Corporation and Enterprise Law

Corporation and Enterprise Law
12/27/2018
Student’s Name

Corporation and Enterprise Law 1
Contents
Question 1........................................................................................................................................2
Issue.............................................................................................................................................2
Rules.............................................................................................................................................2
Application...................................................................................................................................3
Conclusion...................................................................................................................................4
Question 2........................................................................................................................................4
Issue.............................................................................................................................................4
Rules.............................................................................................................................................4
Application...................................................................................................................................5
Conclusion...................................................................................................................................7
Question 3........................................................................................................................................7
Clause 4........................................................................................................................................7
Clause 19......................................................................................................................................7
Clause 26......................................................................................................................................8
References........................................................................................................................................9

Corporation and Enterprise Law 2
Question 1
Issue
The issue of the case is to check that whether Daniel is a partner in the partnership firm named
Rolling Hill Bikes and owe a liability to make the payment of invoice raised by fast bikes.
Rules
The partnership is a business structure where two or more people perform commercial activities
together in order to earn profits. One, more, or all the partners must carry business on behalf of
each other. In Australia, every state has different legislation on the subject of partnership. The
New South Wales, Partnership Act 1892 (NSW) (hereinafter referred as an act for this question),
is there to provide provisions related to partnership businesses in this state and to regulate the
same. Some basic elements are mentioned in section 1 of the act, which must exist in every
partnership firm. The same are as below:-
At least two people must be there.
There must be a contract between them
They must be agree to conduct some business activities
Purpose of the contract must be earning and sharing profits
A document decides the mutual powers and liabilities of the partners of the firm, which is known
as a partnership agreement. This is to state that a partnership agreement can be in written as well
as well in oral format. Rest of the dealings of a partnership venture is regulated by applicable
partnership Act. According to section 5(1) of Partnership Act 1892, a partner of a partnership
firm has implied authority to act on behalf of the firm and in such a manner the same acts as an

Corporation and Enterprise Law 3
agent of the firm (New South Wales Government, 2018). Applying the provisions of agency law,
a partnership firm is liable for the acts of partners. On the other side, partners are also liable for
the acts of a firm as not similar to a corporation; a partnership firm does not have a separate legal
entity. According to the case of Birtchnell v Equity Trustee, Executors & Agency Co Ltd (1929)
42 CLR 384, Partners in mutual have a fiduciary relationship with each other and therefore are
liable for the acts of each other.
Section 24(5) of the act says that each partner of the firm performs managerial activities and a
third party has reason to believe that a partner who is acting on behalf of the firm has required
authority. Law in such a manner protects the interest of third parties.
Application
In the given case, two people named as Madison and Daniel were doing their separate business
as sole proprietors. Later on, as on 1st September 2018, they both have decided to work together
and started a new venture named as Rolling Hill Bikes. They have developed a contract to carry
a business activity. The purpose of the contract was to earn and share the profits out of such
activity as they have also decided the profit sharing ration. As all the essentials of a partnership
were there, this is to state, that Daniel was a partner of the firm.
Further, Madison ordered 250 tyres from a third party named Fast Bikes for the firm and left for
the south of Chile. According to the provisions of section 5(1) of the act, being a partner of the
firm she was entitled to do so. About the authorities of partners, nothing is mentioned. The issue
of the case arose when another partner of the firm i.e. Daniel received an invoice and letter from
Fast bikes in which the same has asked Daniel to make the payment of bill worth $5,000.00 in
against of sale of 250 Tyres. Applying the provisions of Section 24(5) of the act Fast Bikes had