Law of Business- Partnerships: Analysis and Answers

This article provides a detailed analysis of partnership laws in Australia and answers common questions related to partnerships. It covers topics such as partnership property, liabilities, methods of leaving a partnership, and more. The article cites relevant sections of the Partnership Act 1891 and 1989 to support its arguments.

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aw of usinessL B
ameN
Affiliation
nstructorI
Date

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aw of usiness artnershipsL B - P
Answer A Does a partnership between odd and ac e ist: “ T Z x ?”
According to the artnership Act Section a partnership entails a subsisting relationP 1891 1,
between people who participate in a business venture together with the aim of getting profits n. I
this scenario odd and ac are best friends who also have a common interest in liking beer, T Z .
t is this interest that drove ac into setting up a brewing facility e uses his own money toI Z . H
buy equipment while odd chips in by providing space in his father s shed t is upon theseT ’ . I
facts that one has to establish whether a partnership e ists between ac and odd n thisx Z T . I
attempt the artnership Act Section provides rules which help in the determination of, 1891 P 2
whether a partnership e ists urther it is essential to use the RAC ssue Rule Applicationx . F , I (I , , ,
and Conclusion method in dissecting the scenario at hand)
Issue
As stated above the issue here is whether a partnership e ists between odd and ac or, x T Z . F
this to be answered Rule has to be looked into so that acts are determined and the, “ ”
favorable laws and statutes are used to determine the issue at hand.
Rule
A close look at section a of the artnership Act states that a partnership e ists in a2 1 ( ) 1891 P x
situation where there is a joint tenancy the e istence of a common property b sharing of, x , ( )
profits and losses equally or gross returns hen it comes to liability this is presented in. W ,
Section artners are liable for all debts that accrue in the business as well as any kind of9. P
obligation.

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Application
rom the artnership Act one can discern that there is no partnership between odd andF P , T
ac irst there is no joint ownership of equipment used in brewing beer ac used his ownZ . F , . Z
money to purchase the brewing equipment.1 Similarly there are no guidelines for the,
sharing of profits and losses here is also no consultation between odd and ac when a new. T T Z
business venture between laus and odd is being arranged artners should have similarK T . P
interests Despite this requirement ac is not interested in making money or profits. , Z
compared to odd rom these facts there is no partnershipT . F , .2
n the other hand it is seemingly impossible to evade the fact that there seems to be aO ,
partnership eing a friend they love the fact that they can brew beer odd and ac also. B , . T Z
become active in setting up the facility with odd providing space and clients for a start, T .3
owever the absence of clear guidelines regarding the sharing of profit and losses makes theH ,
two friends to become enemies in the end.
Conclusion
n a nutshell there was no partnership between ac and odd owing to the fact that theyI , Z T
did not have common goals did not have joint property assets and there were no clear, /
rules in how the business could be run.4 his conclusion is mainly pegged on the fact thatT
1 Allen D and lackham A Confidentiality and Settlement ncovering the idden Secrets of the, . B , ., 2018. : U H
nforcement of quality aw in Australia and the ourke and ucadou ells R eachingE E L UK. B , J.F. L -W , ., 2015. T
usiness aw Some thical Dimensions from AustraliaB L : E .
2 ayes A and iggins D eaving a common narrative An introduction to essays on familiesH , . H , ., 2014. W : ,
policy and the law in Australia.
3 Australia, U., 2017. ndigenous trategyI S 2017-2020 niversities Australia. U .
4 latt olesel merging partnership practices in V provision in the senior years of schoolingK , P , J., 2018. E ET
in Australia. he ustralian Educational esearcherT A R , 45 pp(2), .217-236.

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there is the absence of a common goal for making a profit as stipulated by section of the, 1
artnership ActP , 1891
B. Is Zac entitled to the money from the beer he had been selling?
eing a partnership al profits and losses got from the business must be shared equally AsB , .
such ac is not the only one entitled to the money he got from selling the beer alone his is, Z . T
a guideline provided by section of the artnership Act which stipulates that partners in9 1989 P
a fi rm are jointly liable for all obligations and debts as well as gains that are incurred when the
membership still e istsx . 5 t is essential for partners to e ercise a duty of good faith n thisI x . I
instance ac should be compelled to share equally what he got from the sales of beer with, Z
his partner odd ne is also legally bound to inform the other partner about businessT . O
activities that he or she takes part in.6 y agreeing to set up a business venture together theB ,
two friends needed to follow the guiding principles of partnerships t is unfair to hide. I
earnings or profits from a colleague and by doing so a partnership ceases to e ist n a, x . I
nutshell ac is not entitled to the money he got after selling beer without notifying odd, Z , T .7
C. Who is liable to pay the outstanding rent?
5 arr gden and Rooney ducating for atient artnership in Australia nitiating aB , J., O , K. , K.F., 2015. E P P : I
Change in Approach to Cross sector atient centred Medicine n- P - . I nd nternational Conference here s the2 I : W '
Patient s oice in Health Professional Education ears n' V -10 Y O ?.
6 atanabe and ayashi ctober ublic rivate artnership ased usinessW , K. H , T., 2015, O . PPP (P -P P )-B B
Continuity of Regional anking Services for Communities in ide Area Disasters nB W - . I nternational Conference onI
Critical nformation nfrastructures ecurityI I S pp Springer Cham( . 67-76). , .
7Sellgren and ennett R wnership and economic development the partnership of business, J. B , ., 2017. O :
and local government n1. I e orms of nershipN w F Ow pp Routledge( . 27-46). .
ikri here the innovation partnership between business and academia is thrivingF , K., 2016. W .

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he main issue to be looked into here is a liability in terms of payment for the outstandingT
rent eing a partnership the two have a joint tenancy stipulated under Section a oint. B , 2 (1) ( ). J
tenancy is a determinant of whether a partnership e ists As such both odd and ac shouldx . , T Z
share the outstanding rent equally.8 n support of the company odd decided to borrowI , T
from his dad so that he could e pand the business rom the onset it is evident$10,000 x . F ,
that both parties were involved in e panding the business t is thus essential to note that in ax . I
partnership all duties and responsibilities are shared equally, .9 n that regard odd and acI , T Z
should be enlightened on the need for equal participation especially when the company is
making profits losses is indebted or is being sued, , .
D. If Denton successfully sues Zac and Todd, who is liable to pay the compensation?
he burden of compensation after being sued solely lies on ac and odd A partnershipT , Z T .
between the two makes them liable and should pay the damages being sought after by
Denton Section of the artnership Act states that any omission or a wrongful act. 10 P 1989
was done by any partner in the course of its business will be strictly be handled by the fi rm.10
n this case odd and ac have to be held responsible for the supply of defective beerI , T Z
supplied by odd t is the business that bears the burden of meeting the losses and theT . I
tainted image it is faced with t is wrong for ac to leave the partnership because of the. I Z
losses being faced and the impending lawsuit before them.
E. Can Zac leave the partnership in the way he did?
8 atanabe and ayashi ctober ublic rivate artnership ased usinessW , K. H , T., 2015, O . PPP (P -P P )-B B
Continuity of Regional anking Services for Communities in ide Area Disasters nB W - . I nternational Conference onI
Critical nformation nfrastructures ecurityI I S pp Springer Cham( . 67-76). , .
9 ilman C omen and economics nG , .P., 2018. W . I ne uality in the st CenturyI q 21 pp Routledge( . 31-33). .
10 Matsuda and Matsuo mpact of M A on entrepreneurial success Do entrepreneurs, N. , Y., 2017. I B :
acquire capacity through the program or does M A only signal gifted talent and e perienceB x . ournal ofJ
Entrepreneurship rgani ation Management& O z , 6 pp(1), .1-7.

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Methods of leaving a partnership are the issue to look into in this section ac decided to. Z
leave because of the problems faced in the partnership such as the lawsuit rent arrears and,
an unsuccessful business deal that would boost the profits of the fi rm t is at this point that. I
ac decides to quit by notifying odd about his plan or starters he does the right thing byZ T . F ,
notifying odd owever he packs all the equipment and his laptop that contained theT . H ,
recipes According to Section a partner has the right to notify about dissolution n this case. 37, . I ,
ac and odd should have reached a consensus of dissolving the partnership or looking forZ T
alternative ways of handling the issues at hand.11 As such ac needed to formally notify odd, Z T
about his actions Secondly property and assets acquired during the partnership have to be. ,
shared equally between the two A clear stipulation on sharing assets is presented by Division. 3
Section and of the artnership Act ere all assets property money and interests19, 20 21 P . H , , , ,
brought into the partnership are referred to as partnership ropertyP .12 As such no one in,
the partnership should have any form of ulterior interests over the assets.13 Also any,
property bought by proceeds from the partnership is deemed to belong to the partnership .
asing on these laws odd and ac should equally share all the property assets losses andB , T Z , ,
profits owever ac left with all the equipment and recipes leaving odd helpless As such. H , Z T . ,
ac does not have any right to leave odd the way he did unless stated otherwise in theirZ T ,
agreement.14
11 uong Management control process introduction and its reflection in Vietnam and SpainH , H. 2015.
business entities.
12 Sandhu M A Shamsuzzoha A and elo Does outsourcing always work A critical, . ., , . H , P., 2018. ?-
evaluation for project business success. enchmar ing n nternational ournalB k : A I J just accepted pp, ( - ), .00-00.
13 itsios M rom Apps to Start ps Success actors for ew ntries in an pen DataK , F. ., 2017. F -U : F N E O
cosystem nE . I Glo al pportunities for Entrepreneurial Gro th Coopetition and no ledge ynamics ithin andb O w : K w D w
across irmsF pp merald ublishing imited( . 337-354). E P L .
14 Rubin Aas and Stead A nowledge fl ow in technological business incubators, T.H., , T.H. , ., 2015. K :
evidence from Australia and sraelI . echnovationT , 41 pp, .11-24.

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F. Are the brewing equipment, Todd’s laptop, and recipe and formula partnership
property?
Section of the partnership Act clearly states that all rights and interests vested in the20
property that was brought by odd and ac into the partnership for the main purpose forT Z
establishing a business so that they could get profits belongs to the partnership, .15 As such,
this is called partnership property and should be equally shared by all partners in an event
of a dissolution t is thus clear that the brewing equipment recipe and laptop that was used. I , ,
by ac and odd belongs to the businessZ T .16 n addition all assets used by the two should beI ,
e pressly implied to belong to them too t is at ti mes noted that many partners enter intox . I
agreements without taking into consideration how assets will be shared in the end n this. I
case one may side with ac because he used his equipment in the partnership odd equally, Z . T
contributed by leasing a premise and looking for a potential market for the product.17 yB
having equal participation in the business it is without a doubt that all equipment and,
resources that were used should have been shared equally between the two y deciding to. B
pack all the equipment and leaving odd empty handed ac used a wrong approach ofT - , Z
leaving the partnership.18
15 Sheehan atural as and the ransformation of nergy Markets China in a lobal Conte t, 2016. N G T E : G x .
Scoping Report to Australia China atural as echnology artnership und ACN G T P F ( NGTPF).
16 Alvesson M and aren D ntellectual failure and ideological success in organization studies, . K , ., 2016. I :
he case of transformational leadershipT . ournal of Management n uiryJ I q , 25 pp(2), .139-152.
17 orman M Applying multiple perspectives to the decision a case study of call centers inB , ., 2017. BPO :
Australia n. I utsourcing and ff shoring usiness ervicesO O B S pp algrave Macmillan Cham( . 413-454). P , .
18 eoh and opovi A tending the understanding of critical success factors forY , W. P č, ., 2016. Ex
implementing business intelligence systems. ournal of the ssociation for nformation cience andJ A I S
echnologyT , 67 pp(1), .134-147.

Surname 8
References
Allen D and lackham A Confidentiality and Settlement ncovering the idden Secrets, . B , ., 2018. : U H
of the nforcement of quality aw in Australia and the ourke and ucadou ellsE E L UK. B , J.F. L -W ,
R eaching usiness aw Some thical Dimensions from Australia., 2015. T B L : E .
ayes A and iggins D eaving a common narrative An introduction to essays onH , . H , ., 2014. W :
families policy and the law in Australia, .

Surname 9
latt olesel merging partnership practices in V provision in the senior years ofK , P , J., 2018. E ET
schooling in Australia. he ustralian Educational esearcherT A R , 45 pp(2), .217-236.
Sheehan atural as and the ransformation of nergy Markets China in a lobal, 2016. N G T E : G
Conte t Scoping Report to Australia China atural as echnology artnership undx . N G T P F
AC( NGTPF).
Australia, U., 2017. ndigenous trategyI S 2017-2020 niversities Australia. U .
arr gden and Rooney ducating for atient artnership in Australia nitiatingB , J., O , K. , K.F., 2015. E P P : I
a Change in Approach to Cross sector atient centred Medicine n- P - . I nd nternational2 I
Conference here s the Patient s oice in Health Professional Education ears n: W ' ' V -10 Y O ?.
Sellgren and ennett R wnership and economic development the partnership of, J. B , ., 2017. O :
business and local government n1. I e orms of nershipN w F Ow pp Routledge( . 27-46). .
ikri here the innovation partnership between business and academia is thrivingF , K., 2016. W .
atanabe and ayashi ctober ublic rivate artnership asedW , K. H , T., 2015, O . PPP (P -P P )-B
usiness Continuity of Regional anking Services for Communities in ide Area DisastersB B W - .
nI nternational Conference on Critical nformation nfrastructures ecurityI I I S pp Springer( . 67-76). ,
Cham.
ilman C omen and economics nG , .P., 2018. W . I ne uality in the st CenturyI q 21 pp( . 31-33).
Routledge.
Matsuda and Matsuo mpact of M A on entrepreneurial success Do, N. , Y., 2017. I B :
entrepreneurs acquire capacity through the program or does M A only signal gifted talentB
and e periencex . ournal of Entrepreneurship rgani ation ManagementJ & O z , 6 pp(1), .1-7.
uong Management control process introduction and its reflection in Vietnam andH , H. 2015.
Spain business entities.

Surname 10
Sandhu M A Shamsuzzoha A and elo Does outsourcing always work A critical, . ., , . H , P., 2018. ?-
evaluation for project business success. enchmar ing n nternational ournalB k : A I J just, ( -
accepted pp), .00-00.
itsios M rom Apps to Start ps Success actors for ew ntries in an pen DataK , F. ., 2017. F -U : F N E O
cosystem nE . I Glo al pportunities for Entrepreneurial Gro th Coopetition and no ledgeb O w : K w
ynamics ithin and across irmsD w F pp merald ublishing imited( . 337-354). E P L .
Rubin Aas and Stead A nowledge fl ow in technological business, T.H., , T.H. , ., 2015. K
incubators evidence from Australia and srael: I . echnovationT , 41 pp, .11-24.
orman M Applying multiple perspectives to the decision a case study of callB , ., 2017. BPO :
centers in Australia n. I utsourcing and ff shoring usiness ervicesO O B S pp algrave( . 413-454). P
Macmillan Cham, .
eoh and opovi A tending the understanding of critical success factors forY , W. P č, ., 2016. Ex
implementing business intelligence systems. ournal of the ssociation for nformation cienceJ A I S
and echnologyT , 67 pp(1), .134-147.
Alvesson M and aren D ntellectual failure and ideological success in organization, . K , ., 2016. I
studies he case of transformational leadership: T . ournal of Management n uiryJ I q , 25(2),
pp.139-152.

Surname 11