ILAC

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ILAC

ISSUES:

Under the Partnership Act of 1891

Was the presence of Christian in the business in harmony with the Act?

If Christian was legally a partner in the business, did he have to get permission from the other members before he made the decision of purchasing the chairs?

Is it possible for Fantastic to file a case against the business in order to claim his balance?

If it is legal for Fantastic to file a suit against the business, does he do so against Christian alone or against all the partners in the business?

LAW: Business Law – Partnership

Statute: Partnership Act 1891(Qld)

Chapter 17.50: continuation of a partnership business

Chapter 17.57: Business created with the main aim of making profit

Chapter 17.220: Oblique conditions in a partnership

Chapter 17.350: How partners relate to a third party

Common Law:

M Young Legal Associates Ltd v Zahid (2006) WLR 2562- States that, a person is can be a partner even if this person does no want a share of the profit generated from the business

Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd (1985) 155 CLR 541- This section states that each partner is a manager of the business and the other partners for the rationale of the partnership business.

APPLICATION

According to Chapter 17 of the Partnership Act of 1891, the responsibility of verification, the applicant who is Fantastic, must set up these elements in order to demonstrate that he should get back his balance:

Whether Christian is a valid partner of the business

He entered into the business agreement with Christian on the grounds of noticeable power

Should Fantastic’s prove all this without any discrepancy, then the defendant has no choice than to make a defense and the appropriate remedies will be evaluate

There are several legal issues which come in this case. For one to reach an effectual clarification, he/she must consider all the legal issues in this case. The basic issue in this case is how the three friends: Harry, Allan and Christian are determined to create a business relationship. Considering the type of business they want to venture into, it is good to understand whether the type of business is an appropriate partnership kind of business or not. The legal issue here is whether Christian is an applicable partner in the business or not. Looking deeper at the partnership kind of business, parties involved must run the business together and they must all be enthusiastic to run the business and the main aim of running the business is profit making. The partners can make an agreement amongst themselves orally or in writings. The second and last legal issue to be looked at is whether it is possible for Fantastic to claim the remaining balance of $ 4,000 or not from the business.

The law that can be used to rule out the matters occurring in this case is the Partnership Act of 1891. Chapter 17 of the Act explains the word partnership into details as a form of business between two or more people and the main aim of such a business is to profit making. The three friends: Harry, Allan and Christian sat down and reached an agreement to venture into the hospitality business. Their main aim was to generate profit from the business. The partners agreed to the business without any complain. This kind of agreement and business goes in line with the partnership kind of business.

The three friends had to come with a business plan for their business in order to make their business flow smoothly. This is clearly spelt out in the chapter 17.50 of the act as it is stated in the act that, for a business to run smoothly and grow the business must have a plan. Allan, Harry and Christian fulfilled the rule as stated in the chapter 17.50 of the act as they had a business plan for a restaurant.

When Allan and Harry asked Christian to join them in their business, Christian accepted but on conditions that, he will only be part of the business but will neither contribute any capital nor will he share the profits of the business though he must be entitled to a yearly retainer. The issue creates a controversy because it is not clear whether Christian’s conditions were in line with partnership business or not. In the Act, the answer to Christian’s case is seen in Chapter 17.57 where it is stated that, people can be partners in business even if they don’t contribute any capital or claim a share of the profit made. The vital part of this issue is depicted in the verdict of M Young Legal Associates Ltd v Zahid (2006) WLR 2562. Whether or not Christian contributed capital does not bar him from being a partner in the business.

It is now clear that Christian is a legal partner of the business. The next part is to understand the rights and duties that business partners have. Chapter 17.220 shows that the duties and privileges of partners. The privileges and duties of partners are that, each member of the partnership business is allowed to conduct major management of the business. Christian had the duty of purchasing for the business and supervising what Allan and Harry were doing and giving them appropriate advice.

Chapter 17.350 of the Act: Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd (1985) 155 CLR 541. Support Christian’s act of buying chairs from Fantastic. According to the Act, Christian did so because he had the powers to do so as part of the partnership. In order to approve the fact that Christian was part of the business, the letter he faxed to Fantastic had the business’s letter head. Whatever Christian did was not wrong because he acted on behalf of the other members of the business.

Fantastic can therefore claim his balance from the business because Christian’s act was not against the Partnership Act of 1891. Christian did not act as an individual but acted as part of the business and he acted on behalf of the other members of the business as stated in the Act.