Contents

Issues ............................................................................................................................................... 2

Rules ................................................................................................................................................ 2

Application ...................................................................................................................................... 5

Conclusion ....................................................................................................................................... 8

Works Cited ..................................................................................................................................... 9

Issues 1. Is The Master Caterers a partnership, and if so, who are the partners? 2. Who is liable for the contract with Celestial Cookware? 3. Who is liable to Ziggy Boris? Rules 1. Is The Master Caterers a partnership, and if so, who are the partners? According to the Partnership Act 1895 Western Australia (W.A.), Section 7 states that Partnership is the relationship which subsists between persons carrying on a business in common with a view of profit. According to the Act, for partnership to exist, the court will regard the true contracts and intentions of the partners as appearing from the whole facts of the case. For instance in the case of Cabby Gabriel Castle Jackson Advertising Pty. Ltd. v Volume Sales (Finance) Pty. Ltd. [1974] 131 CLR 321 (High Court), the conduct of the parties involved in the case was that partners and not joint venture. The parties in the case had a view of profit and agreed to make joint decisions and share profits. The court held that this was enough to create partnership. Rule to apply in determining partnership under Section 8 states that the receipt of share of profits by a person is prima facie evidence that he is a partner but if the receipt of such share or payment is contingent on varying with the profits of the business, it does not make him a partner. As per The Business Names Act 1942-46 (WA), the business name must be registered if it is different from the partners name.

2. Who is liable for the contract with Celestial Cookware? In the secondary issue the following rules have been applied. Partners bound by acts of firm under Section 13 of the act states An act or instrument relating to the business of the firm, done or executed in the firm-name, or in any other manner showing an intention to bind the firm by any person thereto authorised, whether a partner or not, is binding on the firm and all the partners. The law applicable here relates to the Liability of Partners, Section 16, which states that Every partner in a firm is liable, jointly with the other partners, for all debts and obligations of the firm incurred while he is a partner. According to the Special powers of partners Section 26, any act performed by a partner in carrying on the business of the kind carried on by the firm shall bind the partners to the same extent as he were their agent, appointed for that purpose, except when the partner is acting outside his authority in a particular matter. If the partner acts within apparent authority and the third party is not aware or believed the partner to have the authority, it is binding on the firm and the partners. As per the case of Young v Lamb & Ors [2001] NSWCA 225 (New South Wales Court of Appeal), it was held that the renewal of lease of the premises was within the actual authority. The court ruled that the act performed was relating to the business of the firm, done in the firms name, revealing an intention to be bound.

3. Who is liable to Ziggy Boris? Under the final issue the following rules are implemented. The Firms liability for wrongs Section 17 states that the firm is liable to the same extent as the partner by whom a wrongful act is performed, that causes loss to any person not being a partner in the firm, in the ordinary course of the business of the firm. The Law of Misapplication of Money under Section 18 states that when the money of a third person is received by one partner who is acting within the scope of his real or apparent authority, and has misapplied that money which is in the custody of the firm, the firm should be liable to make good the loss. According to the Partnership Act 1895 (W.A.) Section 19 the court states that Every partner is liable jointly with his co-partners, and also severally, for everything for which the firm while he is a partner therein becomes liable. For example the case of Polkinghorne v Holland & Whittington [1934] 51 CLR 143 (High Court) had one of the partners advice the client to invest in a company which did no business. The high court held that the advice and guidance given by the partner was within the ordinary course of a solicitors business and therefore by associating themselves in a partnership all partners were responsible. Also the case of Walker v European

Electronics Pty Ltd [1990] 23 NSWLR 1 (New South Wales Court of Appeal) is considered where three partners of a firm of chartered accountants were sued by a third party for the losses incurred due to a partners misappropriation of funds. The court held that the partner was acting in the ordinary course of the business of the firm and thus the other partners were jointly and severally liable.

Application 1. Is The Master Caterers a partnership, and if so, who are the partners? The application of the Partnership Act of S.7 can be noticed in this case wherein the three partners; Theodore, Alvin and Simon; were conducting the business jointly with a common view of profit through an oral agreement. According to the Business Names Act they have registered the business name as The Master Caterers. All the partners had contributed certain amounts so as to establish their business. They had also agreed that all major decision relating to the management of the business would need all the partners to agree. As was held in Cabby Gabriel Castle Jackson Advertising Pty. Ltd. v Volume Sales (Finance) Pty. Ltd., Theodore, Alvin and Simon had a view of profit, agreed to share the profits and had decided to make joint decisions. Thus, an oral partnership agreement exists between the three partners. As per the Act of S.8, Marishka, Theodores girlfriend, was not a partner even though she had loaned $25,000 to the firm. She would be repaid by receiving a share of profits ($5000) to her each year. She would also be appointed as the office manager with a salary of $30,000 per annum. 2. Who is liable for the contract with Celestial Cookware? The partners in needs of improving their business decided to spend $10,000 to purchase additional cookware. This task of purchase was assigned to Simon as he had to visit Perth. On his attendance at the Good Food and Wine Show in Perth, Simon met Gary who was now an agent for Celestial Cookware. Simon decided to take Gary on his offer and purchase 40 sets of new pans and pots for a total cost of $20,000.

According to the Act of S.26 Simon acted as an agent of The Master Caterers. He was given the task of purchasing cookware with a budget of $10,000 but instead he bought it worth $20,000 without consulting with Alvin and Theodore. Thus, Simon acted within his actual authority purchasing the items on the name of The Master Caterers which leads to S.13 of the Partnership Act that makes the firm liable. While applying the Act of S.16 it has been seen that Simons act is binding on the firm and other partners making them liable for the debt incurred. Even without the consent of other partners Simon acted within his actual authority in making the contract with Celestial Cookware and purchasing the cookware in the name of the company thus making the firm and other partners liable in accordance with the holding in Young v Lamb & Ors. 3. Who is liable to Ziggy Boris? S.13 and S.26 of the Partnership Act as stated above applies in this issue as well. When Ziggy Boris contacts The Master Caterers for starting his own collection of fine wines, he is put through to Alvin. Alvin advices him that for $2,000,000 he could stock up Ziggys cellar with 1,000 bottles of best vintage wine from the Bordeaux region of France. Upon the arrival of the crates after Ziggys acceptance of the advice, he realises that they are local wines worth $50 per bottle. Alvins act binds the firm and other partners as he acted as an agent of the company. According to S.17 and S.19 of the Partnership Act, the partners and the firm are all jointly and severally liable for Alvins wrongful act as they are all partners and Alvin acted as an agent of the company. The case is similar to Polkinghorne v Holland &

Whittington and therefore the same holding could be applied to the context stating that Alvins advice was within the ordinary course of the business and by being a direct partner, Simon and Theodore are also held liable for Alvins Act. Thus The Master Caterers is fully liable to Ziggy Boris. According to the facts of the case, S.18 of the Partnership Act is applied here as Alvin has misapplied Ziggys money. The facts of the case are similar to Walker v European Electronics Pty Ltd and thus the same holding of Alvin acting in ordinary course of the business leading to the other partners also being liable for the misappropriation of funds could be applied here.

Conclusion

1. Is The Master Caterers a partnership, and if so, who are the partners? Based on the facts of the case and the law applied, it can be concluded that partnership existed between Theodore, Simon and Alvin as they agreed to carry on business in common with a view of profit. The company name was registered which concludes that The Master Caterers is a partnership firm. 2. Who is liable for the contract with Celestial Cookware? Simon was acting as an agent of The Master Caterers when in conversation with Gary. He was also operating within his actual authority when contracting with Celestial Cookware. Thus, the firm is held liable for the contract with Celestial Cookware. 3. Who is liable to Ziggy Boris? The Master Caterers is held liable for the wrong act committed by Alvin and also for the misapplication of the money. Alvin is a partner of the firm and by acting as an agent makes the other partners also liable to Ziggy Boris.

Works Cited
Cabby Gabriel Castle Jackson Advertising Pty. Ltd. v Volume Sales (Finance) Pty. Ltd. 131 CLR 321 (High Court of Australia, June 5, 1974). Evans v. Federal Commissioner of Taxation. (Federal Court, June 7, 1989). O'Reilly, Jennifer, and Brendan Sweeney. "Partnership." In Law in Commerce, by Jennifer O'Reilly and Brendan Sweeney, 453-483. Australia, 2007. "PARTNERSHIP ACT 1895 PARTNERSHIP ACT 1895." Western Australian Consolidated Acts. http://www.austlii.edu.au/au/legis/wa/consol_act/p84a1895135/ (accessed June 23, 2012). Polkinghorne v Holland & Whittington. 51 CLR 143 (High Court, 1934). Vermeesch, R. B., and K. E. Lindgren. Business law of Australia . 2005. Walker v European Electronics Pty Ltd . 23 NSWLR 1 (New South Wales Court of Appeal, 1990). Young v Lamb & Ors . NSWCA 225 (New South Wales Court of Appeal, 2001).