Business Structure

Running head: BUSINESS STRUCTURE
Business Structure

BUSINESS STRUCTURE 1
Question 1
There are number of business structures that the parties can choose in operating the business.
There are separate characteristics that are necessary in identifying the parties to ensure that
they are selecting the most suitable business for their business. It has been evaluated that
legal characteristics that has enabled the parties for ensuring the key factors that assist them
in fulfilling the objectives in managing the business. It is the memorandum of advice such as
trusts, partnerships and companies that are available for Emma and Oliver. In this various
rights, liabilities and duties associated with the business structures will be analysed in this
report as well. In the end, the report a recommendation has been provided to Emma and
Oliver with various reasons in assisting them to choose the best business structure on the
mentioned requirements.
Partnership
The partnership is among the common business structure that has been selected by the parties
for establishing the business in Australia. The partnership business has been created when
there two or more than two partners. The business structure of partnership suits to those who
do not much complex legal requirements. The legal structure of partnership has been
governed by the Partnership Act 1891 (Qld) that provides the key provisions in governing the
legal structure. The term has been defined under section 5 of the Partnership Act. It has been
stated that the legal relationship has been created between two or more parties that have
agreed in various terms in order to carry out business in common with the objective of
earning profit. There are minimum number of partners required to form a partnership is two
and maximum can be 20. The liability of partners is unlimited and they acts as agents for
each other. Some key elements of partnership that is required to comply by the partners as in
the case Polkinghorne v Holland1 that each partner have the liabilities and will be responsible
for the acts of the other partner. In an another case of United Dominions Corp Ltd v Brian Pty
Ltd2 in this case the fiduciary duties of partners has been defined in the partnership3.
The partnership has various advantages as it is easy to establish and the cost of establishing is
less than the other business structures. The partnership has less legal complexities. The
1 (1934) 40 ALR 353
2 (1985) 157 CLR 1
3 William Duncan, Ventures law in Australia (Federation Press, 2012).

BUSINESS STRUCTURE 2
partnership is more strengthen if there are two partners. However the partnership has
disadvantage that the act of other partners will have the liability on all the partners. The
raising of fund is not easier in partnership as compared to other business structures.
Trust
It has been defined under the nature of trust that has been formed between the parties
involving the trust property. It has been recognised by the law that also includes the
contractual rights. A relation of trust of benefits that has been benefitted that it results in the
separating the burden of ownership that includes paying taxes, insurance, managing property
and other from the benefits of the property that proceeds sale, rent, profits or others. The
trustee has been considered as the legal owner of the property and it is responsible for giving
back to the beneficiaries. The provision of the trust has been provided under Trusts Act 1973
(Qld). The relationship of trust shall be express or implied in which the parties are required to
create a trust relationship. The trust structure has some advantages than other business
structure that the income has been distributed will on of trustee’s discretion to the
beneficiaries from the third party creditors. The trust has a disadvantage that it is a complex
and expensive process of establishment and there are problems that arise in dissolution. It is
also been difficulty while borrowing the loans and there is a limit of powers in trust deed, a
set period of trust has been given in the trust deed and they will be personally liable for the
debts of the assets4.
Company
Around the world, it is the most common type of business that has been selected by the
number of people in establishing their operations. The companies in Australia have been
governed by the Corporations Act 2001(Cth). Corporation has separate legal identity that is
the key characteristic by which the parties are preferred to manage their operations. The
separate legal identity has been established in the case Solomon v Solomon5 that the company
is a separate legal identity and have separate legal rights and the directors will not been held
personally liable for the debts of the company. The rule of separate legal identity and the
owner has ben considered as the agent of company that means he is the employee of the
company in the case Lee v Lee’s Air Farming Ltd6.
4 Tomasz Sliwa, et. al, "The application of Vacuum Insulated Tubing in Deep Borehole Heat
Exchangers." (2017). 34 AGH Drilling, Oil, Gas
5 (1897) AC 22
6 [1960] UKPC 33

BUSINESS STRUCTURE 3
Company has various advantages that it is the limited liability and the owner personal assets
will not been used for paying off the company’s debts. The shares of the company are easy to
transfer. The share capital can easily been raised by the companies. There are various
mediums for raising the capital for the company. The death of the owner will not effect on the
dissolution of the company7.
However, the corporation has some disadvantages as well. It is very expensive to incorporate
a corporation through the different medium. A heavy registration fees have to be paid by the
members on the registration of the company. There is a heavy registration fees in the
company that has been paid by the members of the company. The financial statements of the
company are public. The liability of the directors will be unlimited on violation of their
director duties that is given under the Corporation Act 2001 (CTH)8.
Question 2
Partnership
Rights
The structure of partnership gives various rights that are available to the partners that to
manage the operation of the business. There is the right to take part in the day-to-day
activities of the partnership firm. In taking the decision, they have the right to take the
decision of the business. The right has been given to the partners in contributing in the capital
of firm and the interest has been availed in advance that has been paid by the partners for the
purpose of business.
Duties
The main duties of partners are to carry out the operations of the business that have a
common advantage. The duty has been ensured that the use of knowledge and skills in
conducting the decisions for the maximum benefits. The true accounts shall be rendered in
the business and has been provided with full and accurate information to others partners. It
has been attended diligently has rendered the duties while the operation of business has been
7 Amedeo Pugliese, Gavin Nicholson, and Pieter‐Jan Bezemer, "An observational analysis of the impact of
board dynamics and directors' participation on perceived board effectiveness." (2015) 26 (1) British Journal of
Management 1-25.
8 Stephen Bottomley, The constitutional corporation: Rethinking corporate governance (Routledge, 2016)