Business Law Assignment: Analyzing Partnerships and Contract Breaches

This business law assignment solution addresses three key areas: partnership law, breach of contract, and online contract terms. The first question examines a partnership dispute, determining Drasic's liability based on the Partnership Act 1963, analyzing the elements of partnership formation and partner responsibilities. The second question focuses on a breach of contract scenario, evaluating whether Halls & Co breached a contract with Feast for Weeks (FFW) and the damages FFW can claim, including an assessment of remoteness, causation, and the duty to mitigate loss. The third question explores online contract terms, analyzing three terms from an online service's terms of service, classifying them as warranties or conditions, and explaining the remedies available for breach of each type of term. The assignment provides a thorough analysis of relevant legal principles, case law, and their application to the given scenarios.

Running head: BUSINESS LAWS
Business Laws
Name of the student
Name of the university
Author note

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Question 1
Issue:
In this given scenario the issue that can be identified is whether Drasic is liable to pay $5,000.00
to Fast Bikes.
Rule
In this given scenario the law governing the operations of Partnerships in Australia is applicable.
The Partnership Act 1963 sets out the regulations relating to the operations of partnerships. The
definition of a partnership has been provided in section 6 of the Partnership Act 1963. In this
section it has been clearly specified that Partnership can be defined as the relation that exists
between the persons who carry commonly with aim of making profit. It can be stated that the
following elements must be present for a business to be termed as a partnership:
 Carrying on Business
 Commonly
 With an aim of making profit
Carrying on of a business:
It can be stated that it is essential to establish that the partners engaged in repetitive business
transactions as opposed to a single and isolated business transactions. In the notable case Smith v
Anderson (1880) 15 Ch D 247 the court had illustrated the need for establishment of repetition
and continuity of business transactions. However the essential element of establishing an
intention carry on business had been overlooked in some cases such as Elkin & Co Pty Ltd v
Specialised Television Installations Pty Ltd [1961] SR (NSW) 165 and Play fair Development

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Corporation Pty Ltd v Ryan (1969) 90 WN (NSW) 504 the courts acknowledged that a
partnership was valid even in a single venture.
Carrying on business in common
It can be mentioned that for establishing a partnership, it has to be proved that the partners
carried on the business in common on behalf of all the partners. However, as held in the notable
case Re Ruddock (1879) 5 VLR (IP & M) 51, all the partners are not required to take an active
part or role in the business venture. In another case Keith Spicer Ltd v Mansell [1970] 1 All ER
462, it had been held by the court that there was no partnership as the parties involved in the
transactions intended to carry on business together, however they had formed a company for
doing so.
With a view to earn profit
This is the last important element of a valid partnership. For the establishment of a partnership it
is essential to prove that such partnership operated for the purpose of earning profits. This is the
basic difference between a partnership and any association formed for the promotion of the
social, religious, recreational and educational activities as held in the case Wise v Perpetual
Trustee Co Ltd [1903] AC 139.
After a partnership is established, it can be said in accordance with the provisions as provided in
section 10(1) of the Partnership Act 1963 that any act or instrument which is related to the
business of a partnership is binding on the partnership and all the partners, if the act had been
done in the name of the name of the firm and in a way showing the intention of binding the firm.
It has been further provided in section 16(1) of the P.A that each and every partner in a

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partnership except in case of a incorporated limited partnerships liable jointly and severally with
the other partners for every liability of the firm.
Application
In this given scenario it has been clearly provided that Madison and Drasic had created a
partnership with a view to carry on the business. It can be stated that the partnership formation
was not an isolated event, as illustrated in the case Smith v Anderson (1880) 15 Ch D 247. It had
also been provided in the agreement that the two of them would be working together to carry on
the business. Further, in this given scenario it is evident that the partnership had been formed for
the purpose of making profit which was shared equally between the partners. Therefore, it is
clearly evident that a partnership had been formed between the two.
Therefore, after having established that the business structure, chosen to carry on the business of
the parties was a partnership, it is important to apply the relevant provisions of the Partnership
act 1963 to the operations of the partnership. It can be said in accordance with section 10(1) of
the Partnership Act 1963 ,that any act or instrument which is related to the business of a
partnership, is binding on the partnership and all the partners, if the act had been done in the
name of the name of the firm and in a way showing the intention of binding the firm. Therefore,
Drasic is liable to pay the $5000 dollars as he was a partner of the firm. This claim can be
substantiated by the application of provisions of section 16(1) which states that the partners are
jointly and severally liable for the liabilities of the firm.
Conclusion
Thus to conclude, it can be stated that Drsic is liable to pay the $5000

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Question 2
Issue
Whether there has been breach of contract by Halls & Co (Halls) in contract with Feast for
Weeks(FFW) and what damages can be claimed for the breach.
Rule
One of the legal remedy which is available in relation to the breach of contract is that of
damages. This form of legal remedy is generally provided in form of monetary award for the
purpose of compensating the party whose rights have been violated. In the case of Addis v
Gramophone [1909] AC 488 the court ruled that the main purpose of giving monetary damages
to an aggrieved party is to place such party in a situation which it would be in if the contract was
not breached.
However damages are calculated based on few other elements like duty to mitigate loss,
remoteness and causation.
In the case of The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196 it had
been stated by the court that a person would only be entitled to get damages where the loss has
been caused to the aggrieved party due to the breach of the contract and would not have taken
place otherwise.

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The case of Hadley v Baxendale (1854) 9 Ex Ch 341 has discussed the rules in relation to
remoteness of damage in contract law. In this case it had been stated by the court that an
aggrieved party whose contractual rights have been breached will be compensated where the
damages have reasonably been caused in a natural way from the breach of the contract and also
those losses which the parties reasonably supposed to be present at the time contemplation
between the parties took place. These rules had also been discussed in the case of Czarnikow
Ltd v Koufos (The Heron II) [1969] 1 AC 350.
In the case of Payzu v Saunders [1919] 2 KB 581 it had been ruled by the court that the
claimant will not be allowed to claim damages where they have allowed their losses to be
increased. They have been imposed with a duty under law to take the reasonable and necessary
steps for the purpose of reducing the losses incurred by them.
In the case of Poussard v Spiers (1876) 1 QBD 410 it had been stated by the court that the
parities to the contract are provided a dual remedy of damages as well as repudiation (discharge
of contractual right) where it has been analyzed that the term which has been breached by the
party is a condition of the contract. A condition of a contract is a term which is used by the
parties to the contract to get into the contract.
Application
FFW while getting into the contract for the purpose of renting the hall had clearly signified Halls
the importance of getting the hall in the morning. It was specifically made clear by jerry that he
would not able to organize the event if she does not get the hall by morning. This term had been
duly accepted by Halls and a valid contract between the parties had taken place. The term had
actually been relied upon by Jerry to get into the contract and without such term being present

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there would have been no contract made by Jerry and thus the term is a condition. The breach of
condition provides the right to damages and repudiation as per Bettini v Gye. The condition has
been breached by Halls as they are not letting the hall to FFW before 5pm rather than the
promised 7am. In relation to damages as per Addis v Gramophone the court would place such
FFW in a situation which it would be in if the contract was not breached. Further as per
Monarch case a person would only be entitled to get damages where the loss has been caused to
the aggrieved party due to the breach of the contract and would not have taken place otherwise.
Evidently the losses would not have been caused to FFW where the breach of contract was not
done. In the given situation the breach of contract was the sole reason of the loss which have
been incurred by FFW as without such losses it would not have to refund the tickets and loose of
$10,000 spent on food and drinks along with the $6,500 for the hire.
However under the rules in relation to remoteness of damages as provided by the case of Hadley
v Baxendale it can be stated that FFW would only be able to claim damages reasonably have
been caused in a natural way from the breach of the contract and also those losses which the
parties reasonably supposed to be present at the time contemplation between the parties took
place. Here the damages from natural breach are of $6500 for hire, profits for the tickets and loss
of $10000 in food and drinks. The $5,000 which would have been received in relation to the
documentary is not a reasonable or agreed loss as such details were not given to Halls. Further
Jerry threw the food and drinks in the bin where he could have saved drinks worth $4000 and
thus under the duty to mitigate loss as per the Payzu v Saunders case he cannot claim for that
$4000.
Conclusion

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There has been breach of contract by Halls in contract with FFW and damages can be claimed
for the breach as discussed above.
Question 3
i
Online contract https://dollarbargains.com.au/pages/terms-of-service
The three terms are as follows
“You agree not to reproduce, duplicate, copy, sell, resell or exploit any portion of the Service”-
This is a warranty. This is because it is not a term on which the parties relied on to get into the
contract according to Bettini v Gye 1876 QBD 183.
“We will provide goods of a reasonable quality”- this is a condition of the contract. This is
because the parties will only purchase the goods if it is of a reasonable quality and fit for its
purpose. where such obligations are breached the party will have the right to rescind the contract
as per the case of Poussard v Spiers (1876) 1 QBD 410
“Certain content, products and services available via our Service may include materials from
third-parties.” This is a warranty. This is because it is not a term on which the parties relied on to
get into the contract according to Bettini v Gye. Where such terms are breached the parties will
only be liable to damages and not to rescind the contract.
ii
where a term has been classified as a condition of the contract the parities to the contract are
provided a dual remedy of damages as well as repudiation (discharge of contractual right) as it is

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a term whuch had actually been relied upon by the party to get into the contract and without such
term being present there would have been no contract made.
Where a term has been classified as a warranty of the contract the parities to the contract are
provided a remedy of damages only. This is because it is not a term on which the parties relied
on to get into the contract
As per the case of Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 a term
which cannot be either classified as a warranty or a condition is an innominate term.

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References
Addis v Gramophone [1909] AC 488
Bettini v Gye 1876 QBD 183.
Czarnikow Ltd v Koufos (The Heron II) [1969] 1 AC 350
Elkin & Co Pty Ltd v Specialised Television Installations Pty Ltd [1961] SR (NSW) 165
Hadley v Baxendale (1854) 9 Ex Ch 341
Keith Spicer Ltd v Mansell [1970] 1 All ER 462
Partnership Act 1963
Payzu v Saunders [1919] 2 KB 581
Play fair Development Corporation Pty Ltd v Ryan (1969) 90 WN (NSW) 504
Poussard v Spiers (1876) 1 QBD 410
Re Ruddock (1879) 5 VLR (IP & M) 51
The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196
Wise v Perpetual Trustee Co Ltd [1903] AC 139.

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