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Corporate Law Assignment - (Sample)

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Added on  2021-06-17

Corporate Law Assignment - (Sample)

   Added on 2021-06-17

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Corporate LawNameInstitutionCourseDate1
Corporate Law Assignment - (Sample)_1
Question 1IssueThe issue is whether a partnership exists among people who venture into a business where one individual finances the start-up costs and later receives payment as annuity, while the other members are not paid as employees but through the consultancy arrangement with what they do. Relevant LawsPartnership Act 1892 (NSW)ApplicationAccording to subsection 1 of the Partnership Act of New South Wales, a partnership is a relationship between people who engage in a common business venture with the hope of generating profit (s.1 PA 1892 NSW). Samuel, Thomas and Peta started up an internet business together by purchasing goods from unfortunate companies and resold them to get profit. They are generally contractual as all the members agree on the same thing – engaging in the same business venture with the hope of getting something in return. In partnerships, partners do not have any separate legal identity of their own. Besides, partners must be shown to have consent ofworking together in common with a view of making profits and later applying the generated profits to the agreed subjects (Cribb v. Korn, 1911). However, the requirement of ‘in common’ does not necessarily imply that all the partnersare obliged to take part actively in the business. Nonetheless, the case Lang v James Morrision & Co Ltd describes the test as “Does the person who carries on the business do so as agent for 2
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the persons alleged to be partners” (Lang v James Morrison & Co Ltd, 1911)? In addition to that,in the definition of partnership, the view of making profit is explained in the Minter v Minter thatgenerating profit is essential in every partnership even if it may not be the motive of the partners in the short term (Minter v Minter, 2000). This implies that even if the partners are on business with one another expecting losses in their first months, they are expected to continue working together with the hope that at the end, they will earn profits. Nonetheless, according to section 2 (2) of the Partnership Act 1982, the sharing of the gross returns does not necessarily imply that a partnership exists. In addition to that, in ss 2(3), if a person receives a share of profits of the business, it is evident that the person is a partner in the business. However, if the share or the payment varies with the profits the business gets, then the individual is not a partner in the business (s.2(3) PA 1982 NSW). In the same way, Samuel, Thomas and Peta agreed on some form of payment where Peta who financed the start-up costs had to receive payment on annuity. Clearly, this shows that Peta had some shares in the business and that is why she receives monthly payment. On the other hand, since the payment of Samuel and Thomas varies, then it is shows that they do not have shares in the business. Aside from that, s2(3)(d) of the Partnership Act clearly states that the advance money given by a person to someone engaged or about to engage in business that makes the lender receive a particular rate of interest that does not correspond to the company’s profits, does not make the lender a partner in the business. Additionally, in subsection (e) of the Act, any person who is getting payments as a way of annuity does not make the person a partner in the business. Conclusion3
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