The elements are carrying on a business

Running head: PARTNERSHIP ASSIGNMENT
PARTNERSHIP ASSIGNMENT
Name of the Student:
Name of the University:
Author Note:

PARTNERSHIP ASSIGNMENT1
Answer 1:
Issue:
The issue which is to be analyzed here is whether it provides a better idea for Mitsi, Kai,
Sen and Luc for continuing without any discussion regarding the legal arrangements among
them.
Rules:
Section 6 of the Partnership Act 1963 (Cth), hereinafter referred to as Act defines the
term partnership. It states that partnership relation exists among two or more people when they
are involved in a business having a common capacity with the only objective of gaining profits.
This definition was further discussed in decision given in the case of United Dominions
Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1, (1985) 60 ALR 741. Section 9 of the Act
states that the partners are empowered to bind the firm by their acts. It provides that a partner can
be regarded as the firm’s agent and also other partners’ agent for the reason of business of the
firm. Any act done by one partner of a partnership business will not only bind the firm but also
the partners except when the partner does an act without having any authority to do it in that
particular manner and the person with whom the partner deals with either has knowledge that the
partner is acting without such authority or has no knowledge that he is the partner of the firm.
This was entrenched in the case of Smith v Anderson (1880) 15 Ch D 247.
Application:
In the present case, Mitsi, Kai, Sen and Luc started offering consultancy services to the
clients of small business. Sen and Kai were specialization in providing help to the clients in order

PARTNERSHIP ASSIGNMENT2
to incur finance for growing business. Luc deals with clients having solvency issues. He wants to
get the registration of a liquidator such that later on he can offer services related to liquidation.
Marketing services are sold by Mitsi to the clients. All of them gave 20,000 $ as the startup
costs. For this consultancy services, rented premises were shared by them and all of them signed
the lease agreement of these premises. Sen and Kai used the name ‘Time to glow’ as a trading
name whereas Luc trades using another name ‘Moving Forward’ whereas Mitsi uses ‘Tip Top
Marketing’ as the business name. None of them got their trading name registered. They also have
not decided about the legal arrangements in this regard. It will result into confusion and
ambiguity about their liability in their business. As there was no proper business structure
available for their business, the rights of the parties will not be known. Hence, any third party
claim cannot be ascertained against the business due to the absence of proper business structure.
Conclusion:
Hence, it can be inferred that idea of Mitsi, Kai, Sen and Luc of continuing the business
without any proper legal arrangements is not a good idea.
Answer 2:
Issue:
The issue here is whether a partnership has resulted among four partners without any
proper legal agreement.
Rules:
Section 6 of the Partnership Act 1963 (Cth), hereinafter referred to as Act defines the
term partnership. It states that partnership relation exists among two or more people when they