Corporations and Business Law Case Study Assignment
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This presentation discusses the issues, rules, and application of the law related to partnership business and agency in Australia. It also provides a conclusion and references for further reading.
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CORPORATIONS AND BUSINESS LAW CASE STUDY ASSIGNMENT
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Issues: Whether the Swimming Co is responsible for the acts of Martin? Whether it can be claimed by the company that they are not liable for Martin’s act as he acted without instructions? Whether Martin is liable for any of his actions to his employer? Whether Martin has caused the breach of any law if he has planned to establish his own business.
Rules: The law of agency deals with relations that includes a person known as the agent who has been authorised to act on behalf of another known as the principal to make transactions with an outsider known as the third party. An agent acting within the authority conferred to him by the principal binds the principal and makes him liable for the act done by the agent as observed in the famous Panorama Developments (Guildford) v Fidelis Furnishing Fabrics Ltd.
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Rules (Contd.) Any illegal or misconduct committed by the agent will make his principal liable to the 3rdparty who can claim damages under the law of tort if the agent has performed such act within the authority he has been entrusted with as observed in the case of Deatons Pty Ltd v Flew. The principal can deny his liability for any wrongful act committed by the agent when the agent has acted beyond his authority or without any authority
Rules (Contd.): The agent also has a fiduciary duty towards his principal such that he acts n good faith to ensure best interest for his principal and to act in accordance to the directions of his principal as entrenched in the case of Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad. The agent is prohibited to incur any personal advantages in course of his transactions as an agent. The agent is barred to set up a business in competition to that of the principal.
Application: Swimmingpool Co employed Martin as a manager of Tasmanian sale division to quote to the potential customers of installation cost of different varieties of pools offered by the company. He had to ensure that a deposit is to be paid by those customers which is be transferred to the company’s bank account. The Company offered him fixed salary but allowed to get bonus provided the annual target was achieved by him. These can be regarded as a relation of agency between the Martin and the company.
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Application (Contd.) Martin had contracted with 20 customers and half of their work had tarted. But one month after this, the company got many complaints that the construction work of the pool was quite different from what the customers are contracted for. These arises out of the employment of the agent in the company, thus the company is vicariously liable for this. Martin did not deposit in the bank account the profits collected by him. This can be regarded as the act of disobedience by the agent as he did not follow the instructions given to him by the company.
Application (Contd.): Martin attempted to set up a similar type of business to compete with the company. This accounts for a breach of his duty as an agent.
Conclusion: Swimming Co is responsible for the acts of Martin when he acted within his authority of agency. The company can claim definitely that they are not liable for Martin’s act as he acted without instructions. Martin is liable for his act towards employer Company. Martin had breached the non compete law as he had planned to establish a similar business like the Company.
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Issues: a) whether Koo, Lucy and Seamus are carrying on partnership, b) Whether Koo and Lucy can be made liable to contribute for purchase of the ride on mower, c) Whether Lucy has breached his duties of partnership for carrying out her weekend work, d) whether the FastCut can discover the individuals present behind the business name LuSeKo in a legal action, e) Whether Seamus’s death can affect the partnership in any way, f) Whether Lucy and Koo can determine the partnership property and whether the partnership property can be used to compensate the losses made to LuSeKo.
Rules: The law related to the partnership business is governed by the Partnership Act 1963 in Australia. Section 6 states that partnership can be defined as the fiduciary and legal relation that exists among the partners who are working for a common business with a common aim to incur gain. It also includes a limited partnership business as seen in case ofWang v Rong [2015]. A valid agreement must be present between the parties.
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Rules (Contd.): Section 9 states that every partner is regarded as both the agent as well as principal of the partnership firm and can bind both the firma and other partners by his act. Thus every partner is liable for the act of other partners in common course of business. Section 23 of the said Act provides the mutual rights and duties of the partners. Section 33 states that it is the duty of the partners of a firm to give true accounts and total information about all the matters that can affect the firm to other partners.
Rules (Contd.): Section 34 states that a partner must give true account of any personal gain without the consent or knowledge of other partners. Section 35 prevents any partner to carry out similar business. When a partner is carrying out such business, he has a duty to account for it and transfer the profit incurred to the firm’s account. Section 38 provides that a partnership can be dissolved if a partner dies, if there is no agreement in contrary. Under Common Law, property of a firm refers to any property that is owned by the partners as the joint property in the firm’s name.
Application: A partnership business has been registered by three partners namely Koo, Lucy and Seamus in the name of LuSeKo as per the Partnership Act 1963. During the carrying out business, Seamus had the responsibility of cutting grass, Lucy is entrusted with the duty of removing the clippings in her truck and Koo is given the duty to keep accounts.
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Application (Contd.) Seamus felt the need of an industrial ride on mower and contracted with the FastCut Mowers in this regard without making discussion with other partners. This contract is entered in the name of and on behalf of the company, hence the firm as well as all the 3 partners are bound by this contract.
Application (Contd.) Lucy personally removed rubbish from the properties of clients LuSeKo on weekends. This is a similar type of business that Lucy started. The profits incurred from the parallel business of Lucy were transferred to Lucy’s personal account and not to the account of the firm. Moreover, she did not disclose this to other partners. These show that Lucy violated her duties as a partner.
Application (Contd.) Death of Seamus will result into dissolution as the partners have not made any agreement to the contrary as per section 38 of the Partnership Act. The property of the partnership firm will be including all the properties that the firm has acquired in the course of business to carry out the business.
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Conclusion: Koo, Lucy and Seamus are carrying on a partnership business in the name of LuSeKo of their firm. Koo and Lucy can be made liable to contribute for purchasing the ride on mower as it was bought by Seamus being the partner of the firm. Lucy has caused the breach of the duties contained in any partnership business as he carrying out her work in weekend. FastCut has the right to contact with ASIC so that the individuals present behind the business name LuSeKo are discovered in order to bring a legal action. Seamus’s death will result into dissolution of the partnership. f) Lucy and Koo can determine the partnership property which can be appropriated to compensate the losses made to LuSeKo.
References: Australian Competition and Consumer Commission v Flight Centre Travel Group Limited [2016] HCA 49; 261 CLR 203; 91 ALJR 143; 339 ALR 242 Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529 Deatons Pty Ltd v Flew [1949] HCA 60, (1949) 79 CLR 370 Liners Ltd [1910] AC 498 434 Moore and Kettle v Woolsey and Knill (1854) 4 E & B 243 Midland Bank Limited v Seymour [1955] 2 Lloyds Rep 147 Panorama Developments (Guildford) v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711 Regal (Hastings) Ltd v Gulliver [1942] UKHL1 Shaddock and Associates Pty Ltd v Parramatta City Council (No 1). [1981] HCA 59 The Partnership Act 1963
THANK YOU…
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