Question 1:
You are a business advisor and have a client who has been asked to join with three prominent and experienced business people in a collaborative business relationship. They have said to her that the most suitable business arrangement to share the risk of setting up a new business is to form a partnership.
She is to contribute capital while the others are to contribute their business skills.
You are aware that partnerships have a number of advantages as a business vehicle. It is generally recognised however that there are some disadvantages.
Advise the client of the advantages and disadvantages of adopting the partnership as an appropriate business form for her.
Question 2:
George and Harold carry on a business in the ACT as motor mechanics specializing in gearbox and transmission systems. They agreed that profit from the business was to be equally shared. The following things happened in the business.
George entered into the following transactions on behalf of the business although there was no express authority in the agreement for him to do so.
(1) George placed a buying order with Inter-share Company, sharebroker, for the purchase of 10,000 shares in Jupiter Company. He had intended to sell the shares shortly after the purchase for a profit, but because the stock market subsequently declined it was not appropriate to sell the shares.
(2) George entered into a five-year lease agreement with Kevin Leasehold Company for workshop accommodation situated close to the current workshop of the business.
(3) In the course of “mucking around” in the workshop one day, Harold negligently spilt some flammable oil that caught fire on Leslie, resulting in Leslie suffering severe bums.
Required:
(i). Discuss the rights of Inter-share Company as against Harold and the assets of the business for the purchase price of the 10,000sharesinJupiterCompany.
(ii). Discuss the rights of Kevin Leasehold Company as against Harold and the business.
(iii). To what extent is George liable for Harold’s negligence? Give reasons.
Question 3:
Sarah visits David Jones and purchases the following goods. With reference to statute and case law identify any legal consequences:
- Selecting the item from the shelf and taking it to the cashier, Sarah purchases a “luxury, deep filled duck-down pillow” to help her sleep. She uses the pillow and the following morning has suffered an allergic reaction and has a severe rash. David Jones denies any responsibility
- Sarah purchases a game for her son that breaks during the first use and injures her son’s eye.
- Sarah decides she requires a new pair of training shoes for the gym. She selects the pair described as having “gel-filled sales” and being suitable for running on a treadmill. When Sarah uses the trainers they begin to fall apart during the first gym session and she discovers the soles are not “gel-filled” as advertised. Again David Jones denies any liability
- Advise Sarah on her rights in each of these matters, remembering to refer to both relevant Legislation and case law as appropriate and
- Advise David Jones of any potential liability they might have towards Sarah and her son, remembering to refer to both relevant Legislation and case law as appropriate.
Question 4:
Margaret is a student at the University of Canberra. She is a very environmentally conscious person and rides her bicycle to the University every day.
During a particularly good party with her friends on Saturday night, it was decided to go into the library the very next day to work in a study group.
As it was by then early morning, and although they had all drunk quite a lot of wine, she decided to go straight from the party to the library.
On the way, and while riding across a pedestrian crossing, she was knocked off her bicycle by George who was on his way home from a party.
Margaret can’t remember much about what happened but she suffered a broken shoulder. She now seeks your advice as to her prospects of getting compensation from George.
Advise Margaret
Question 5:
Paul, Oliver and Samantha were partners in a small business, P, O & S Hardware. They operated as partners in Gungahlin, ACT. They had no written Partnership Agreement. They had discussed the possibility of expanding their hardware business by adding a new line of cane furniture and agreed that if they did, none of them would have authority to order goods in excess of $5000 in value.
The following month, at a trade show in Brisbane, Paul met several salespersons who were eager to do business with P, O & S Hardware. One of them, a representative of Cane Crafts Pty Ltd (‘the company’), was particularly assertive and offered to pay Paul a $750 personal ‘commission’ if he placed an order with the company for goods to the value of $7500.
Recently Paul had seen a lap top for sale for $750 and decided that there would be no harm in accepting the money and using it to purchase the lap top for him to use.
Oliver and Samantha did not know about the order until the goods arrived at their store a few weeks later. The goods were not at all what they had discussed and they claimed that as Paul had no authority to order them, they would not pay any account related to them.
The company sent the bill for $7500 to Paul’s attention at the firm and included a note at the bottom of the account which said ‘I hope you are enjoying your new lap top’. Oliver and Samantha were so furious when Paul gave them the bill that they decided they want to end the partnership with him.
Referring to the relevant legal principles, discuss the rights and liabilities which each of the following parties have:
- P, O & S Hardware,
- Paul, and
- Cane Crafts Pty Ltd.
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