2105AFE Introduction to Business Law: Case Study on Partnership Law

This document presents a comprehensive case study analysis centered on business law, specifically addressing the complexities of partnership liability. The case involves a partnership running a restaurant, where one partner, Chris, establishes a competing business, leading to contractual obligations with a third party, Loki's Logistics. The analysis delves into the application of the Queensland Partnership Act 1891, particularly Section 12 and Section 33, to determine the liability of partners Luke and Liam for the contract entered into by Chris. The document explores the implications of Chris's actions, the breach of partnership terms, and the potential legal recourse available to the remaining partners and the third-party supplier. Furthermore, the assignment includes short answer questions exploring limited liability partnerships and registration requirements.

INTRODUCTION TO BUSINESS LAW

CASE STUDY ANSWER
Issue
The issue in the given case study is whether Luke and Liam are liable for the contract
entered by Chris with Loki’s Logistics.
Rules
The respective partnership acts of the states govern the matters of partnership
businesses, such as in case of Queensland, the Partnership Act, 1891. It is essential to note
that the principle of agency and equity are the chief pillars of the partnership firms. The
section 12 of the act, every partner of the firm is jointly liable for the debts and obligations
concerning the firm’s business, as incurred by other partner or partners when being part of the
partnership firm (Queensland Government, 2019a). This signifies that the partners will have a
liability towards the third parties even when there is no knowledge of the contracts entered
into by other partner or partners. Hence, it can be stated that third parties can sue the partner
of the firm for the contracts even when there is no awareness among the other partners of the
said contract. The said case can be established on the grounds of underlying presumption that
all the partners of the firm possess total and equal liability for the acts of the firm. In addition,
the section 33 states if a partner, indulges in carrying on any competitive business of the same
nature without the consent of the other partners, the partner must account for the same and pay to
the firm all profits made under that business.
Application
The following points are noteworthy in relation to the application of the above rules
on the given case scenario. In the given case, Luke, Liam and Chris are in a partnership for
the business of running restaurant called Thundering Tacos (TT). In the given case, Chris has
opened his own restaurant namely Marvel’s Mexican in the premises of the firm and uses
ingredients and equipment of the TT. Thus, it can be stated that Chris has breached the
section 33 of the act.
Further to state, an invoice has been received by the firm in absence of Chris for the
manufacturing of 1,000 cans of Godly Guacamole which has been ordered by Chris for
Marvel’s Mexican. It can be stated that Loki’s Logistics has entered into contract in capacity
of the third party with Chris with no knowledge of the irregularities and the fact that the said
product has been manufactured for Thundering Tacos or Marvel’s Mexican. Based on the
section 12, the Loki’s Logistics can sue the partners Liam and Luke in the absence of Chris

for the contract in the absence of knowledge of new business by Chris. Luke and Liam will
be jointly and severally liable for the acts of partnership firm.
Conclusion
The discussion in the previous parts aid to conclude that Luke and Liam are liable for
the contract with Loki Logistics for the payment of the said invoice. In addition, these
remaining partners can sue Chris for starting competitive business as that of the firm and
make good the expenses done by Luke and Liam for the said new business.

Question 1a
Section 49 of the Partnership Act 1891 (Qld) gives the definition of the Limited
Liability Partnership.
Question 1b
Section 49 states a Limited Partnership to be a partnership that is formed under this
chapter and is other than the incorporated limited partnership. The same constitutes a two or
more persons in which 1 or more partners are general partners and one or more are limited
partners. In addition a corporate may be general or limited partner under the said limited
partnership.
Question 2a
The chief executive is responsible for keeping the register all limited partnerships.
Question 2b
Section 51 of the act is comprised of information related to register and proof of
registration.
Question 3a
Section 53 prescribes the liability of a limited partner.
Question 3b
A limited partner in a limited partnership is liable to contribute towards the liabilities
of the firm to the extent of the amount shown in the register in relation to that limited partner
or the part of the amount that is remaining unpaid.
Question 4a
As per Section 60, a limited partner must not take part in the management of the
business of the partnership.
Question 4b
As per Section 59, the registered office of the firm cannot be located outside of
Queensland.
Question 5a
The registration of a limited partnership firm is done with the Form 1 named as
statement prescribed under section 50.

Question 5b
The fees for registering limited partnership is $150.90 (Queensland Government,
2019b).

References
Queensland Government (2019b). Limited partnership forms and fees. Retrieved from:
https://www.qld.gov.au/law/laws-regulated-industries-and-accountability/queensland-
laws-and-regulations/associations-charities-and-non-for-profits/limited-partnerships/
limited-partnership-forms-and-fees
Queensland Government (2019a). Partnership Act 1891. Retrieved from:
https://www.legislation.qld.gov.au/view/html/inforce/current/act-1891-007#sec.33