Business Law Case Study: Partnership, Liability, and Agreements

This case study analyzes a business law scenario involving a partnership between Shaun and Craig, operating a music business named 'NetMuso'. The study examines several key issues, including the existence and formation of the partnership, Craig's ability to withdraw, his entitlement to fees from extra lessons, whether the music equipment is partnership property, liability for outstanding debts, and the responsibility for damages caused by an accident on the business premises. The analysis applies relevant sections of the Partnership Act 1963 and other legal precedents to determine the rights, responsibilities, and liabilities of each partner, providing conclusions for each issue presented in the case.

Running head: LAW OF BUSINESS ORGANIZATION
Law of Business Organization
Name of the Student
Name of the University
Author Note

1LAW OF BUSINESS ORGANIZATION
Table of Contents
Issue.................................................................................................................................................3
Rules................................................................................................................................................3
Application......................................................................................................................................3
Conclusion.......................................................................................................................................4
Issue.................................................................................................................................................4
Rules................................................................................................................................................4
Application......................................................................................................................................5
Conclusion.......................................................................................................................................5
Issue.................................................................................................................................................5
Rules................................................................................................................................................6
Application......................................................................................................................................6
Conclusion.......................................................................................................................................6
Issue.................................................................................................................................................7
Rules................................................................................................................................................7
Application......................................................................................................................................7
Conclusion.......................................................................................................................................8
Issue.................................................................................................................................................8
Rules................................................................................................................................................8
Application......................................................................................................................................9

2LAW OF BUSINESS ORGANIZATION
Conclusion.......................................................................................................................................9
Issue.................................................................................................................................................9
Rules................................................................................................................................................9
Application....................................................................................................................................10
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

3LAW OF BUSINESS ORGANIZATION
A.
Issue
The issue is whether a partnership is exists between Shaun and Craig?
Rules
The partnership will only establish when there is an intention to carrying a business
between two or more than two persons. In the cases of Green v Beesley (1835) and Smith v
Anderson (1880) it has been found that a partnership has been exist when two persons or more
than two persons has together contributed in a business jointly for the a limited time and make a
contract for running a business. The section 9, 10 11 of the Partnership Act 1963 of Australia has
been defined the relations of partners where they must bound to their common business and must
act behalf of the partners and the rights of the partner to use the credit of firms for the private
purposes in the limited partnership. In the partnership there should be a legal entity for creating
such partnership (Coffee Jr, Sale and Henderson 2015).
Application
The basic elements of the partnership are:
 A valid agreement should be form between the partners.
 The partners should have intention to carry a business in common intention where a
single or isolated transaction could be carried.
 When the partners are carrying a business therefore they will carry a common business
where they have mutual rights, agency, interest and other obligation related to the
partnership business.

4LAW OF BUSINESS ORGANIZATION
 There should be the legal intention to carry the business.
According to the case facts Shaun and Craig both has a common intention to carry a legal
music business with common and mutual rights. They have started the business with an
Australian Business Number (“ABN”) and registered the following business name:
“NetMuso”. They have also registered the following domain name: “www.netmuso.com.
Conclusion
Therefore a partnership exists between Shaun and Craig.
B.
Issue
The issue is whether Craig can leave the partnership in the way he did?
Rules
When a partnership has been formed the partners holds the common and mutual rights
and they have several potential liabilities towards their business. The section 9 of the Partnership
Act 1963 has stated the relations of partners where they must bound to their common business or
the firm. The sec 13 of the Partnership Act 1963 has legislates the liability of partners. When the
partners carrying a business under a name and business registration they holds the liabilities of
the partnership (Iacobucci and Trebilcock 2013).

5LAW OF BUSINESS ORGANIZATION
Application
The liability of a partner is defines the duties and obligations towards the business and
the other partners. The sec- 9 has already defines the liabilities of the partners towards the
business each of the partners hold a separate responsibilities towards the business with legally
and financially for every actions towards the other partners and the business also (Owen 2014).
According to the case facts Shaun and Craig has jointly started their music business with
an Australian Business Number and registration. Therefore both of them not terminate the
partnership until and unless other partners has involved in any negligence or criminal activities
with the other partners and the business also. Both of Shaun and Craig has a joint bank account
therefore when the business has faced any legal obligation then both of the partners should face
such issues but they cannot dissolute the partnership.
Conclusion
Therefore Craig cannot leave the partnership when they are facing the legal obligation.
Shaun can take legal actions against him for falsely dissolution of the partnership (Iacobucci and
Trebilcock 2013).
C.
Issue
The issue is whether Craig is entitled to the fees from the extra lessons he had been doing?

6LAW OF BUSINESS ORGANIZATION
Rules
According to the section 34 of the partnership act legislated where it is the duty of the
partners to give accounts towards the other partners. It is the rights of the partners that they must
have the accountability for the private profits. The section 35 has defined the duty of partners not
to compete with the firm. Therefore if a partner of the firm has making their own profit by using
the name of the firm for own benefits then it will be illegal in the partnership business.
Application
According to the case study, Craig had been doing a number of extra lessons outside of
the studio. If he is using the name of the partnership business for the personal profit purposes
then it will be completely illegal and unfair according to the partnership business. Craig kept the
fees from those lessons to himself. Therefore he is using the business name for his own personal
benefits. If Craig did extra lesson outside of the studio without using the name of their
partnership business then it will not make any disturbance. However according to the liability in
the partnership acts Craig has breach the section 34 and 35 of the Partnership Act. He has been
using the business name for getting his personal benefits where he is not sharing such fees which
is against of the partnership (Coffee Jr, Sale and Henderson 2015).
Conclusion
Therefore it can be concluded that Craig has no right to do extra lesson by using the
partnership business where he is taking fees for himself which is illegal to the therms of the
partnership.
D.

7LAW OF BUSINESS ORGANIZATION
Issue
The issue is whether the music instruments and equipment are the partnership property or
not?
Rules
The section 26 of the Partnership Act 1963 has stated the property bought with money of
the firm which has describes that the properties or assets which has been bought with the money
which belongs to the firm unless and until the contrary intention has been appears which has
been bought on account of the firm (Owen 2014).
Application
According to the case facts Shaun has made the lease agreement for their business pay
the advanced rental bond of $20,000 which he has been borrowed from his father while Craig
has moved his collection of music instruments and equipment which has monetary value of
$25,000 to their business place. Though they are in partnership business the music instruments
and equipment has owned by Craig and not bought from the account of the business. Therefore
though they are in the partnership the music instruments and equipment are not the property of
the partnership business (Iacobucci and Trebilcock 2013).
In a partnership business equipments are required. It can be owned by the partners of the
business from the joint account of the partners. When the properties have been brought by the
account of the partnership account then it will be held in the name of the partnership business not
the partners individually. But if the properties have been owned by any partner it never belongs

8LAW OF BUSINESS ORGANIZATION
to the partnership business though it is using in the business. Therefore according to the case
study, Craig has owned the music instruments and equipment.
Conclusion
According to the case facts the music instruments and equipment are not the partnership
property as those are owned by Craig.
E.
Issue
The issue is who is liable to pay the outstanding rent and electricity Shaun or Craig?
Rules
In a partnership both the partners hold the duties pay every debt related to the partnership
business. When a partnership form it holds the basic element of the partnership which is when
the partners are carrying a business therefore they are carrying a common business where they
have mutual rights, agency, interest and other obligation related to the partnership business. The
sec-13 of the Partnership Act has defined the liabilities of the partners in the partnership business
(Owen 2014).
In the case of Broadcasters Ltd v Ashton’s Nominees Pty Ltd (1979) it has been found
that the in a joint venture of partnership the partners will use the profit and share every losses and
use the profits for the maintenance of the partnership business. The partners are bound to pay
every debts jointly which are related to the partnership business (Coffee Jr, Sale and Henderson
2015).

9LAW OF BUSINESS ORGANIZATION
Application
According to the fact of the case, Shaun make the lease agreement with the owner of the
property but as he is running a partnership business with Craig therefore it s the liability of the
both partners to pay every debts which are related with the business. When a business has been
formed on the terms of the partnership then it the liability of the both partners that they can share
the profits and pay the losses. Therefore it is their obligations to pay every debts of the business.
The partners will jointly pay the debts out of their earnings from the business (Iacobucci and
Trebilcock 2013).
Conclusion
Therefore according to the case facts it can be concluded that Shaun and Craig both are
liable to pay the outstanding rent and electricity which are related to their partnership business.
F.
Issue
The issue is who is liable to pay that amount of money Shaun or Craig if Ronnie
successfully sues them?
Rules
According to the section of the Partnership Act has defined the liabilities of the partners
in the partnership business where the partners hold the mutual duties and obligation regarding to
their business. Therefore when the business face any legal obligation due to the negligence of
one partner then all of the partners are liable for such acts as it has been held in the partnership
business (Owen 2014).

10LAW OF BUSINESS ORGANIZATION
Application
As per the case facts Ronnie who is a school aged student took lessons from Shaun.
When he took bathroom break he fell in the bathroom which cause severe blow to the head and
also broke his jaw. Now he has been undergo complicated surgery on his jaw and sued both
Shaun and Craig for $12,000. Therefore as the partnership act though one partner is liable for
such negligence which cause damage to the plaintiff but both of the partners are bound to pay
such compensation as they are running a partnership business and the accident has been caused
in the property of that business (Iacobucci and Trebilcock 2013).
Conclusion
Therefore according to the case study both Shaun and Craig are liable to pay the
compensation amount to Ronnie for his damage.

11LAW OF BUSINESS ORGANIZATION
Reference
Broadcasters Ltd v Ashton’s Nominees Pty Ltd (1979) 22 SASR 552
Burnett, C., Taylor, C.J. and Wong, J., 2015. Qualification of Taxable Entities and Treaty
Protection: National Report for Australia.
Coffee Jr, J.C., Sale, H. and Henderson, M.T., 2015. Securities regulation: Cases and materials.
Green v Beesley (1835) 2 Bing N C 108 at 112
Green, R., Berti, M. and Sutton, N., 2017. Higher Education in Management: The Case of
Australia. In The Future of Management Education (pp. 117-137). Palgrave Macmillan UK.
Iacobucci, E.M. and Trebilcock, M.J., 2013. An economic analysis of alternative business
structures for the practice of law. Can. B. Rev., 92, p.57.
Mann, R.A. and Roberts, B.S., 2015. Business law and the regulation of business. Nelson
Education.
Owen, S.L., 2014. Allocating Partnership Debt: If It Ain't Broke, Don't Fix It. J. Passthrough
Entities, 17, p.71.
Smith v Anderson (1880) 15 Ch D 247 at 273

12LAW OF BUSINESS ORGANIZATION