Corporations and Business Law Case Study: Agency and Partnership Law

This case study delves into two distinct scenarios within corporations and business law, focusing on agency and partnership. Part A examines the liability of a swimming pool company (Swimming Co) for the actions of its manager, Martin, exploring issues such as vicarious liability, breach of duty, and the implications of Martin's actions, including setting up a competing business. Part B analyzes a partnership (LuSeKo) involving Koo, Lucy, and Seamus, addressing issues like partnership formation, liability for business debts, breaches of partnership duties (Lucy's weekend work), the impact of a partner's death, and the determination of partnership property. The case study applies relevant legal principles, including those from the Partnership Act 1963, to provide comprehensive conclusions on each issue, supported by case law and statutory provisions. The study also examines the responsibilities of partners, the rights of third parties, and the consequences of actions that deviate from the established partnership agreements.

CORPORATIONS AND
BUSINESS LAW
CASE STUDY ASSIGNMENT

Part A

Issues:
Whether the Swimming Co is responsible
for the acts of Martin?
Whether it can be claimed by the company
that they are not liable for Martin’s act as
he acted without instructions?
Whether Martin is liable for any of his
actions to his employer?
Whether Martin has caused the breach of
any law if he has planned to establish his
own business.

Rules:
The law of agency deals with relations that
includes a person known as the agent who
has been authorised to act on behalf of
another known as the principal to make
transactions with an outsider known as the
third party.
An agent acting within the authority
conferred to him by the principal binds the
principal and makes him liable for the act
done by the agent as observed in the
famous Panorama Developments
(Guildford) v Fidelis Furnishing Fabrics Ltd.

Rules (Contd.)
Any illegal or misconduct committed by
the agent will make his principal liable to
the 3rd party who can claim damages
under the law of tort if the agent has
performed such act within the authority
he has been entrusted with as observed in
the case of Deatons Pty Ltd v Flew.
The principal can deny his liability for any
wrongful act committed by the agent
when the agent has acted beyond his
authority or without any authority

Rules (Contd.):
The agent also has a fiduciary duty
towards his principal such that he acts n
good faith to ensure best interest for his
principal and to act in accordance to the
directions of his principal as entrenched in
the case of Caltex Oil (Australia) Pty Ltd v
The Dredge Willemstad.
The agent is prohibited to incur any
personal advantages in course of his
transactions as an agent.
The agent is barred to set up a business in
competition to that of the principal.

Application:
Swimmingpool Co employed Martin as a
manager of Tasmanian sale division to
quote to the potential customers of
installation cost of different varieties of
pools offered by the company.
He had to ensure that a deposit is to be
paid by those customers which is be
transferred to the company’s bank account.
The Company offered him fixed salary but
allowed to get bonus provided the annual
target was achieved by him. These can be
regarded as a relation of agency between
the Martin and the company.

Application (Contd.)
Martin had contracted with 20 customers and
half of their work had tarted. But one month
after this, the company got many complaints
that the construction work of the pool was quite
different from what the customers are
contracted for. These arises out of the
employment of the agent in the company, thus
the company is vicariously liable for this.
Martin did not deposit in the bank account the
profits collected by him. This can be regarded
as the act of disobedience by the agent as he
did not follow the instructions given to him by
the company.

Application (Contd.):
Martin attempted to set up a similar type of
business to compete with the company. This
accounts for a breach of his duty as an agent.

Conclusion:
Swimming Co is responsible for the acts of
Martin when he acted within his authority of
agency.
The company can claim definitely that they are
not liable for Martin’s act as he acted without
instructions.
Martin is liable for his act towards employer
Company.
Martin had breached the non compete law as
he had planned to establish a similar business
like the Company.

Part B

Issues:
a) whether Koo, Lucy and Seamus are carrying on
partnership,
b) Whether Koo and Lucy can be made liable to
contribute for purchase of the ride on mower,
c) Whether Lucy has breached his duties of partnership
for carrying out her weekend work,
d) whether the FastCut can discover the individuals
present behind the business name LuSeKo in a legal
action,
e) Whether Seamus’s death can affect the partnership
in any way,
f) Whether Lucy and Koo can determine the partnership
property and whether the partnership property can be
used to compensate the losses made to LuSeKo.

Rules:
The law related to the partnership business is
governed by the Partnership Act 1963 in
Australia.
Section 6 states that partnership can be
defined as the fiduciary and legal relation that
exists among the partners who are working for
a common business with a common aim to
incur gain.
It also includes a limited partnership business
as seen in case of Wang v Rong [2015].
A valid agreement must be present between
the parties.

Rules (Contd.):
Section 9 states that every partner is regarded
as both the agent as well as principal of the
partnership firm and can bind both the firma
and other partners by his act. Thus every
partner is liable for the act of other partners in
common course of business.
Section 23 of the said Act provides the mutual
rights and duties of the partners.
Section 33 states that it is the duty of the
partners of a firm to give true accounts and
total information about all the matters that
can affect the firm to other partners.

Rules (Contd.):
Section 34 states that a partner must give true
account of any personal gain without the consent
or knowledge of other partners.
Section 35 prevents any partner to carry out
similar business. When a partner is carrying out
such business, he has a duty to account for it and
transfer the profit incurred to the firm’s account.
Section 38 provides that a partnership can be
dissolved if a partner dies, if there is no
agreement in contrary.
Under Common Law, property of a firm refers to
any property that is owned by the partners as the
joint property in the firm’s name.

Application:
A partnership business has been registered by
three partners namely Koo, Lucy and Seamus in
the name of LuSeKo as per the Partnership Act
1963.
During the carrying out business, Seamus had
the responsibility of cutting grass, Lucy is
entrusted with the duty of removing the
clippings in her truck and Koo is given the duty
to keep accounts.

Application (Contd.)
Seamus felt the need of an industrial ride on
mower and contracted with the FastCut Mowers
in this regard without making discussion with
other partners. This contract is entered in the
name of and on behalf of the company, hence
the firm as well as all the 3 partners are bound
by this contract.

Application (Contd.)
Lucy personally removed rubbish from the
properties of clients LuSeKo on weekends. This
is a similar type of business that Lucy started.
The profits incurred from the parallel business
of Lucy were transferred to Lucy’s personal
account and not to the account of the firm.
Moreover, she did not disclose this to other
partners.
These show that Lucy violated her duties as a
partner.

Application (Contd.)
Death of Seamus will result into dissolution as
the partners have not made any agreement to
the contrary as per section 38 of the
Partnership Act.
The property of the partnership firm will be
including all the properties that the firm has
acquired in the course of business to carry out
the business.

Conclusion:
Koo, Lucy and Seamus are carrying on a partnership
business in the name of LuSeKo of their firm.
Koo and Lucy can be made liable to contribute for
purchasing the ride on mower as it was bought by Seamus
being the partner of the firm.
Lucy has caused the breach of the duties contained in any
partnership business as he carrying out her work in
weekend.
FastCut has the right to contact with ASIC so that the
individuals present behind the business name LuSeKo are
discovered in order to bring a legal action.
 Seamus’s death will result into dissolution of the
partnership.
f) Lucy and Koo can determine the partnership property
which can be appropriated to compensate the losses made
to LuSeKo.

References:
Australian Competition and Consumer Commission v
Flight Centre Travel Group Limited [2016] HCA 49; 261
CLR 203; 91 ALJR 143; 339 ALR 242
Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad
(1976) 136 CLR 529
Deatons Pty Ltd v Flew [1949] HCA 60, (1949) 79 CLR 370
Liners Ltd [1910] AC 498 434 Moore and Kettle v Woolsey
and Knill (1854) 4 E & B 243
Midland Bank Limited v Seymour [1955] 2 Lloyds Rep 147
Panorama Developments (Guildford) v Fidelis Furnishing
Fabrics Ltd [1971] 2 QB 711
Regal (Hastings) Ltd v Gulliver [1942] UKHL1
Shaddock and Associates Pty Ltd v Parramatta City
Council (No 1). [1981] HCA 59
The Partnership Act 1963

THANK YOU…

THE END