Legal Issues in Business Transactions

This assignment delves into three distinct business scenarios involving legal complexities. The first case examines contract breach and misrepresentation in a car sale, the second explores contractual obligations and the principle of willing buyer/willing seller, and the third analyzes the issue of non-payment for services rendered by an informal laborer. Each case study requires applying relevant legal principles and ethical considerations to determine the parties' rights and responsibilities.

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Partnership Law
Name:
Institution:
Date:

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Case study 3
Legal issues
The partnership is built on the basic understanding of sharing responsibility and sticking to
the general agreement that was created upon establishment of the association (Graw, 2011).
Lance can be sued for breach of the partnership agreement. When lance buys the motor
vehicle, he has a cap on the amount that he can be able to spend (Cracknell, 2004). There are
three rules for liability in a partnership business.
1. Every partner is liable for his or her own action undertaken separately ( Individual
responsibility)
2. Every partner is liable for the action taken by all other partners jointly( collective duty
of care)
3. Every partner is liable for the action of the business employees
Lance will take individual responsibility for his action. In the partnership agreement, a
partner can only spend a given amount of money that is authorized. Lance spent more which
is contrary to the agreement. Although, Lynton does not know the terms and conditions of the
partnership, so he goes ahead and sells the car. He is not guilty of these actions.
Legal Principles
This is a business where more than two people jointly own a property or a business as well as
have a shared responsibility of managing the company. They share the income and the losses
generated by the business according to the agreements on the partnership shares. Most
partnerships between two people are shared on an equal basis. Incomes from the business are
paid to partners who then have to claim it for the tax refunds. Partnership business does not
have taxes on the profits and losses unlike in corporations (Underhill, 2013).

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In a partnership business there are three types of associations;
The general conference
Partnerships limited
The joint project
Applying the law to the case study
In the general partnership, the partners share the same managerial responsibility and
workload equally. The profits and losses generated by the business are shared by the partners
who are all actively involved in the business operations.
The limited partnership is a completely different set up and structure. It allows outside
investors to buy into the business but have a limited scope in terms of participation that is
largely based on their contribution. It is complex and turns out to be a little bit hard in terms
of decision making of the company (GOW, 2016).
Thirdly, the joint partnership project is only focused on joint project undertaking that attract
alliances and associations by multiple partners. If the joint project is successfully tabled and
implemented, it will evolve to a general partnership or association. If the project is cancelled,
it will lead to cancellation of the intended partnership.
In this business Lance buys a new motor vehicle for the herbal products business. There are
three partners in this business and Lynton, the car salesperson is not aware that Lance has a
cap on the money that he can spend (Blackett-Ord & Haren, n.d.).
in a general partnership, partners are required to act in a prudent manner with regard to
carrying out activities and business of the partnership. This is known as duty of care. The
primary purpose of this is to make partners act reasonably, without any conflict of interest

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and in good faith when making business decisions for the partnership. Lance is therefore
expected to make decisions that wont affect the business when transacting on behalf of other
partners.
Unlike corporations, which helps partners to join through responsibility, associations have
shared and individual responsibilities (Goode, 2009). This means that all partners are
responsible for their actions and are supported by the company, as are the actions of the other
partners.
In an partnership agreement, the terms and conditions of establishment of the herbal business
product were set. It is in this partnership agreement that the remaining two partners will use
to sue Lance. He is liable his individual actions. Losses arising from the transaction will be
affected to Lances account. It is arguably correct to say that lance should have consulted the
other partners on the best possible way of dealing with the issues. Although, the car will be
used for business purposes, the partners may agree that he contravened the rules and
regulations that guide the establishment of the partnership (Graw, 2011).
Since a partnership involves people undertaking a common business for profit. In a general
partnership, partners are fiduciaries to each other. This means that partners owe each other
certain basic duties and also to the business. A partnership is one relationship that requires the
partners to exercise honesty, fairness, good faith, loyalty and fairness. Therefore, partners like
Lance are expected to act for the benefit of all partners when transacting on behalf of the
business. The highest standards of care are expected from a partner. Fiduciary duties,
imposes on a partner that they should not take advantage of one another by concealment,
misrepresentation, adverse pressure and threat relating to the partnership and its business.
Lance has misrepresented as well as concealed information from Lynton about the limit

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placed on the amount that he can spend to purchase the car (Bradgate, White & Llewelyn,
2012).
Another of the fiduciary duties is the duty of full disclosure. A partner in a general
partnership is expected to disclose fully to fellow partners any information relating to the
business that could affect the partner’s interest in the business (Bradgate, White & Llewelyn,
2012). This duty of disclosure is not owed only to partners but also to anyone who is in one
way or another transacting with the partner on behalf of the business. For example, Lance
would have disclosed to Lynton about the limit placed on the amount that he was to spend.
The three rules of liability in a partnership are, That every partner is liable for their actions, a
partner is liable for the actions of the other partner and every partner is liable for the action of
employees (Boros & Duns, 2013).
Therefore, in general partnership each partner can incur liability for his own acts and
omissions or acts of the other partners. A partner can sue another partner for settlement of the
partnership general account and for dissolution of the partnership (Roth & Kindler, 2013).
Under the partnership Act, one of the partners can sue for dissolution of the firm if a partner
consistently and deliberately commits breach of agreement relating to the firm’s
management. Other grounds for dissolution are when a partner becomes insane and / or is
incapable of performing his partnership duties. A court can only pass a decree if the conduct
of the partner is deemed to be a calculated prejudice of the business.
Conclusion
Lance has the duty of good faith and fair dealing, which begins when a partnership is being
formed. This duty continues throughout the life of the business and extends to the point of
complete settlement and dissolution of the partnership(Roth & Kindler, 2013).. Even when

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there is a strain in relations between partners, all partners are expected to act in good faith and
fair dealing. However, lance did not act in good faith when he ignored to disclose the limit
that the partners had placed when buying the vehicle. This could eventually harm the
business and relations between partners. Other partners should take action against Lance for
going against what they had agreed in regards to how much should be spent for the vehicle.
In this case The partners may not take the legal route, because lance has not consistently
breached the agreement in other occasions. However, partners can draft a way of ensuring
that there are consequences when one of the partners breaches an agreement in the
partnership agreement. The partnership however can not be bound by this contract, because
dissolution can only occur if the other partners establish that Lance has been consistently
breaching the agreements made by the partners (Reddy & Canavan, n.d.). He however,
should pay back the money exceeded during the purchase of the car.
Case study 2
Legal issue arising
One of the legal issues that arises from the above case is that there is misrepresentation.
Misrepresentation is the process of giving consumers false information about the use of a
product during adverting. The moisturizing product does not actually slow the effects of
ageing and this is misrepresentation of a product. This is known as product liability.

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On the other hand the legal issue is whether Saqlaim the refugee has been taken advantage of
by the partners when they sell to him the car(Goode, 2009)..
Legal principles
The principle in use here is known as uberrimae fidae. This is a minimum standard that
requires the seller and the buyer in a transaction to act honestly towards each other and not
withhold or mislead critical information about the product from each other. This principle is
also known as Utmost good faith. Xiaojing should notify the consumers on the actual uses
of the moisturizer, and also on the other hand the partners should not take advantage of
Saqlaim(the refugee) little knowledge of English to sell to him a car. This is unethical .
Applying law
In the case of Xiaojing, false information is telling the consumers that the moisturizer will
slow the effect of ageing. Since a false statement must be one of fact, consumers who are
aware of the fact that the moisturizer has been misrepresented and has got no effect on ageing
can sue Xiaojing for the loss incurred when they purchased the product. According to the
law, sellers are not supposed to misrepresent their products in order to make people buy the
product(Graw, 2011)..
On the other hand, Saqlaim cannot sue the partners who sold for him the car. If the car was
not defective and all the partners had agreed on selling it, then there is no liability on part of
partners. The fact that Saqlaim has little knowledge of English cannot be used in a court of
law to make a case that Lance took advantage of him when selling the car. The principle of
willing buyer willing seller applies here(Goode, 2009)..
Conclusion

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Xiaojing can be sued by the consumers and any contract that he has with other companies can
be rescinded as a result of misrepresentation of a product. On the other hand, Saqlaim is
bound by the contract because he entered into the contract willingly. He cannot sue for any
loss.
Case Study 3
Legal issue
Non-payment of services provided
The legal issue in this case is the non-payment of services provided by Felix to Xiaojing.
Although a casual laborer, Felix is entitled to his wages at the end of services rendered. This
case also borders on business ethics and laws(Goode, 2009). The concept of ethics in
business relates to the goodness and badness or the righteousness or wrongness of an action
in relation to identifiable external behavior. The society determines what is wrong and what
is right.
Application of the law
However, there is a legal problem in this case because there is no contract between Felix and
Ms. Xiaojing. It is important that the ethical issues in this case be addressed. There was no
contract between the two and it would be hard to sue or seek any legal redress if the work
was not signed under a contract. Laws in employment require that everybody upholds
common legal ethics in business and in hiring. Non-compliance and non-obedience of the
laws will only lead to legal issues as the society has set standards for which the to seek legal
redress(Graw, 2011).
Conclusion

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In conclusion, Felix cannot seek legal redress as he cannot authentically produce a contract
under which he was legally hired. In this case, ethical issues arise where it is only right
ethically for the employer to pay him.

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References
Blackett-Ord, M., & Haren, S. Partnership law.
Boros, E., & Duns, J. (2013). Corporate Law. Melbourne: OUPANZ.
Bradgate, R., White, F., & Llewelyn, M. (2012). Commercial law. Oxford: University Press.
Commercial law. (2006). London.
Cracknell, D. (2004). Commercial law. London: Old Bailey.
Goode, R. (2009). Commercial law. London: Butterworths.
GOW, N. (2016). PRACTICAL TREATISE ON THE LAW OF PARTNERSHIP. [S.l.]:
FORGOTTEN BOOKS.
Graw, S. (2011). An outline of the law of partnership. Rozelle, N.S.W.: Thomson Reuters
(Professional) Australia Limited.
Reddy, J., & Canavan, R. Q & A commercial law.
Roth, G., & Kindler, P. (2013). The spirit of corporate law. Oxford, United Kingdom: Hart.
Underhill, A. (2013). Principles of the law of partnership. Miami, FL: Hardpress Pub.