Partnership Law Question and Answer 2022

Running head: PARTNERSHIP LAW
Partnership Law
Name of the Student
Name of the University
Author Note

PARTNERSHIP LAW1
Question 1
Issue
Whether the idea of carrying out a business without discussing the legal arrangement existing
between Kai, Sen, Luc and Mitsi would be a good idea.
Rule
The definition of the term partnership has been provided u/s 6 of the Partnership Act 1963
(Cth) (PA). The definition of the word partnership can be best understood under the light of
the principles established in the case of Green v Beesley (1835) 2 Bing N C 108. As per the
provisions contained under the section any relationship existing between people running a
business in a common capacity with the sole motive of earning profit depicts the relationship
of partnership. As per the provisions contained u/s 9 of the PA, the partners pertaining to a
firm conferred with the power to bind the firm by their actions taken under the name of the
firm. A partner of a firm is to be designated as an agent of that firm and has the capacity of
carrying out business and the name of the firm. The actions that any partner pertaining to the
firm adopts in the furtherance of discharging his power as a partner would bind the firm as
well as other partners to that action. However, this liability can only be evaded when the
partner does not have the authority to act in such a manner and the person dealing with such a
partner has the knowledge or belief of such an excess of authority being exercised. This can
be best explained with the principles established in the case of Smith v Anderson (1880) 15
Ch D 247.
Application
In the given scenario, Kai, Sen, Luc and Mitsi were engaged in the offering of several
consultancy services towards small business clients. Kai and Sen were engaged in helping

PARTNERSHIP LAW2
clients with obtaining finances for the purpose of growing the businesses. Luc was rendering
services to clients with solvency problems and has a wish to be registered as a liquidator.
Mitsi has been involves in the selling of marketing services to the clients. This arrangement
has been financed with $20,000 for the purpose of initial setup and has been contributed by
all of them. They were also sharing a rented premise for the business venture and the lease
agreement has contain the signature of all of them. However, they have chosen separate
names for the business they have been carrying out but no registration has been made. The
have not made decision regarding the legal arrangements that they desire to pursue in this
case. This would incur a probability of creating an ambiguity regarding the liability that will
be incurred in case of any liability being incurred by the business. Moreover, the rights of the
parties involved in a business structure will not be available until and unless a proper
business structure has been decided upon. Moreover, the claims of the third parties against
the business will be difficult to be ascertained in case of an absence of a legal structure.
Conclusion
The idea of carrying out a business without discussing the legal arrangement existing
between Kai, Sen, Luc and Mitsi would not be a good idea.
Question 2
Issue
Whether in the absence of any agreement with respect to the same, a partnership has been
formed between Kai, Sen, Luc and Mitsi.
Rule
The definition of the term partnership has been provided u/s 6 of the Partnership Act 1963
(Cth) (PA). The definition of the word partnership can be best understood under the light of