LAW6000 Business and Corporate Law: Detailed Case Study Analysis

This document presents solutions to three case studies related to business and corporate law. The first case examines partnership law, specifically whether a partnership is bound by a contract entered into by one partner and the remedies available to other partners. It applies principles from the Partnership Act 1892 and relevant case law to determine the liability of partners. The second case focuses on consumer law, addressing remedies for false advertising and unconscionable conduct in contract formation, referencing the Australian Consumer Law and relevant court decisions. The final case explores the doctrine of promissory estoppel, analyzing whether a promise is legally enforceable based on key elements and relevant case law, such as Central London Property Trust v High Trees House Ltd.

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Commercial and Corporations Law

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Answer 1
Issue
The legal issue is whether the partnership is binding in the contract formed between Lance
and Lynton? Whether other partners can take legal action against Lance and what remedies
do they have?
Rule
The legal principle, in this case, is related to the principle of partnership legal structure in
Australia. The provisions regarding this business structure are given under the Partnership
Act 1892. It is referred to a legal agreement between two or more parties who had agreed
to form a business and run its operations together. The objective of partners for starting the
business is to earn profits for them which they divide based on their profit sharing ratio
(Business, 2017). The business did not have a separate personality and partners do not have
limited liability. They are liable for the debts of the business, and their personal assets can
be used for repayment of the business liabilities. Moreover, each partner has a duty towards
each other based on which they can be held liable for the action of another partner. Section
10 of the Act provides that liability of partners is unlimited and the partnership can be held
liable for the wrongful actions of a partner (Jade, 2018).
In Re Agriculturist Cattle Insurance Co, Baird’s Case (1870) LR 5 Ch App 725 case, the court
provides provisions regarding liability of partners. In this case, the court provided that each
partner is considered as an unlimited agent of other partners in every matter which is
related to the partnership business. Thus, all the actions taken by partners that are not
outside the scope of the partnership business are binding upon other partners as well
(Morse, 2010). The court provided a similar judgement in the case of National Commercial
Banking Corporation of Australia Ltd v Batty (1986) HCA 21. The court provided that as long
as one partner takes any action which comes within the definition of ordinary course of
partnership business, then the other partners will be bound by such action, and they can be
held liable for any liabilities arising out of such action. Furthermore, partners can take legal
actions against the partner who breached his fiduciary duty to take any action which
resulted in causing harm to any other partner or the business of the partners.

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Application
In the present scenario, the decision of purchasing a car comes within the definition of the
ordinary course of business. Lance was authorised to purchase a car for the partnership.
Thus, the partnership is bound by the contract formed between him and Lynton. However,
he breached his fiduciary duty by purchasing a car worth $25,000 whereas he was only
authorised to spend $20,000. Thus, other partners can take legal action against him to
recover extra $5,000 from Lance personally.
Conclusion
Based on the above analysis, the partnership is bound in the contract formed between
Lance and Lynton and other partners can take legal action against Lance to recover the extra
amount spent by him on purchasing of the car.

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Answer 2
Issue
The legal issue is whether any remedy is present for customers to protect them from false
advertising? Whether the contract binds Saqlaim?
Rule
Customers have various rights to provide them safety and protect them from unfair trade
practices. There are a number of provisions given by the Australian Consumer Law which
focuses on protecting the rights of customers. Section 18 prevents a business from making
false or misleading claim about their products or services which could result in deceiving
customers. Similarly, section 29 restricts businesses from making false claims about their
products through advertisements which resulted in misleading or deceiving customers or
are most likely to do so. Businesses that use ‘headline’ advertisements to make claims about
their products or services which are false can be held liable for breaching section 29 of the
act as given in the judgement of ACCC v TPG Internet Pty Ltd (2013) HCA 54 case (Pearson,
2017).
The fact that corporations include a disclaimer or information in their description does not
protect them from making a misleading claim about products or services. Furthermore, any
contract which is formed between two or more parties based on unconscionable conduct
can be set aside by the court. While applying these principles, the conduct of the stronger
party is evaluated by the court. This principle was implemented by the court in Lloyds Bank v
Bundy (1974) 3 WLR 501 case. Another good case is Commercial Bank of Australia v Amadio
(1983) 57 ALJR 358. In this case, the court set aside the contract because one party did not
know English well and the other party took advantage of this fact to form a contract without
disclosing its full details (Hepburn, 2013).
Application
Xiaojing made a false claim about its products in the advertisement to attract more
customers. This type of advertisement is prohibited under section 29 of the Australian
Consumer Law. Based on this provision, customers have the remedy to file a claim against

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Xiaojing for damages for the false advertisement as given in the case of ACCC v TPG Internet
Pty Ltd. Furthermore, Saqlaim entered into the contract because Lance used his charm and
fast English taking skills. He took unfair advantage of the poor English knowledge of Saqlaim
in order to bind him into the contract. As discussed in Commercial Bank of Australia v
Amadio case, Saqlaim can rely on the defence of unconscionable conduct in order to free
himself from the liabilities of the contract formed between him and Lance.
Conclusion
Based on the above analysis, the Australian Consumer Law protects customers and provides
them remedies towards false advertisement under section 29. Furthermore, Saqlaim can
claim to terminate the contract based on the principle of unconscionable conduct.

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Answer 3
Issue
The legal issue is whether Felix can legally enforce Xiaojing to pay him $100?
Rule
The legal principle in this scenario is regarding the provision of promissory estoppel. Terms
of a contract are required to comply by all contracting parties to avoid legal consequences.
Many people rely on their legal contractual rights to make promises which they do not plan
to fulfil. The principle of promissory estoppel prevents people from making false promises
by relying on their legal rights. In order to rely on this principle, certain elements must be
fulfilled by the parties without which this provision cannot be applied. In Central London
Property Trust v High Trees House Ltd (1947) 1 KB 130 case, the court provides provision
regarding applying of this provision. It was held that contractual relationship must be
changed based on the promise which is made without consideration in order to apply the
provision of promissory estoppel (Hudson, 2016). Furthermore, certain conditions must also
be fulfilled to apply this provision.
In Legione v Hateley (1983) 57 ALJR 292 case, the court provided that the promise must be
unequivocal and clear. Pre-existing contractual relationship must be present between
parties while the promise was made as given in Combe v Combe (1951) 2 KB 215 case (Graw,
2012). Furthermore, positions of the parties must be changed after the promise has made as
given in the case of Alan v El Nasr (1972) 2 WLR 800. Until the legal position of the parties is
affected or charged by the promise made by a party, the provision of promissory estoppel
cannot be applied. The final element of promissory estoppel provides that it must be
equitable to let the person go back on his promise as given in Waltons Stores (Interstate) Ltd
v Maher (1988) 164 CLR 387 case (Godwin, 2013). The detriment suffered by the party is not
a key element required to apply the provision of promissory estoppel. It must be inequitable
for the innocent party to let the deferred party go back on his promise.

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Application
In the present scenario, Felix and Xiaojing have a pre-existing contractual relationship since
Felix was working part-time for him. The promise made by Xiaojing was unequivocal and
clear which cannot be confused otherwise. After making the promise, the legal position of
both the parties was changed since Xiaojing owed $100 to Felix. Lastly, Felix is working part-
time to earn some extra cash during his summer holidays, and it is inequitable to let Xiaojing
go back on her promise. Thus, based on the provision of promissory estoppel, Felix can
claim $100 from Xiaojing.
Conclusion
Based on the above analysis, Felix can legally enforce Xiaojing to pay him $100 based on the
provision of promissory estoppel since all of its elements are fulfilled in this scenario.

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References
ACCC v TPG Internet Pty Ltd (2013) HCA 54
Alan v El Nasr (1972) 2 WLR 800
Business. (2017) Partnership. [Online] Available at: https://www.business.gov.au/info/plan-
and-start/start-your-business/business-structure/business-structures-and-types/partnership
[Accessed 11 August 2018].
Central London Property Trust v High Trees House Ltd (1947) 1 KB 130
Combe v Combe (1951) 2 KB 2015
Commercial Bank of Australia v Amadio (1983) 57 ALJR 358
Godwin, A. (2013) Obligations to Negotiate in Good Faith in Cross-Border Deals. Harvard
Business Law Review Online, 3.
Graw, S. (2012) An introduction to the law of contract. London: Thomson Reuters.
Hepburn, S. (2013) Principles of Equity & Trusts (Aus) 2/e. Abingdon: Routledge.
Hudson, A. (2016) Understanding equity & trusts. Abingdon: Routledge.
Jade. (2018) Partnership Act 1892 (NSW). [Online] Available at: https://jade.io/j/?
a=outline&id=276604 [Accessed 11 August 2018].
Legione v Hateley (1983) 57 ALJR 292
Lloyds Bank v Bundy (1974) 3 WLR 501
Morse, G. (2010) Partnership Law. Oxford: Oxford University Press.
National Commercial Banking Corporation of Australia Ltd v Batty (1986) HCA 21
Partnership Act 1892
Pearson, G. (2017) Further challenges for Australian consumer law. Consumer Law and
Socioeconomic Development, pp. 287-305.

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Re Agriculturist Cattle Insurance Co, Baird’s Case (1870) LR 5 Ch App 725
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387