HI6027 Business & Corporate Law: Case Studies in Partnership & Agency

This assignment presents two case studies focusing on business law principles. The first case examines a partnership dispute involving Lucy, Seamus, and Koo, addressing issues such as partnership formation, liability for business debts, breach of partnership obligations, and the impact of a partner's death on the business. It applies the Australian Partnership Act 1963 to determine the rights and responsibilities of each partner. The second case study explores agency law through the scenario of Martin, a sales manager at Swimmingpool Co Pty Ltd. It analyzes the company's vicarious liability for Martin's actions, his fiduciary duties, and the legal implications of his misconduct and plans to start a competing business. The analysis references relevant case law to support the conclusions.

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

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Table of Contents
Question 1......................................................................................................................2
References......................................................................................................................3
Question 2......................................................................................................................3
References......................................................................................................................3

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Question 1
Issue
The issues need to be determined in this cases are:
I. Whether Lucy, Seamus and Koo have a partnership between them;
II. Whether Lucy and Koo shall be held liable to contribute for buying the ride-on
mower;
III. Whether Lucy has breached her obligation under partnership for carrying out her
personal work in the weekend;
IV. Whether Lucy, Seamus and Koo could be identified as partners of LuSeKo by FastCut
for bringing legal action against them;
V. Whether Seamus’s death will affect the partnership business;
VI. How the partnership property could be determined by Lucy and Koo and how the
losses incurred by the partnership could be met by the property of the partnership
business.
Rule
In Australia, the Partnership Act 1963 deals with the matters relating to partnership
for of business. Section 6 of the Partnership Act states that a partnership is a form of business
which involve two or more people who carry on a common business for making profit, and
also include a limited partnership.
Under Section 9 of the Partnership Act, the partners of the partnership firm shall be
bound to each other and they would work as the principal as well as agents for carrying out
the business of the firm. When a partner enters into a contract on behalf of the partnership
firm, all the other partners as well as the partnership firm shall be bound by it. In case, one of
the partners lack the authority to enter into an agreement on behalf of all other partners or
when the other party knows that such partner is not authorised to enter into an agreement on

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behalf of the firm, then in that case, the agreement shall not be binding on the other partners
as held under Section 9 of the Act.
Under Section 33 of the Partnership Act, the partner who keeps the record of the fund
of the firm must furnish proper information about it, or otherwise it may affect the firm’s
operation. Section 35 of the Act directs the partners to furnish information as the personal
benefit that they may have incurred without the knowledge of the other partners, or under the
firm’s name or by making use of the property of the firm. Section 35 restrict the partners from
carrying out any competitive business that challenges the productivity and operation of the
firm. A partner shall be liable to return the gains to the firm which he incurred by carrying
out a similar business or by using the firm’s name without the knowledge of other partners.
Section 38 of the Partnership Act states that the partnership firm shall be subjected to
dissolution in case a partner dies. However, such a provision can be amended by inserting a
clause contrary to the provision. It can be agreed that the partnership shall be carried on if
one partner dies in a partnership firm comprising of more than two partners (Hodge and
Greve 2017).
As per Common Law, the properties held under the partnership firm would be
considered to be joint property of all the partners and shall be used under the firm’s name.
Therefore, a partner shall be authorised to make use of the firm’s property for the purpose of
the partnership firm, irrespective of the knowledge of the other partners (De Vries and
Yehoue 2013).
Application
In this case, Lucy, Seamus and Koo started a partnership business and named it
LuSeKo for operating their lawn-mowing business. They made use of the computer of Lucy
and printed flyers to advertise about their business all around the neighbourhood and soon
they gained several clients. In the course of business, Seamus engaged in cutting the grass

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using the law-mower, Lucy engaged in removing the clipped grasses and Koo took the
responsibility of keeping records. Therefore, it can be established that Lucy, Seamus and Koo
were engaged in a partnership form of business, governed by the Partnership Act 1963.
After sometime Seamus thought of investing in a ride-on-mower for the business as
he thought that would increase the productivity of the business as a ride-on-mower works
better than a lawn-mower. He entered into an agreement with FastCut for purchasing the ride-
on-mower in the name of their partnership business. Therefore, it is evident in this case that
the agreement entered by Seamus for the benefit of the business would be applicable on all
the partners as well as the partnership firm. The firm and its partners shall be bound by the
agreement with FastCut.
In case the partners try to evade their obligation to pay FastCut due to disagreement
about the purchase of the ride-on-mower, they could trace the partnership firm and the
partners through the Registrar of the Partnership business of the certain area from they
operated their business. FastCut shall be liable to recover the price of the ride-on-mower from
the firm by bringing a legal action against it. In addition, Lucy carried out a business of her
own on the name of LuSeKo, which is in contravention to the provisions of the Partnership
Act.
Subsequently, on Seamus’s death, the partnership firm may face dissolution unless a
contrary provision to continue the firm by Lucy and Koo was incorporated in the partnership
agreement. However, in this case, there is no evidence of the existence of such a clause of
continuation of the firm even after the death of a partner, therefore LuSeKo shall face
dissolution.
Conclusion
Therefore, from the rules and its applications, it can be concluded that:

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I. Lucy, Seamus and Koo have a partnership between them;
II. Lucy and Koo shall be held liable to contribute for buying the ride-on mower;
III. Lucy has breached her obligation under partnership for carrying out her personal work
in the weekend;
IV. Lucy, Seamus and Koo could be identified with the help of the Registrar of
partnership business as partners of LuSeKo by FastCut for bringing legal action
against them;
V. Seamus’s death will affect the partnership business and will lead to its dissolution;
VI. The partnership property shall be determined by Lucy and Koo and they shall be
liable to compensation for the losses incurred by LuSeKo and also to pay the price of
the ride-on-mower to FastCo.

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Question 2
Issue
The issues of this case is to determine:
I. Whether Swimmingpool Co will be held liable for Matrtin’s actions;
II. Whether the company shall be eligible to claim that they have no liability for the
Martin’s action as he did not follow instructions;
III. Whether Martin will be held liable to his employer for his actions;
IV. Whether Martin has breached any law for planning to set up his own business.
Rule
The law of agency deals with contractual, non-contractual as well as quasi-contractual
relation involving the principal who authorises another person known as the agent to carry on
with the operations of the particular business concern. The agent is authorised by the
principal to act on his behalf. Under the law of agency, the principal confers certain express
as well as implied rights upon the agent to carry out on with the business along with taking
decisions on behalf of the principal in his absence (Butler et al. 2013).
An agent acting on behalf of the principal as per the rights vested upon him shall
make the principal liable to be bound by the decisions made by the agent on the course of
carrying out his duties. Therefore, the principal shall be held liable for the decision made the
agent, even it proves to be wrong and harmful for the business. The principal shall be liable
to compensate the clients in case the decision made by the agent affects a customer and shall
not be able to deny his liability that arises from the misconduct of the agent as held in
Panorama Developments (Guildford) v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711.
However, if the principal had expressly barred the agent from carrying out a particular
activity and the agent disobeys it, the principal shall not be held liable for it, under the law of

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agency as seen in the case of Shaddock and Associates Pty Ltd v Parramatta City Council
(No 1). [1981] HCA 59. For the expressly rights that the principal vests upon the agent, he
shall not be able to deny their consequences as held in Midland Bank Limited v Seymour
[1955] 2 Lloyds Rep 147.
On a similar note, a principal shall be bound by vicarious liability under the Common
Law for any misconduct or illegal act of the agent (Bell 2013). However, it needs to be
established that the agent had conducted such illegal or deceptive act on his capacity of an
agent and not outside his authority vested by the principal. If it is proved that the agent had
acted within his authority, the principal shall be held liable to pay damages to the clients of
the business who has sustained losses due to the action or misconduct of the agent, as held in
Deatons Pty Ltd v Flew [1949] HCA 60.
In the case of Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136
CLR 529, it was held that the agent bears a fiduciary duty towards the principal and therefore
shall be liable to carry out his duties in good faith for the benefit of the principal. An agent
carrying out a conduct by contravening the direction provided by the principal shall be held
liable to bear the consequences of such misconduct as held in the case of Moore and Kettle v
Woolsey and Knill (1854) 4 E & B 243.
An agent is barred from incurring any personal gain from the business of the principal
in the course of his employment, unless he is authorised to do so as per the rights vested upon
him by the principal. In addition, ACCC v Flight Centre Travel Group Limited [2016] HCA
49, it was held in an agent is barred from carrying out a competitive business which could
challenge the business of his principal.
Application
In this case, Martin was working as a sales manager with Swimmingpool Co Pty Ltd
and was vested with the duty to quote prices and the variety of swimming pools to the

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potential clients of the company. He was also vested with the duty to collect the deposits paid
by the client to the company as an advance payment for the swimming pool installment work
and subsequently transfer the deposit to the account of the company. This holds the principle
of agency between Martin and Swimmingpool Co Pty Ltd.
The wrong decisions made by Martin in advising the clients of the company and
thereby the clients facing issues with the faulty installations would attract liability for the
company as Martin did so in the course of his employment. The company shall be held
vicariously liable for the mistakes of made by Martin.
However, the deceitful conduct of Martin not to deposit the amounts collected from
the clients and subsequently planning to open a similar business which would compete with
Swimmingpool Co would hold Martin liable for such wrongful conduct.
Conclusion
Therefore it could be concluded that:
I. Swimmingpool Co Pty Ltd shall be held responsible for the wrongful acts of Martin.
II. The company shall not be able to claim that it is not liable for Martin’s misconduct for
martin carried out such acts in the course of business.
III. On the other hand, Martin shall be made liable for his deceitful act towards the
company by not depositing the deposits collected from the clients of the company;
IV. Martin shall breach a law if he starts a competitive business.
V.

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References
ACCC v Flight Centre Travel Group Limited [2016] HCA 49
ACCC v Flight Centre Travel Group Limited [2016] HCA 49
Bell, J., 2013. The basis of vicarious liability. The Cambridge Law Journal, 72(1), pp.17-20.
Butler, D., Christensen, S., Willmott, L. and Dixon, B., 2013. Contract Law Case Book.
Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529
De Vries, P. and Yehoue, E.B. eds., 2013. The Routledge companion to public-private
partnerships. Routledge.
Deatons Pty Ltd v Flew [1949] HCA 60, (1949) 79 CLR 370
Hodge, G.A. and Greve, C., 2017. On public–private partnership performance: A
contemporary review. Public Works Management & Policy, 22(1), pp.55-78.
Midland Bank Limited v Seymour [1955] 2 Lloyds Rep 147
Partnership Act 1963
Shaddock and Associates Pty Ltd v Parramatta City Council (No 1). [1981] HCA 59