Enterprise Law Assignment 700254: Business Entities and Contracts

This Enterprise Law assignment solution addresses key legal issues related to business entities and contract law. The assignment analyzes a partnership scenario involving Rebecca and Joel, focusing on their liabilities concerning unpaid bills, property damage, and potential conflicts of interest. The solution applies relevant sections of the Partnership Act 1892 (NSW) to determine Rebecca's potential liabilities and the obligations of the firm. The second part of the assignment examines a contract dispute between Tanya and Bentley, evaluating breach of contract and potential damages. The solution explores contract formation, breach, and remedies. The third part analyzes various scenarios involving Abdul, Bianca, Mason, and Stephanie to determine the formation of contracts based on their communications with Jeremiah, covering offer, acceptance, and consideration. The solution applies the IRAC method, providing a structured approach to legal problem-solving.

Corporation & Enterprise Law
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Table of Contents
Answer 1: Business entities.............................................................................................................3
Facts.................................................................................................................................................3
Issue.............................................................................................................................................3
Rule..............................................................................................................................................4
Application..................................................................................................................................5
Conclusion...................................................................................................................................6
Answer 2: Contract..........................................................................................................................6
Facts.............................................................................................................................................6
Issue.............................................................................................................................................7
Rule..............................................................................................................................................7
Application..................................................................................................................................8
Conclusion...................................................................................................................................9
Answer 3..........................................................................................................................................9
References......................................................................................................................................10
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Answer 1: Business entities
Issue
1. Is Rebecca potentially liable with regard to the demanded payment of the unsettled bill of
$1500 by Ooh Orchids?
2. Is Rebecca potentially liable with regard to the damage of $5000 caused to the car of
another driver?
3. Is Rebecca potentially liable with regard to the separate business of selling flowers
specifically for weddings without informing Joel?
Rule
1. As per Section 1(1) of the Partnership act 1892 (NSW) (‘the Act’), ‘Partnership’ refers to
the relation existing between the persons doing business with a purpose to attain profit as
well as take account of incorporate limited partnership (legislation.nsw.gov.au, 2012).
 Doing business refers to the ongoing activity by the parties in context of the
business- Khan v. Miah (2000)
2. Section 9(1) of the Act states that all the partners in the firm are liable for all the debts
and obligations of the firm in general partnership (legislation.nsw.gov.au, 2012).
3. Section 10 (1) of the Act states that the firm is equally liable as the partners for acting or
omitting to act and the penalty is incurred upon, for any kind of wrongful act or omission
by the partners in the firm, and in this course, loss or injury is caused to others who are
not the partner (legislation.nsw.gov.au, 2012).
4. Section 30(1) of the Act states that it is the duty of the partner not to act in a manner to
compete with the firm. The section states that if a partner carries on any business of
similar nature, which can give competition to the existing business without the
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permission of the other partners in the firm, it is the responsibility of the partner to
comprise and to pay over all the profits to the firm made in that business
(legislation.nsw.gov.au, 2012).
Application
According to Section 9(1) of the Act, it is the potential liability of Rebecca to pay the
unsettled bill of $1500 by Ooh Orchids because of unlimited liability on her for all the debts
and obligations incurred upon the business.
As per the elements of partnership in the Act, it has been stated that the liability of the
partners remains unlimited in case of a general partnership. As per Section 1(1) of the Act,
the partners remain responsible for all the profits and losses incurred by and to the business.
It has been decided by Rebecca and Joel that both will conduct a business together and after
extensive market research, both decided to conduct online florist business named ‘Fusion
Flowers’. The profit was to be equally distributed in 50:50 ratios. So, both decided to conduct
a common business with a view to attain profits equally.
As per Section 10(1) of the Act, it is the responsibility of the firm to be liable for the acts or
omission by the partners in the process of doing business. That is why, if she has not been
informed about the purchase of expensive flowers, she should discuss the matter with him
but payment must be cleared by her on behalf of the company (Commonwealth of Australia,
2019).
In accordance with section 10 (1) of the Act, which states that the firm is equally liable as the
partners for acting or omitting to act and the penalty is incurred upon, for any kind of
wrongful act or omission by the partners in the firm, and in this course, loss or injury is
caused to others who are not the partner, the damage of $5000 caused to the car of another
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driver should also be compensated by the company because it is a kind of obligation of the
business to compensate for the damages caused by the business partners. The damage has
been caused due to the pressure imposed by Rebecca due to whom Mathew crashed into a
standing car. To pay for the damages is the liability of the firm because the delivery man was
performing on behalf of the firm, so the liability is incurred upon the firm.
As per Section 30(1) of the Act, it is the duty of the partner not to act in a manner to compete
with the firm. It has also been stated that if a partner carries on any business of similar nature,
which can give competition to the existing business without the permission of the other
partners in the firm, it is the responsibility of the partner to comprise and to pay over all the
profits to the firm made in that business. So, the potential liability of Rebecca with regard to
the separate business of selling flowers mainly for weddings without consulting Joel does not
occur because it is the duty of the partner not to compete with the firm in which he/she is in
partnership only if the partner is carrying out the business of similar nature. However, as
stated in the case, the joint business of Rebecca and Joel was not supplying flowers to events
like weddings considering the increase in the insurance costs due to such supplies. Rebecca
and Joel have previously discussed about the profitable nature of supplying flowers to the
wedding industry but not agreed to the same. Furthermore, she would not be doing
competitive business but entirely different business, which will not affect their partnership
business of online flower selling.
Conclusion
1. It is the potential liability of Rebecca to pay the unsettled bill of $1500 demanded by Ooh
Orchids on the purchase of orchids from the shop as being a partner in the business, it is
the responsibility of the firm to clear the debts and obligations incurred upon by the
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partners of the firm in due course of their actions or omissions (legislation.nsw.gov.au,
2012).
2. It is the potential liability of Rebecca to pay damages of $5000 on behalf of the company
to another car driver because the firm is considered to be as liable for the wrongful acts or
omissions on behalf of any partner in the business and penalty incurred upon them is to
be cleared by the firm (legislation.nsw.gov.au, 2012).
3. There is no potential liability of Rebecca against Joel with regard to the separate business
of selling flowers mainly for weddings without consulting him because she is not doing
same business but the business is quite different from that of their existing business and it
cannot give competition to their business. So, she will not be required to share profits of
her private business with the existing partner Joel (legislation.nsw.gov.au, 2012).
Answer 2: Contract
Issue
Is Tanya eligible to obtain damages against Bentley for breach of the contract, if yes what
damages?
Rule
1. According to the “Australian Competition & Consumer Commission” (ACCC), the
contract refers to an agreement between two or more parties and is legally enforceable
(Australian Contract Law, 2019). The contract formation takes place when one party
makes an offer and the other shows the intention to accept it.
2. The Australian Contract Law is categorized on these bases i.e. Formation of contract
takes place when a promise is an undertaking by an individual to perform or refrain from
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doing something or making a promise in return. A promise becomes legally binding
based on the meetings of certain criteria (Australian Contract Law, 2019). It requires an
agreement, which include offer and acceptance; consideration; intention to create legally
binding contract; capacity to contract; and legal compliance of contract.
3. The terms classified as essential allow the innocent party to claim damages for breach.
4. The terms are considered as implied when complete intent of the parties to the contract is
expressed. After the payment of price requested by the promisor in return of promise, the
contract formation takes place (Australian Contract Law, 2019)
5. The terms should be constructed to provide them the meaning intended by the parties.
The intentions should be revealed factually, what a reasonable person would think to be
intended by the term.
 The Court confirmed the principle of objectivity through which the rights and
duties of the parties of the contract are identified- Toll (FGCT) Pty Ltd v
Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165
Application
The contract has been made between Tanya and Bentley to take her to the concert at Sydney and
back. As Bentley failed to perform accordingly, it is important to evaluate when and if a valid
contract was made, nature of terms, obligations, and what remedies might be available in case of
breach of the contract.
In this context, both the parties i.e. Tanya and Bentley entered into a contract after she paid the
price asked by Bentley in the form of consideration. Both of them displayed the intention to enter
into the contract. She had no other option to reach Sydney on the date of the contract if Bentley
would not have kept his promise. He has breached the contract by not fulfilling his liabilities to
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perform the contract. She can claim for damages, however, it would not keep her in the same
position, at which she would have been if the contract has been fulfilled.
Bentley should pay her the deposit amount he had taken from her along with the total costs
incurred in travelling to Sydney.
Conclusion
As Bentley had breached the contract and deprived Tanya from attending the concert of her
favorite pop group. He should pay the damages of $1500 to Tanya in order to compensate her for
the breach as well as to deprive her from the joy to meet her favorite pop stars.
Answer 3
i) Abdul entered into conversation with Jeremiah by sending an email and both
negotiated the terms and conditions of the contract before entering into a final
contract. Instead of $500 and the removal of a tree before 10th March, the negotiation
between the two has not yet settled down as last response of Jeremiah is to make it to
$375 and removal of a tree till 15th March. When the two will agree at a final price
with the date confirmed to be 15th of March, it will take the form of a contract.
ii) Bianca calls Jeremiah and expressed her interest in the tree and arranged a date for
meeting. There has been no negotiation between the two and proper communication
between the two has not been established. The communication did not end between
the two with an agreement to establish contract. As Jeremiah has not responded to
Bianca, the process of offer and acceptance along with consideration has not taken
place. Two-way communication and agreement on the terms and conditions after
offer to be given by one and accepted by the other is required (ACCC, 2019).
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iii) Mason sent the email to Jeremiah at night and accepted the terms and conditions of
the contract to which she replied with acceptance. Both entered into a legally binding
agreement but Mason realized that he cannot enter into such an agreement and sent
another mail to inform about the same. However, the formation of contract will take
place after the consideration and all other terms and consideration are fulfilled. The
emails are considered as binding if the formal agreement has been done by offer
given by one and accepted by the other (Ready, 2015).
iv) Stephanie calls Jeremiah but she does not answer. Stephanie leaves a message that
she is on her way with payment and five tree removalists, of which Jeremiah has no
information. She added that she will leave the money in an envelope under the door
step if Jeremiah would not be at home. No mutual communication has been
established between the two and Jeremiah has asked to call or email to enter into
agreement and not to show agreement even on leaving message on answering
machine (Australian Contract Law, 2019). She has not accepted the offer given by
Stephanie, so no formal agreement has taken place between the two. It would be
illegal if Stephanie get the tree removed in her absence without having her responded
to the message sent by her (Australian Contract Law, 2019).
References
ACCC, 2019. Entering into a contract. [Online]
Available at: https://www.accc.gov.au/consumers/contracts-agreements/entering-into-a-contract
[Accessed 17 December 2019].
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Australian Contract Law, 2019. Australian contract and consumer law. [Online]
Available at: https://www.australiancontractlaw.com/
[Accessed 17 December 2019].
Australian Contract Law, 2019. Contract Law. [Online]
Available at: https://www.australiancontractlaw.com/contractlaw.html
[Accessed 17 December 2019].
Australian Contract Law, 2019. Formation of contracts | Consideration. [Online]
Available at: https://www.australiancontractlaw.com/contractlaw/formation-consideration.html
[Accessed 17 December 2019].
Australian Contract Law, 2019. Remedies. [Online]
Available at: https://www.australiancontractlaw.com/contractlaw/remedies.html
[Accessed 17 December 2019].
Australian Contract Law, 2019. Scope and content: Terms. [Online]
Available at: https://www.australiancontractlaw.com/contractlaw/scope-terms.html
[Accessed 17 December 2019].
Commonwealth of Australia, 2019. Business structures. [Online]
Available at: https://www.business.gov.au/planning/business-structures-and-types/business-
structures
[Accessed 17 December 2019].
legislation.nsw.gov.au, 2012. Partnership Act 1892 No 12. [Online]
Available at: https://legislation.nsw.gov.au/inforce/f9dfc85e-8f91-e79f-99e5-
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8042677519f3/1892-12.pdf
[Accessed 23 December 2019].
Ready, K., 2015. Australia: Email contracts – Who, What, When and Where – The formation of
binding agreements through email exchanges. [Online]
Available at:
http://www.mondaq.com/australia/x/431732/Contract+Law/Email+contracts+Who+What+When
+and+Where+The+formation+of+binding+agreements+through+email+exchanges
[Accessed 17 December 2019].
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