LAW 6000 Business and Corporate Law- Principles of Partnership Law

Felix a uni student aged 20 is keen to earn some income during the summer holidays. He is employed as a casual to pick lavender. He will be paid $25 cash per bag.

One Sunday Xiaojing tells him that he is doing such great work she will pay him an extral $100 for work he did yesterday clearing garden beds.

She reneges on her promise and Felix is outraged. He wants to know if he can sue Xiaozing for the $100.

Advise Felix

Answers

1. Issue

The issue which needs to be determined in accordance to the scenario is that whether herbal products business would be liable to the contract entered upon by Lance based on the principles of partnership Law

Rule

The partnership Act 1963 governs the operation of partnership businesses operating within Australia.

At common law the partnership business is bound to the act of its partners and in the same way the partners operate as each other’s agent. The principle had been discussed by the case of Smith v Anderson (1880) 15 Ch D 247 at 273.

According to section 9 of the PA the partners are bound by the act of each other committed in the course of business unless the partner had no power to act in a manner which he did in relation to a firm or the third person with a deal has been entered into knows about the fact that the partner has exceeded their liability or he is actually not the partner of the firm.

It was in the Green v Beesley (1835) 2 Bing N C 108 at 112 case the concept of partnership was referred as ‘Mutual Preparation’ without formation of any legal entity.

In the case of Lang v James Morrison & Co Ltd (1911) 13 CLR 1 at 11 it had been ruled by the court that where the third party had no knowledge about the situation that a partner has exceeded his authority provided by the firm and relied upon the fact that the person is actually a partner and working within his authority to get into a deal, than the deal would be binding on the firm.  

If the partner exceed authority provided by the partnership a claim can be made against him personally for the breach of partnership agreement

Application

In has been provided in the given situation that Lance is the partner in Herbal Product business.  He has got into a deal to purchase a ute from Mighty Motors Pty Ltd which was worth $25000. The sales person representing  Mighty Motors Pty Ltd got into the contract with Lance as he was told by Lance that his is the partner is the herbal product firm. However Lance did not have the authority to purchase a car for more than $20000. In the given situation the sales man had no idea that the authority provided to lance by the partnership firm was limited to $20000. The fact was also not notified to him by lance. According to the above discussed principles the partners are bound by the act of each other committed in the course of business unless the partner had no power to act in a manner which he did in relation to a firm or the third person with a deal has been entered into knows about the fact that the partner has exceeded their liability or he is actually not the partner of the firm. The partners can also make a claim against the partner who has violated the agreement

Conclusion

Therefore the partnership would be bound to the contract and can make a claim against Lance

2. Issue

• The issue in this case is to determine whether consumers can make a claim in relation to the moisturizer according to the Australian Consumer Law misleading and deceptive conduct
• The issue is also to determine whether Saqlaim is bound to the contract based on principles of  unconscionable conduct

Rule

According to section18 of the Australian Consumer Law provided through Schedule 2 of Australian Competition and Consumer Act 2010 a person is restrained from indulging into a conduct in the course of trading which is deceptive or misleading or is likely to mislead or deceive a consumer.

According to section 56 of the ACL, goods which are sold by a description must conform to such description or else a claim under consumer guarantees can be made by the consumer.

Section 21 of the ACL prohibits unconscionable conduct. A conduct can be unconscionable if it is harsh or oppressive. The conduct cannot be unconscionable merely because it is unfair, it has to be of such a nature that it is against the norm of society. A business behavior can be adjudged as an unconscionable conduct if it is oppressive harsh and not within the scope of business bargaining.

According to section 22 of the ACL it is an unconscionable conduct on the part of the seller if the other party did not have the capacity to understand the documentation used.

Application

In the given situation it has been provided that Xiaojing has made an advertisement in relation to a moisturizer for sale. The advertisement makes a claim that the moisturizer is going to slow the effect of aging on skin. However the claim made through the advertisement is false. Making a false claim can be regarded as a misleading and deceptive conduct. According to section 18 of the ACL a person is restrained from indulging into a conduct in the course of trading which is deceptive or misleading or is likely to mislead or deceive a consumer. Thus the section has been violated by Xiaojing and she would be punishable for the breach of such section under the provision of ACL. In addition if the product is purchased by any consumer and the anti-ageing effect does not take place they can make a claim against the business under section 56 of the ACL

The partnership has sold the Ute to Saqlaim who did not have much knowledge about English. Lance used his skills to persuade him to get into a contract for the purchase of the Ute. Here the business has conducted unconscionable conduct. This is because according to section 22 of the ACL it is an unconscionable conduct on the part of the seller if the other party did not have the capacity to understand the documentation used.

Conclusion

Saqlaim is not bound to the contract  

Consumer can claim the remedy under consumer warranties of repair, replace or refund.

3. Issue

The issue which has to be determined in this case is that whether a valid contract has been formed between Felix and dash so that Felix can make a claim of $100 which have been promised to her by Dash.

Rule

A contract is formed between two parties when there is a proper offer acceptance and consideration as provided in the case of Associated Newspapers Ltd v Banks (1951) 83 CLR 322.

Consideration is an element of contract according to which one party to the contract commits an act or make an omission in return of the promise made by the other party.

In the case of dash it had been ruled by the court that a past consideration is not a valid consideration. This means that deal with has been committed in the past cannot be considered as a consideration in contract law.

For the formation of a valid contract the proper offer is acquired which means that one party to the contract has to make a statement which would contain the intention to legally binding the other party towards terms. A contract cannot be created between two parties without the presence of intention to create legal obligation.

Application

In the given situation it has been provided that Felix is 20 years of age and therefore has the legal capacity to get into a contract. She is appointed as a worker who pics lavender and this paid $25 cash for each bag. She has been made a promise by Xiaojing that he would be paid $100 for the work she had perform yesterday. However a reasonable person would interpret such promise as a valid offer. In addition there is no consideration to this offer because what Felix has done was a past consideration and it cannot be considered as a valid consideration according to the rules of contract. Therefore even if A promise was made by Xiaojing there was no legal in tension in the promise to former binding contract. When a binding contract has not been formed between the parties there is no right to make a claim.

Conclusion

Felix cannot make a claim against Xiaojing

References 

Associated Newspapers Ltd v Banks (1951) 83 CLR 322.

Australian Competition and Consumer Act 2010

Green v Beesley (1835) 2 Bing N C 108 at 112

Lang v James Morrison & Co Ltd (1911) 13 CLR 1 at 11

Smith v Anderson (1880) 15 Ch D 247 at 273

The Partnership Act 1963 (Cth)