Nature, Characteristics, and Advantages and Disadvantages of Partnerships, Trusts, and Companies

This document provides an overview of the nature, characteristics, advantages, and disadvantages of partnerships, trusts, and companies. It explains the rights, duties, and liabilities associated with each type of business structure. Suitable for students studying Corporations Law.

Corporations Law
Page 1

To: Oliver and Emma
From: Beanstalk
Date:
Subject: Providing legal business advice to Oliver and Emma
The Nature, Characteristics, and Advantages and Disadvantages of the Partnerships,
Trusts, and Companies Available To Oliver and Emma
With the intention to start a partnership business, Oliver and Emma must be aware of certain
rules, regulations, and laws that are prevalent in Australia. Prior to identifying the rights as
well as duties of Oliver and Emma’s business, nature, characteristics, advantages, and
disadvantages of their partnership, trust, and available companies needs to be understood.
This has been explained in the following sections.
Partnership
Nature
A business partnership can be regarded as a process of collaboration, wherein two or more
individuals or organisations are engaged in developing new business for the purpose of
attaining profitability1. Fundamentally, both parties are treated equally in a particular type of
business. Though both members may or may not be involved in different works in the
business. It depends on their contracts as well as trust on each other. In the case of Oliver and
Emma, the latter plays a major role, whereas Oliver plays a minor role in the business.
Characteristics
As per the above discussion, the contribution and participation of partners within the business
is not limited. It based on the self-considerations as well as mutual understanding. In the case
of Oliver and Emma, both will receive profits based on their partnership contact.
1 Ronald W. McQuaid, ‘The Theory Of Partnership - Why Have Partnerships?’(2016) Managing Public-Private
Partnerships for Public Services: An International Perspective 3.
Page 2

Fundamentally, there are three types of models are observed to be in the partnership business,
which includes the neoclassical economics model, neo-liberal model, and conventional
business partnerships model2. The business can also be considered to be a conventional
business partnerships model because neoclassical has been conducted by big companies for
market acquisition. On the other hand, a neo-liberal partnership exists when two companies
are working together due to market and economic demand of a particular product.
Advantages
The advantage of the partnership business will be that both Oliver and Emma will receive the
expected return from this type of companies. In partnership business, it is observed that risk
involved in the business is shared equally between the partners. Contextually, each partner
has adequate knowledge regarding the sectors they will work. This can be considered as the
major advantages of partnership business for Oliver and Emma’s. At the same time, Oliver is
financially strong for the business, wherein Emma is physically and technically strong to
operate the business adequacy. It will help them to conduct business collaboratively, wherein
they can resolve the emerging issue easily.
Disadvantages
Not only advantages, but there are also certain disadvantages that exist, in the partnership
business. Initially, both partners are not aware of their past. Any kind of bad intention to
harm another partner in business can lead to creating an issue within the business, wherein
parties can claim rights as well as other factors based on the business partnership law 1963. It
can lead the business towards the loss. On the other hand, conflict can arise anytime, which
can also affect the business3. Hence, these can be considered as a major issue in the business
of Oliver and Emma.
2 Ananya Reed Mukherjee and Darryl Reed, ‘Partnerships for Development: Four Models of Business
Involvement’ (2014) Journal of Business Ethics 14.
3 Legalvision Pty Ltd, Benefits of a Partnership Structure (17 December 2018)
<https://legalvision.com.au/partnerships/>
Page 3

Trusts
Nature
Trust can be regarded as a belief and reliability of an individual over the other partner with
respect to the business. It is an important aspect in any business, as it can help in creating a
good operational environment. At the same time, trust builds up a good relationship between
the partners as well as the customers4. With respect to Oliver and Emma, trust plays a major
role, as the success of their business depends on it.
Characteristics
Trust depends on an individual’s ability, strength, and personality. Synchronizing along with
developing a relationship with other persons or organisations can be considered as the main
motive of trust. In respect to the business, trust is a process of developing a business
relationship by holding assets of a client or party for the purpose of attaining profit from the
market. Therefore, Oliver and Emma should develop their own and organisational trust so
that performance can enhance5.
Advantages
Trust between the partners in an organisation is receiving five types of advantages. Initially,
an organisation is able to successfully place its business in the market if there is trust between
the parties, who are to be engaged in a partnership. Secondly, trust can provide a competitive
advantage to an organisation, which can help in operating the business efficiently, whereas
the rival companies can face the issue in business. Additionally, a loyal and productive
market can be possible to establish by maintaining trust. Furthermore, a strong market
relationship can be introduces, which can help an organisation to survive in the market
successfully. Finally, the relationship developed on the basis of trust with both the customers
4 Harrison Mcknight, and Norman L. Chervany, ‘The Meanings of Trust’ (2014). University of Minnesota 43
5 Ibid 45
Page 4

and shareholders can help in overcoming of any organisational crisis and provide time to
recover6. Oliver and Emma must focus on these factors so that their business can achieve
market success.
Disadvantages
Developing and maintaining trust between the individuals can be perceived as an aspect
within an organisation. Initially, establishing trust is a structured process along with being
complicated. Any wrong step can affect the organisational reputation. In addition, a trustee
can use his power in the business in a wrong way. It can lead to a situation, wherein an
organisation may face the issue in borrowing loans from the banks7. Oliver and Emma must
have adequate knowledge of each of the above-mentioned factors about these factors prior to
making an investment in their business.
Companies Available
Nature
As per the case scenario, it has been identified that Oliver and Emma will focus on covering
various business owners and tenant along with contractors to facilitate asset management,
building audits, building repairs, fire protection, reporting, tendering, as well as invoicing.
Hence, the nature of the new business will remain active so that it can help in obtaining fees
to Oliver and Emma.
Characteristics
With respect to the characteristics of any construction company, it can contact Oliver and
Emma for asset management, audits, repairs, fire protection, reporting, tendering, and
6 World Economic Forum, The Evolution of Trust in Business From Delivery to Values (17 December 2018)
<http://www3.weforum.org/docs/WEF_EvolutionTrustBusinessDeliveryValues_report_2015.pdf>
7 Tasmanian Government, Trust – Advantages and Disadvantages (17 December 2018)
<https://www.business.tas.gov.au/starting-a-business/choosing-a-business-structure-intro/trust-advantages-and-
disadvantages>
Page 5

invoicing. Besides, ordinary companies or local businesses also can contact them for
receiving adequate service from their business.
Advantages
The demand for the work can be considered to be high within the market. Each business firm
requires a good financial supporter to check as well as develop financial statements. Hence,
Oliver and Emma can fulfill this demand of customers. Adequate service can lead their
organisation towards attaining market success. Additionally, it can also reach their
expectations within a short period of time.
Disadvantages
In the context of disadvantages, market competition can affect the company. At the same
time, Oliver and Emma may face the issue of establishing a work from different clients.
Customers or companies may not show interest to receive their services. Hence, Oliver and
Emma must focus on marketing their business so that companies can get attracted to using
their services.
Summarise The Rights, Duties, And Liabilities Associated With The Various
Partnerships, Trusts, And Companies Available To Oliver And Emma.
With the aim of establishing a firm, an organisation must follow up certain rights, duties, and
liabilities. In the partnership business of Oliver and Emma, both need to know about the
legislation related to the partnership as well as trust. For this reason, relevant legislation has
explained below.
Page 6

Partnership Act 1963
Rights
Initially, both the parties involved in the partnership incorporate a mutual right prior to
establishing any business. According to section 36(1)8 of Partnership Act, a partnership firm
must have own account or book to record data and cash. All the benefits have to be deposited
in the firm’s account. The partners have no rights to deposit the profitability amount in their
personal account. Only ‘share of profits’ can be allowed to keep but the amount has to be
allowed by the other partner of the business, (section 36(2))9. Each partner has equal rights in
the business property. Partners must consider other property and each partner has legal rights
takeover own property after the business dissolution. However, mutual rights play a major
role in here, thus a legal contract may be signed between the partners, wherein one partner
can restrict another partner to regarding the property.
Duties
According to section 29(1to 11) of the Partnership Law 1963, each partner has equal duties to
perform within a firm. Loss or profit has to be divided between the partners. However, loss of
the firm has to bear by both partners. In any circumstances, if one of the partners invests large
capital for the business with other partner’s permission, then the other partner must provide
7% interest on the investment on return. With respect to the management, each partner of a
business has to involve in the management process. Non-participation can be treated to be an
offence in partnership law. Remuneration process is not applied to the partners, as they are
not entitled to any wages or salary from the business. As per the partners’ consent, any person
can join as a partner of the firm, however, it should not affect the business. Financial books
are not allowed to be kept for personal purposes. It has to be stored in the firm and each
partner has equal rights to analyse statements for their own and business purpose. These
8 Partnership Act 1963 s 36 (1)
9 Partnership Act 1963 section 36(2)
Page 7

aforementioned factors are major duties that are to be performed by the partners within a
firm10.
Liabilities
With respect to the liabilities, each partner has limited responsibility towards the
organisation. Debt and obligations can be carried by both partners. In any circumstances, one
partner is dead, and then the liability of the dead partners will not be carried out by another
living partner. In addition, debts and obligations will be treated separately. Each partner has
limited liability, debt, obligations, and responsibility. However, an agreement must be formed
before the partnership. In any situation, the agreement has evidenced the debt and liability
should be taken by another partner after death, then only the aforesaid rule will not be
accepted by the living partner11.
Oliver and Emma must fulfill the abovementioned legislation prior to conducting partnership
between each other regarding their business. Their partnership agreement will cover all the
legislation to establish a successful and legal business.
Trusts Act 1973
Rights
According to the Trusts Act 1973, trust must be incorporated on a trustee in order to provide
security on a business object. The trustee has enough power to create trust in the market. The
only trustee is responsible for this kind of business activity12. Hence, partners of an
organisation must provide adequate security as well as protection to a trustee, which are
his/her major rights in an organisation. In the case of property, any person cannot claim the
property to be his or her own. Claimer must prove the fact in front of the court with the help
10 Partnership Act 1963 s 29
11 Partnership Act 1963 s 13
12 Trusts Act 1973 s 4
Page 8

of the trust law13. Hence, Oliver and Emma must focus on these factors to develop their
business; however they have limited rights in business.
Duties
A trustee has the legal power of making the investment within the firm based on the
circumstances. Initially, trustee’s engagement within the business is a major point, where this
rule can be implemented. With respect to the duty, a trustee must invest a certain amount of
money once in a year14. However, the trustee can discharge himself or herself to pay the
entire investment amount15. In any reason, if a trustee is either suspected or caught as a fraud,
then it can be considered to be an offence16. Hence, maintaining the aforesaid legal
circumstances are the major duties of a trustee within an organisation.
Liabilities
The trustee has no right to misuse his power of discharge. In this context, the misuse of
power within an organisation will be treated as a legal offence in business17. A trustee has
major responsibility for the invested money. Trustee provides security regarding a large
amount of money, hence he or she does not breach the contract. This is due to the fact that
trustee has the liability to secure the money18. A trustee has a liability to establish insurance
regarding the property, which will be considered as a legal activity19. However, breach of
trust can be considered as a criminal offence, wherein the court can take a decision against
the situation20. Thus, Emma and Oliver can be considered to be the main trustee of an
organisation. However, Emma will invest in the business, hence she can take the part of the
13 Trusts Act 1973 s 84
14 Trusts Act 1973 s 22
15 Trusts Act 1973 s 72
16 Trusts Act 1973 s 69
17 Trusts Act 1973 s 7(d)
18 Trusts Act 1973 s 30B
19 Trusts Act 1973 s 47
20 Trusts Act 1973 s 66
Page 9

trustee. A legal agreement between Emma and Oliver can help in developing trust within the
market.
Companies Available
Rights
In the business partnership of Oliver and Emma, the clients also have certain rights in the
business. According to the Australian Consumer Law and Fair Trading Act 2012, an
organisation must deliver a fair product and service based on the price21. At the same time, an
organisation cannot force the customers to purchase the product directly. Hence, the
customers have certain rights in the market while taking products and service from a business
outlet22. With respect to Oliver and Emma, they must be aware of the above-mentioned
customers or clients rights at the time providing a cloud-based solution to the customers.
Duties
Except for above-mentioned rights, Oliver and Emma as well as the companies or clients
have certain responsibilities while conducting the business. Initially, maintaining trust is the
major duty of a company, wherein Oliver and Emma play a major role. At the same time,
duties do not depend on the legal personality. It is based on the services as well as products as
along with rights and powers. However, trustee’s power has increased through the regulatory
regime of an organisation23. In here, Oliver and Emma are the trustees, who have the duty to
develop a regime, wherein the customers can receive adequate service24.
21 Australian Consumer Law and Fair Trading Act 2012
22 The Australian Consumer Law
23 Superannuation Industry (Supervision) Act 1993 (Cth)
24 Robert, French, Trusts and Statutes (17 December 2018)
<https://law.unimelb.edu.au/__data/assets/pdf_file/0007/1774555/07-French.pdf>
Page
10

Liabilities
With respect to the liability, the companies are liable to provide adequate fees for the services
or products. On the other hand, Oliver and Emma also have the liability to maintain the
above-mentioned law during the period business and its operations within the market.
Recommend, With Reasons, the Best Business Structure for Oliver and Emma
Based on the discussions, it has been identified that both Oliver and Emma must develop a
business structure for attaining success. The case reflected that Oliver and Emma want to
develop cloud-based solutions for the consumers. Hence, they must focus on the cloud
computing along with its process. Additionally, the cloud is a technology, which provides
storage services. In this case, they must include certain services in their portals such as pay-
per-use, permanent network access, on-demand self-service, pooling, and sharing of
resources. Through these services, the customers within the market will get attracted and join
the service of Oliver and Emma. Simultaneously, they must introduce a hybrid cloud system
so that the customers can access their own storage system. With respect to the software,
Emma and Oliver will use Google drive, Zoho Office Suite, and Microsoft Office 365 to
provide solutions to the customers25. The aforementioned software is the easiest and low-cost
technologies, which assist the company in gaining expected profitability in the initial stage of
business.
Not only the above-mentioned factors, but Oliver and Emma must also focus on other aspects
for developing the business structure. Mainly two factors are identified for their business
structure in which one is the business factors and the other is a legal factor. With respect to
the business factors, they must focus the initial business cost and its benefits. After the
identification of cost factors, they must focus on the security risks as well as its prevention.
25 Gabriela, Kiryakova, Lina Yordanova and Nadezhda Angelova, ‘Application Of Cloud Computing Services In
Business’ (2016) 13(1) Trakia Journal of Sciences 393.
Page
11

As they will provide a cloud solution to the clients, hence they may face cyber threats in the
future. Thus, due to this reason, they must focus on the security risks and its prevention26.
Besides, Oliver and Emma will need a workforce structure for developing organisational
productivity s profitability. Therefore, they must develop an organisational structure, wherein
Oliver and Emma will work as Chief Information Officer (CIO). Under this, the information
management team will work, which will be used to connect the client and cloud maintenance.
Under this team, various architectures will work to maintain the infrastructure of the cloud
base27. This is the organisational structure, which can be followed by Oliver and Emma to
develop their organisation.
With respect to legal factors, they must focus on certain laws such as Australian Consumer
Law and Fair Trading Act 2012 and The Australian Consumer Law among others. It will help
the company in providing quality service at an affordable price. On the other hand, Emma is
unknown about Oliver’s imprisonment with respect to funding appropriation. Hence, it can
lead to causing a legal issue in the future. On the other hand, Oliver also has no idea
regarding Emma’s increasing personal debt and two of the creditors sending her letter of
demand relating to the same. Based on this situation, it can be claimed that it can create
issues in the future. For this reason, both partners must confess their problems and make a
mutual and legal agreement towards the business. Only this can assist them to establish a
proper organisational structure, which will provide benefits within the operating market.
Therefore, it can be stated that Oliver and Emma must focus on both business factors and the
legal factors to make a successful business.
26 Mihail Dimitrov, and Ibrahim Osman, The Impact of Cloud Computing on Organizations in Regard to Cost
and Security (17 December 2018) <http://umu.diva-portal.org/smash/get/diva2:728880/FULLTEXT02.pdf>
27Denis, Lapin, Proposing a Cloud-based Operational Model for IT Infrastructure (17 December 2018)
<https://www.theseus.fi/bitstream/handle/10024/85709/Denis_Lapin_16_12_2014.pdf?sequence=1>
Page
12

In addition, Oliver and Emma must develop an internal environment prior to receiving
success within the market. Therefore, they must focus on the organisational culture and
leadership. Fundamentally, three types of culture has been identified, which are customer
focused culture, collaborative culture, and Agile-based culture. Through these cultures, the
company will able to develop a proper structure for the organisation. Each employee will be
able to work efficiently through these cultures. Simultaneously, six major aspects must be
implemented for the purpose of conducting a proper business operation. These include active
sponsorship to attract customers, distributing product information within the market, proper
internal as well as external communication, behaviour, establishing effective cloud base
ecosystems, and developing a plan to execute a task28. By following these above-mentioned
processes, the organisation will able to create a business structure, wherein the customers can
easily connect with the organisation. At the same time, Oliver and Emma will able to provide
the required service on time. However, customer’s relationship is one of the major factors due
to the fact that the organisation will establish the structure as per the consumer need. In the
initial stage of business, only customer satisfaction will lead the organisation towards market
success.
28 Kevin, Lees, Organizing For the Cloud (17 December 2018)
<https://blogs.vmware.com/cloudops/files/2017/02/VMW_Organizing_for_the_Cloud_Feb2017.pdf>
Page
13

BIBLIOGRAPHY
A Articles
Kiryakova, Gabriela, Lina Yordanova and Nadezhda Angelova, ‘Application of Cloud
Computing Services in Business’ (2016) 13(1) Trakia Journal of Sciences 392-396
Mcknight, Harrison and Norman L. Chervany, ‘The Meanings of Trust’ (2014). University of
Minnesota 43-45
McQuaid, Ronald W., ‘The Theory Of Partnership - Why Have Partnerships?’(2016)
Managing Public-Private Partnerships for Public Services: An International Perspective 3
Mukherjee, Ananya Reed and Darryl Reed, ‘Partnerships for Development: Four Models of
Business Involvement’ (2014) Journal of Business Ethics 14
B Legislations
Australian Consumer Law and Fair Trading Act 2012
Partnership Act 1963
Superannuation Industry (Supervision) Act 1993 (Cth)
The Australian Consumer Law
Trusts Act 1973
C Others
Dimitrov, Mihail and Ibrahim Osman, The Impact of Cloud Computing on Organizations in
Regard to Cost and Security (17 December 2018)
<http://umu.diva-portal.org/smash/get/diva2:728880/FULLTEXT02.pdf>
Page
14

French, Robert, Trusts and Statutes (17 December 2018)
<https://law.unimelb.edu.au/__data/assets/pdf_file/0007/1774555/07-French.pdf>
Lapin, Denis, Proposing a Cloud-based Operational Model for IT Infrastructure (17
December 2018)
<https://www.theseus.fi/bitstream/handle/10024/85709/Denis_Lapin_16_12_2014.pdf?
sequence=1>
Lees, Kevin, Organizing for the Cloud (17 December 2018)
<https://blogs.vmware.com/cloudops/files/2017/02/VMW_Organizing_for_the_Cloud_Feb20
17.pdf>
Legalvision Pty Ltd, Benefits of a Partnership Structure (17 December 2018)
<https://legalvision.com.au/partnerships/>
Tasmanian Government, Trust – Advantages and Disadvantages (17 December 2018)
<https://www.business.tas.gov.au/starting-a-business/choosing-a-business-structure-intro/
trust-advantages-and-disadvantages>
World Economic Forum, The Evolution of Trust in Business from Delivery to Values (17
December 2018)
<http://www3.weforum.org/docs/WEF_EvolutionTrustBusinessDeliveryValues_report_2015.
pdf>
Page
15