Understanding Business Partnership Process in Australian Law (Coursework Sample)
A case study. I was requested to identify an issue and give my response based on the Australian law.source..
Solution 1 (Business Entities)
In this case of Daniel and Fast Bikes, the issue is whether Daniel would be legally considered a partner to Madison, and his potential liability for the 5,000 dollars owed to Fast Bikes for the supply of tyres to Tolling Hill Bikes (a business they own together).
In Australia, most jurisdictions allow for business partnerships subject to legally signed or verbal contracts. According to the Partnership Act 1891 (SA), all parties in partnership agreement are liable for their partner's actions. The law further states that a person dealing with one partner can presume that all partners will share equal and total liability for anything promised in the deal. This law means that each partner in a partnership agreement can create liability or enter into a contract, which is legal and binding as though the parties had created the liability or entered into contracts themselves.
Moreover, looking at another similar case, the courts tend to rule in favour of the contacts made verbally on in writing between two or more parties. In Poussard v Spiers & Bond (1876) 1 QBD 410, the contact between Poussard, the opera singer and the producer was repudiated for her failure to perform at the onset of the season.
Daniel and Madison entered into partnership contact, which they both agreed to and set terms. Some of the terms were that both parties would share "any" cost and that each party would contribute materials, supplies and repair equipment. Although Madison entered a contract with Fast Bikes, the law under Partnership Act 1891 (SA) dictates that any party can enter into contact and create liability and other parties will share the liability equally and in totality. On this ground, Daniel is considered a partner and is liable for the 5,000-dollar debt owed to Fast Bikes. While Daniel may defend himself that the supply agreement was not shared as per the contract, it is not enough ground to repudiate the contact.
Daniel will most likely be considered a partner in this case and liable to the 5,000 dollars supply debt owed to Fast Bikes. Although the contract states that the cost of supplies would be shared, it did not mention the proportions. However, to the Fast Bikes, the supplies were done to the Rolling Hills Bikes, which is co-owned by Madison and Daniel. Therefore, Daniel is liable to the debt in full as he is the only partner available.
Solution 2 (Contacts)
The issue here is whether Bruce has a legal ground of claiming full payment of the amount 40,000 dollars after he accepted the 25,000 dollars from Rupert as a full settlement of the account.
Two or more people can have legally signed a contract or verbally agreed on terms. In the past, the courts have ruled in support of the verbal agreement made just before the signing of the contacts. In de Lassalle v Guildford (1901) 2 KB 215, de Lassalle asked Guildford whether drains were in good order and was assured of the same, just before signing of the contract. Despite the terms in the lease that the tenant was to take good care of the drains, the court held that Guildford, the defendant was in breach of oral collateral contact and that de Lassalle would not have signed the lease.
Similarly, in the Van Den Esschert v Chappell  WAR 114, the purchaser was assured by the vendor that there are no white ants in the house just before the signing of the contact. When the purchaser sued the vendor after finding out that the house is infested by white ants, the court held that the assurance given by the vendor before the signing of the contact informed the agreement between the two parties. In this case, the oral collateral contact was treated as a condition precedent.
The contact between Bruce and Rupert initially stated that the amount 40,000 dollars would be paid after the completion of the contact as a full settlement of the account. However, Rupert later would later request Bruce for a reduced fee citing various reasons. Bruce then accepted Rupert's request of paying an amount of 25,000 dollars as full settlement of the account, which could be argued to be due to the reasons were given by Rupert. Legally this could be treated as an oral collateral contact and can be assumed to have informed the agreement between Bruce and Rupert. Moreover, the palms that were given to Bruce were not part of the contact and can, therefore, be treated as a gift.
Bruce can help successfully sue Rupert and claim full payment as per the initial contract. Bruce can claim that he only agreed to the second contact of accepting 25,000 dollars as full pa
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