Corporations Law Project: Business Legal Advice - Delaney Williams

This Corporations Law project presents a legal analysis of a business scenario involving Sam and Travis, who are engaged in a gardening supply and earthmoving business respectively. The project examines the legal implications of their partnership, including issues of profit distribution, quasi-partnership, and potential breaches of agreement. It delves into the process of incorporating the business into a private company, outlining the necessary procedures under the Corporations Act 2001, and the benefits and obligations associated with it. The project also covers aspects of dividend payments, business security through intellectual property rights, and the protection of business names. The analysis includes relevant case studies such as Salomon v Salomon & Co Ltd and Burland v Earle, and legal frameworks such as the Partnership Act 1958. The project emphasizes the importance of legal compliance and the protection of business interests, offering comprehensive advice to the client, Sam, on various legal matters.

CORPORATIONS LAW PROJECT
ASSISTANCE

Delaney Williams, Lawyers and Consultants
18th April 2020
Ref No: XXX
To Jo Delaney
From XYZ
Subject Business legal Advice
Dear Mr. Delaney,
I present the following subject matters relating to the case study
Introduction about the client:
1. Sam is running the business relating to the gardening and also completed the business
for the time period of five years. She supplies the equipment to retailers and such
equipment are related to gardening use such as plants, pots, garden walls etc.
2. Travis which carrying the business globally enters into the contract with Sam in
respect of partnership business sharing equal profits on dealing with any private
clients.
3. They deal with the three large private garden renovation and earn the total revenue of
$30,000 for first and $45,000 for second. They split the total revenue in the ratio of
50-50 as per the decided ratio during the time of entering into the business.
4. But the issue is faced by Travis in respect of not paying the amount which is received
from the third party. As Travis decided to own the $50,000 but due to facing
inappropriate division, it is against the policies which is decided by the partners.
5. Another issues which is examined is relating to knowing the truth about the Travis
regarding entering into the partnership with the Lorraine and also dealing in same
kind of business. As this is violation of the rules regarding dealing the same business
with other person.
The memorandum of preliminary advice is based upon these instruction
The options which the client had
Legal issues:
6. Sam didn’t get the amount for the third job which is fixed by the Travis in respect of
distributing the amount equally. So issues faced in respect of distributing the amount
equally.
7. It is also stated that Sam can claim the amount for the revenues earned of $2, 00,000.
As in previous aspects, the business is undertaken by Sam and Travis both.
8. As Sam decided to convert the business into private company and thus various
procedure and steps are to be presented to make the conversion easier and clear.

9. The procedure of getting paid or rewarding in return of the efforts made in the
company if Sam is planning to sell the business into the new company to receive
shares.
10. Another situation is raised in respect of needing the appropriate guidance regarding
protecting the business from the competitors dealing in same type of business.
Rules and Laws
Quasi partnership and Partnership:
11. This case reflects the matters of the Quasi Partnership as both the partner agree to
deal in same business in the form of implied terms1. Similarly in the form of
partnership firm, but the difference is that both the partner not enter into the
partnership deed or also not registering their business under the Partnership act.
12. As per the Partnership act, 1958 it is stated that the partnership business is formed
when two or more person agree to enter into the common business and also intention
to earn and manage profits equally2. Section 115 stated that the partnership firm is not
formed by more than 20 members and thus in this case this situation fits and also they
can carry the business under the quasi partnership.
13. In the present case, it is stated that the quasi contract which is existed since 1973,
stated that it is created when individual agree to enter into the business with the other
party, share risk and rewards the each other and jointly manage the losses to secure
the business from the winding up procedure3. It is also stated that no third party is
allowed to enter into the business without the permission from partners. Thus, it
results in considering the business as unlimited liability in which the partner are liable
for any debts which is undertaken in firm.
14. In case of breach committed in terms of condition which is clarified during the Quasi
Partnership business, it results in applying for specific performances remedy in which
the court order the other party to perform the contract as per the set instructions. This
is supported with the case of Strahan V Wilcock as in this case the issues is raised
regarding not performing the contract with the set terms. As the deal is made in
respect of purchasing the shares with the set guidance but during the period of
purchase, Mr. Strahan rejects the proposal4. Thus, resulting in breach in not following
the terms mentioned in the contract.
1 Abdul Razak, A. (2018). Corporate manslaughter and the attempt to reduce work-
related deaths: a comparative study of the United Kingdom, Australia and Malaysia‘s
legislative framework (Doctoral dissertation).
2 Barnes, J. (2018). On the ground and on tap—law reform, Australian style. The
Theory and Practice of Legislation. 6(2). 193-224.
3 Du Plessis, J. J. (2017). Disqualification of Company Directors: A Comparative
Analysis of the Law in the UK, Australia, South Africa, the US and Germany. Taylor
& Francis.
4 Strahan v Wilcock. [2006] SVC 34. 2020. [Online]. Available through: <
https://library.croneri.co.uk/cch_uk/svhcases/2006-svc-341>.

Incorporation of business:
15. If any company planning to convert their business from sole proprietorship or
partnership to limited company, than they are required to follow the respective
guidance which is mentioned under the Corporation act, 20015.
16. Chapter 2A is mainly designed for the registration of the company. As company
carries the title regarding the limited liability in which the liability of members are
limited to the amount of shares held by them6. They are not liable for any personal
debts as company had to bear all the losses and expenses which is incurred in the
business.
17. It is also stated that in respect of starting the new company, it requires higher cost to
manage the business and also the cost of running the business is higher. It carries the
activities regarding assigning the role and responsibilities to particular person and also
monitoring their work is difficult7. It is also necessary that they are required to follow
the compliances and regulation which is mentioned under the corporation Act, 2001.
18. If the company is registered, than the corporation veil is formulated which set
guidance regarding managing the interest of shareholder different from the interest of
the company. As company is liable if any such issues is faced by the shareholders or
directors of the company. It is necessary to protect the corporate veil through
undertaking the following task such as undertaking the necessary formalities which is
required in managing the business in right manner8. As very action which is
undertaken in business must be mentioned in the document, so that every shareholder
are aware of their right and duties at work place. Another point which is necessary is
relating to the differentiating the personal assets with the company. As through this
manner it helps in making the company financial statement in better way.
19. It is presented with the case study of the Salomon v Salomon & Co Ltd as in this case
the issues is raised regarding not paying the money to the creditors within the
stipulated time period. It is stated that the Salomon is running the business
individually but after examining the interest of the children, they convert the business
into the company with considering all the five children as their directors of the
business9. In respect of not managing the business as per the set directions, it stated
5 Hedges, J & and et.al., (2018). The potential economic gains from increasing public
law enforcement against illegal phoenix activity. Monash UL Rev. 44. 267.
6 Foo, M. (2017). A review of socially responsible investing in Australia. An
independent report for National Australia Bank (NAB) by the Australian Centre for
Financial Studies (ACFS) at Monash Business School.
7 Fu, J., & Tomasic, R. (2017). The Use of Noncourt‐Based Corporate Rescue: Does
the Australian Voluntary Administration Procedure Provide a Model for
China?. International Insolvency Review. 26(2). 153-175.
8 Glover, J. (2018, March). Tax agents providing trust deeds and/or advising about
trusts: unauthorised legal practice?. In Australian Tax Forum (Vol. 33, No. 3).
9 Salomon v A Salomon and Co Ltd [1897] AC 22 Case Summary. 2020. [Online].
Available through: < https://www.lawteacher.net/cases/salomon-v-salomon.php>.

that company is undergoing the procedure of winding up of business. As the judgment
presented by the court, it reflects that company is the corporate veil and thus the
members are not liable to pay debts.
20. The process of incorporating the business and also formulating the business into the
company under the ASIC is relating to:
 Application is to be made under the ASIC in respect of converting the business
and also authentic documents is to be attached with the stated fees in respect of
converting the business into company10. The registration is to be made under the
section 117 of the Act. In this the rule is made in respect of attaching the copies
and also fees is to be paid along with the application for registration.
 Once the verification is done regarding sending the authentic document, ASIC
registers the company and issues the certificate under Section 118 of the Act11.
 Once the application is received, the company comes into existence on the day
when the registration is made under section 119 of the act. In respect of managing
the roles of directors, members and secretaries, their role are assigned under
section 120 of the act12. Thus, various obligation are also imposed in respect of
bounding the shareholder to work in the set directions.
21. Once the procedure of incorporation is undertaken, it is stated that it takes time to
incorporate the business as the settlement of business activities is undertaken or the
name is to be finalized through which the buying and selling of activities are
undertaken13. As the company carry the right to manage the business such as
assigning the duties of the directors or shareholder or also managing the task in
respect of starting the business at primary stage.
Distribution of profits:
22. In case of dividend, it is paid once the company assets exceeds its liabilities, than
dividend is declared by the company on the bases of earning the profits. This is
mainly undertaken through managing the account in the business and also they are
earning additional profits in business14. Under the section 254 of the act, it is stated
that the dividend is to be paid in the accordance of the three limb test is balance sheet,
shareholder protection and duration of solvency of business.
23. This is supported with the case study of Burland v Earle [1902] AC 83, the case stated
that the company is not entitled to pay dividend in respect of not managing the
10 Grantham, R. (2018). To Whom Does Australian Corporate and Consumer
Legislation Speak. U. Queensland LJ. 37. 57.
11 Kelly, S. & and et.al., (2019). Unlocking Australia's Sustianable Finance Potential.
12 Holland, C. (2016). The Art of Business Succession: Who Will Fill Your Shoes?. John
Wiley & Sons.
13 Harries, A. (2017). Complaint reform. Agent, The. 50(5). 9.
14 Hanrahan, P. A. M. E. L. A. (2018). Legal Framework Governing Aspects of the
Australian Superannuation System. Background Paper. 25.

activities in right manner15. As this is the internal rules of the company in respective
of not paying any dividend until company is set up and continue to manage its
business in good way.
Security of business:
24. It is necessary to register the name of the business before disclosing any information
in the market regarding its establishment and also the products which they are dealing
in. Thus, in respect of receiving the certificate of registration or the product which
they are dealing in, is unique or carrying specialty, resulting in getting the rights
secured under the intellectual property rights16. In this manner, if any person want to
carry the same business with the same concepts, then they cannot infringing the other
company right as they are secured under the intellectual property law.
Application of the stated rules:
25. By applying the case study which is mentioned relating to presenting the matters of
the quasi partnership business, it is stated that the Sam carry the right to resolve the
third fee issues in respect of distributing equally17. As it is stated under the implied
terms of the Quasi Partnership contract that all the partner are equally obliged to
perform the terms which is mentioned under the partnership act. Thus, Sam can file
the suit in the court in respect of demanding for the specific performances of the
contract.
26. As it is stated that court not easily accepts the grounds of giving order for specific
performances remedy until they personally verify that the breach is undertaken in
respect of not performing the contract with the stated terms18. After verifying the
details, the court provide the judgment on the bases of distributing the third job
money equally.
27. The deal is made between the Travis and Lorraine regarding carrying the same
business which is already made between the Sam and Travis. But in this case the deal
is made between the two parties and thus rights of third person are not entitled under
this agreement19. Thus, Sam cannot claim to obtained revenue under this case. But
claim for the damages faced in respect of committing breach regarding dealing the
same business with the third party during the period of contract.
15 Burland v Earle [1902] AC 83. 2017. [Online]. Available through: <
https://www.casemine.com/judgement/uk/5b4dc2422c94e07cccd23513>.
16 Manwaring, K., & Hanrahan, P. F. (2019). BEARing responsibility for cyber security
in Australian financial institutions: The rising tide of directors’ personal
liability. Journal of Banking and Finance Law and Practice. 30(1). 20-42.
17 Peel, J., Osofsky, H., & Foerster, A. (2017). Shaping the Next Generation of Climate
Change Litigation in Australia. Melb. UL Rev. 41. 793.
18 Pearson, G. (2018). Enforcement and Effectiveness of Consumer Law in Australia.
In Enforcement and Effectiveness of Consumer Law. (pp. 75-97). Springer, Cham.
19 McLaren, J. (2019). Laws to protect tax whistleblowing in Australia: what does this
mean for taxpayers and the taxation profession. Australian Tax Review. 48. 24-41.

28. In case of moving forwards to the next situation, the cases reflects the matters related
to entering into the company. Thus, it indicates that converting the partnership
business into the limited company20. The rule of the ASIC are involved in the cases as
through their rules and regulation imposed in respective of managing the business or
registering the business into limited company. It is the duty of the owner to follow the
accurate guidance. After making application for converting the business, the partner
became the shareholder of the company and also it is stated that if the company is
converting the business into the private company, than the shareholder are not less
than two in numbers.
29. It is also stated that power of directors and shareholders are also stated in the
document which is made in context of new registered company. Once the company
carry the right to continue the business, Sam can order the directors and shareholder
to attend the meeting or also share their opinion on the particular agenda. This
indicates that they all are involved in the company decision and also to show the
smooth working of the company, it is represented through the balanced sheet and
company financial accounts21. By this procedure, it helps in maintaining the norms
and standards mentioned under the corporation Act, 2001.
30. In respect of selling the business to the new company, it is stated that the shares are
such profits which is given to the shareholders or employees regarding understanding
the assets of the business. Thus, in respect of Sam, she is liable to get paid in respect
of having additional profits which the company earned during the exiting year22. As
dividend are declared in company, if the assets exceeds its liabilities and also
company have surplus benefits to provide additional profits to their employees and
shareholders.
31. In context of receiving payment for the work committed in the company, it is mainly
received through offering the higher post or also offering more shares of the company.
As Sam considered to be the shareholder of the new company and thus liable to get
more shares in return of the work committed23. Through this manner, the dedication
and loyalty existed at work place and also they deliver more quality services in the
new company. As it is necessary to manage the interest and honesty at work place and
thus resulting in providing more benefits in the business24.
20 Rajapakse, P., & Senarath, S. (2019). Summary of Conclusions. In Commercial Law
Aspects of Residential Mortgage Securitisation in Australia. (pp. 269-280). Palgrave
Macmillan, Cham.
21
Whitford, K. (2018). 17 Corporations Law in Australia. Company Law in East Asia.
22 Ramsay, I., & Webster, M. (2019). Court Review of the Decisions of the Australian
Financial Complaints Authority and its Predecessors. Journal of Civil Litigation and
Practice. 8(1). 6-30.
23 Ramsay, I. (2018). A History of the Corporations and Markets Advisory Committee
and its Predecessors. Published as. 56-72.

32. As in respect of bringing innovative ideas in business, it results in getting more
competitors in market regarding dealing in same kind of products or services. In
respect of securing the business from the competitors, they are securing their business
under the intellectual property rights under the various forms such as patent act, 1990,
Trade Mark act, 1995 and Copyright act25. Various forms of activity are protected
under the particular intellectual property right such as music, or artistic work are
protected under the copyright act. In case of new and innovative design such as logo,
packing style or any sign are protected under the trade mark and design act. In
respective of any new ideas or thoughts, than they are secured under the patent rights.
33. Thus from above respective, if Sam feel that their business are protected and also
different. Than they protected the business under the intellectual Property right act.
By this aspects, the right of the business are secured for the longer way.
Yours sincerely
XYZ
Trainee lawyer
24 Tie, F. H. (2019). Modernisation And Reform Of Corporate Law Amidst The
Influence Of Globalisation And The Development In Information
Technology. Journal of Malaysian and Comparative Law. 29. 160-176.
25 Sartori, J. (2017). Australia's foreign investment legislation and its application to
acquisitions of shares in Australian mining corporations. Australian Resources and
Energy Law Journal. 36(2). 53.