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

Corporations Law
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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.
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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/>
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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
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