obligation to that effect. Any lawsuit
arising out of any strategy that has been clearly mentioned in the contract, the terms of the contract need
to be eloquent.
Conclusion: Lyton entered into the contract being aware of the terms and therefore he cannot later claim
that he was not aware of the purchasing limit on Lance. Therefore, Lyton can be sued.
Case study 2
Issue: was the conduct of the seller misleading and was the customer misled into buying a product which
it was not?

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Rule: Section 18 of the Australian Consumer Law states that a person shall not indulge in any misleading
or deceptive conduct and a person is barred by legislation to indulge in any trade or commerce which is
likely to mislead any person into buying a product. Section 1 of the Act shall not in any way limit the
powers of the legislation and in cases when any seller misrepresents or deceives any other person into
buying a product which it is not, the seller shall be held liable. Unfair contract terms, the main subject of
the contract has to define all the basic terms of the contract and the terms need to be expressly and clearly
expressed. The laws are applicable to the state or territory and the terms have to be unambiguous. The
contract has to clearly spell out the terms to make sure that the parties are bound by the terms.
Application: In the present factual scenario, Xiaojing is keen on selling her products and her business
deals in the production of lavender and Echinacea moisturizer and the business gives an advertisement
that the moisturizer will slow the ageing and therefore promoting the moisturizer as making the customer
younger. The case is not that because that statement made about the moisturizer is false and misleading
and the customers are of the opinion that they have the presumption that they have bought a lemon.
Saqlaim is from Syria and he is a refugee and he does not understand English language very well. Here,
they have tried to mislead the customer into making them believe that the product shall make them young
and that they will not age that faster but the statement is false. Lance was very charismatic in his approach
and therefore they decided to sell the car being very well that Saqlaim does not understand the language
and it will be easier to dupe him into buying the product. He therefore enters into the contract and makes
the finance company to buy the car.
Conclusion: Xiaojing sells the product with the aim of deceiving the customers because the aim of the
product was to mislead the customers into believing that the moisturizer shall make them young. The
advertisements were misleading and therefore, the seller shall be liable under section 18 of the Australian
Consumer Law.

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Saqlaim was deceived into entering the contract and he was not aware of the English language and he was
duped into entering the contract on false terms. Therefore, Saqlaim cannot be said to be bound by the
contracts.
Case study 3
Issue: The issue to consider is whether Felix can sue Xiaojing for $100 for not fulfilling the promise.
Rule: A contract is an agreement between two or more parties and it is essential for a contract to be
binding that the parties have a legal intention to enter into the contract. A contract can be either written or
oral and the rule is that in cases of oral contract, the onus is on the party to prove that they had the
intention to create a legal contract and that once the intention to create a legal contract has been
established, the other party cannot go back on his own words. Verbal contracts are difficult to enforce in
court because in such cases there no legal; backing and the trust that was created by the parties while
entering into the contract will be taken into account. A verbal contract does not have all the terms of the
contract clearly laid down and it is essential for the parties to state that the terms of the contract are
legally binding. A contract can be both written and oral and once the parties can establish that they had
the intention to create a contract, the other party can sue him for breach of contract. An enforceable
contract has considerations and verbal agreements are enforceable. For a contract to be binding, it is
essential to ensure that there is offer and acceptance and one party makes an offer and the other party
accepts the terms of the contract. Offer and acceptance together make the contract. For a contract to be
binding, all the terms of the contract need to be fulfilled and the contract has to be ‘complete’.
Application: In the present case, the agreement between the parties was verbal and there was a valid
contract because there was a consideration between the parties. In this case, Felix was promised a certain
sum of money, Xiazing did not perform the terms of the contract, and therefore Felix can sue for non-
performance of contract.

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Conclusion: The terms of the contract were clear, the amount of money was verbally agreed, and
therefore by not paying that sum, there has been a breach of contract.

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