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Foundations of Company and Commercial Law

   

Added on  2020-04-29

10 Pages3276 Words76 Views

CASE STUDY1Question 1(a)Issue:The key issue in this case revolves around which business structure the business ofMary, Fred and Chris is being carried on.Rule:There are different forms of business structures in Australia, which can be adoptedfor running the business and one of these is partnership. In a partnership form of businessstructure, two or more people come together to run a common business, in which the profitsand losses are shared in an equal manner, and the objective is to run the businesscommonly. In a partnership, the people who run the business are deemed as partners andthe business is known as the firm. The partnership deed is a document which covers theterms on which the partnership is based. And this is the document which provides thecapital contributions, the manner in which the profits will be shared and the related detailsof running the business. Each jurisdiction in the nation has its own Partnership Act and they are more or lessthe same. The partnership act dictates that a partnership is formed when the profits areshared in an equal manner, or as is provided under the partnership deed. The act alsoprovides that the partnership deed is to cover the details of the manner in which thepartnership is to be operated, particularly regarding the capital contribution and otherrelated matters. Application:In the given case study, Mary, Fred and Chris put down certain rules of running thebusiness in a common manner. On the basis of rules stated above, this would be deemed asa partnership deed as more than two people came together to carry on the real estatebusiness and created an agreement covering the rules of running this business. As they putin equal capital contribution and also decided to share the profits in an equal manner theywould be deemed as partners. All the partners are working towards this business as they are

CASE STUDY2passionate about it, thus confirming that a partnership form of business structure has beenadopted in this case. Conclusion:On the basis of this, it can be concluded that Mary, Fred and Chris were carrying ona partnership form of business structure, for the reasons of presence of equal profit sharing,equal capital contribution, partnership deed being formed and more than two peoplerunning the business for a common objective. Question 1(b)Issue:The key issue in this case revolves around the liability of Fred towards customer Xfor the negligent misrepresentation. Rule:Misrepresentation can be defined as a false statement made by one person, toanother person, which is a statement of law or fact, and which results in the representeebeing included into entering of the contract. In order for a person to make a claim ofmisrepresentation, it is important to show that the false statement was one which was madeof fact and did not contain estimation or an opinion regarding anything.In Bisset v Wilkinson, a farmland was purchased by the claimant and he enquiredthe landlord regarding the capacity of the land holding sheep. The seller had never keptsheep at the farm but gave out an estimation of 2000 sheep. Relying upon this statement,the land was purchased and when the land could not hold 2,000 sheep, the claimant suedthe landlord for misrepresentation. The case was unsuccessful as the court held that theestimate was a statement of opinion, instead of one of fact. However, there are cases in which a statement of opinion can result in a case ofmisrepresentation can be upheld, particularly when the representor holds the position ofknowing the facts. Smith v Land and House Property Corp was a case in which a hotel was

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