Corporation and Business Structure Assignment 2022

Running Head: BUSINESS LAW 0
CORPORATION AND BUSINESS
STRUCTURES

BUSINESS LAW 1
PART- A
This is preferably advised regarding the possible business structures that could be satisfactory
for the establishment of the restaurant food supply business. While considering the view-
point of all such parties seeking the relevant advice in favour of their business concern issue.
Therefore, two of the parties named as Jekyll and Hyde are supporting the partnership form
of structure and the third one i.e. Pat is favouring the company form of business structure
more appropriate. In support of the above-stated advice, the company should be the first
entity to be discussed.
A company is that kind of a business structure which is considered to be looked upon for
beginning and expanding any sort of business. It is a different lawful body and having the
same rights as that of a natural person, which holds the potential to sue or can bring legal
action against it. The holder of the company can opt for restricting their private responsibility
and does not get legally answerable for any sort of debt incurred by the company. This kind
of business structure has a very complex approach and nature with the high managerial cost1.
The Company must get itself registered in accordance with the Australian Securities and
Investments Commission provisions.
A company can sue or be sued in its own name while dealing with the third party. It is stated
that the company will be legally responsible towards the third party but the directors of the
company will not be liable. This is a lawful concept which is deals with the lifting of the
corporate veil which differentiates the identity of the corporation from its shareholders and
also from being individually responsible for the debts and obligations of the company.
In accordance with section 588G under the Corporations Act which states that the director of
the company will be made legally responsible if the director allows the company permits the
1 Stephen Bottomley and Kath Hall, Contemporary Australian Corporate Law (Cambridge University Press,
2017) 652.

BUSINESS LAW 2
corporation to experience a new debt. The director cannot inappropriately use its position or
the necessary information for its own personal interest. In the case of Hall v Poolman2, where
relieve towards the breach of duty was recognized and must give comfort on the part of
directors.
The contractual liabilities under the statutory contract of section 140 (1) of the Corporations
Act explains that the contract has a consequence which is created between each member,
directors and the company. Such formation is in the manner of an agreement lawfully
enforceable between the parties to the contract. Therefore, the companies that are limited by
shares have certain financial liabilities on the shareholders for their unpaid amount on such
shares in the company.
The Corporate liabilities have different pattern and nature which is dependent on the
particular type of offence. Firstly, it is categorized into the offences relating to the bribery
and corruption which deals with criminal code of section 141.1 stating the Bribery of a
Commonwealth public official and section 490.2 by recklessly dealing with false accounting
documents. Secondly, it is then determining the offences of Corporations Act which are
under the section of 1308 that expresses the advertising or publishing false or misleading
statements. The tort of negligence arises in terms of the vicarious liability which is strictly
imposed upon the violator of the corporation.
In the case of Salomon v A Salomon and Co Ltd3, the House of Lords declared that the
company is duly incorporated in its nature. It emerged and gave the company all the rights
and liabilities of an independent person. The uplifting of the corporate veil came into
existence between the owners and the company.
2 Hall v Poolman (2007) 215 FLR 243; 65 ACSR 123
3 Salomon v A Salomon and Co Ltd (1897) AC 22

BUSINESS LAW 3
A partnership is a kind of business structure in accordance with section 5 that comprises of
two or more individuals coming together for a common motive of forming a business with an
aim to maximize profit and distribute losses under the Partnership Act 1891. A partnership
agreement should be made mandatory to avoid any such dispute amongst the partners. It has
stated that the relationship between the members of the company shall be constituted under
the Corporations Act. Its application of the laws is based with relevance to section 5A that
means that the limited and incorporated limited partnerships are expressed. In such cases
where the partnership law does not concern is upon the incorporated limited partnership, then
all such partners who are involved in this partnership, and the type of relationship they carry
forward in its nature4. Third-party liability arises in every case where the actions of a partner
may affect the other party. It states that the acts done by a partner for the intention of the
business will surely bind all the duties on each partner.
In the case of Phillips v MacDonnells Solicitor5, it was decided by the court that the partners
are made lawfully responsible jointly towards every debt of the corporation.
The partnership form of business is not a separate legal entity as that of a company structure.
The agency functions of the partners are based on the actual and apparent authority.
Therefore, the actual liability is also further classified into two aspects: Express actual
authority which is an advantage to the company to become transparent within the authority
and its scope that easily recognizes the agent.
Then, the implied actual authority does not depend on the main document of the company,
such as a resolution. In the apparent authority, the agreement between the agent and the
corporation is not mandatory. The relationship of the agency is made by the appearance of the
4 Andy Gibson and Douglas Fraser, Business Law 2014 (Pearson Higher Education AU,2013) 1103.
5 Phillips v MacDonnells Solicitor (2010) QSC 62