You are on page 1of 7

UNIVERSITY OF ENGINEERING AND TECHNOLOGY,

TAXILA
COURSE: ENGINEERING BUSINESS LAW
EFFECTIVE DATE: November 01' 2010
COURSE CODE: EM-36
CREDIT HOURS: 03
ex h:J;e..A.. l~" ~i '-=
Date of Submission: NI.7\' ember Ql' 2Q 1Q
Date of Return: November 08'2010

ASSIGNMENT

Ql. (P) Contracted with Builder (D) to have it install a heating system in P's motel. P
brought an action for specific performance on the basis that the system was improperly done
and incomplete. Court decides in favor of (P) and against (D).
Now, will a judgment of specific performance be given in a construction situation? Or
will a Court estimate Damages and pay compensation? Explain by giving reasoning. 3 Marks

Q2. What is a contract? How do you differentiate it from an agreement? How many different
Types/kinds of contracts are there? Explain each by giving at least one example. 2 Marks

Q3. What is an objective theory of contracts? What are the essentials of a valid offer? Explain
each requirement in detail. Explain also rules regarding acceptance and revocation. Explain in
detail the time of revocation of offer and acceptance. 2 Marks

Q4. XYZ Bank & Trust Co. (P) acquired premises leased by Shell Oil Co. (D) in a foreclosure
sale. The lease had an initial term of 15 years with an option to extend for a like term (at a fixed
monthly rental) and permitted the lessee to terminate the lease on 90 days notice. P sought to
have the lease invalidated as against public policy. Now, is a contract based on bad bargain for
one of the parties enforceable? Explain by identifying rules. 3 Marks
Shazia Bilal
Email: shazivab@hotmail.com
7 The partnership
Introduction:

F or a number of commercial reasons, it may be mutually

advantageous for two or more people to form a

The Partnership Act, 1932


partnership.

Question: Have you ever wondered what a 'partnership'

means? What characteristics a partnership


has?
Answers: The Partnership Act defines a partnership
as 'the relationship which subsists
Shazia Bilal between persons carrying on business
cmail:sha:t;iY;l.b@hormail.com in common with a view of profit'. The
Engineering- Business Law Fall 2010 people who won a partnership are called
week 'partners'. They do not have to be based or
work in the same place, though most do.
IIDwever;-mey-mamIaII1 mre sel 01
accounting records and share the profits & losses. (j)
(j)

INature/ Characteristics of Partnership I Essential Elements/Test of Partnership


• Legal entity
• Agency;
• Result of an agreement
CJ Partnership relation based on Contract.
• Unlimited Liability; CJ Implied or Express (Oral or Written)
• Number!Association of two or more persons
CJ Max. limit: 10 for banking; 20 for other business
• Existence! Must carryon some business
o Trade, Occupation or Profession
6)
®
r7- IEssential Elements of Partnership/cont... I Mode of Creating Partnership
• Share profits of the business • Based on agreement
o 50%/50% • Agreement may be express or implied

o 20%1 80% (could be any arrangement) Q In Writing: helpful in times of adversity

• Business is carried on by all or anyone of them Q Written agreement: "Partnership Deed"


acting for all (mutual agency)
• Essence of Partnership: Trust & Confidence
• Unlimited Liability • D rafted with care and sig ned by all partners
• Capital • Stamped in accordance with Stamp Act
• Duration • Firm should be registered and copy of the
Deed to be filed with the Registrar (j)
-----l{[)

IPartnership Deed IPartnership Deed


• Prepared for resolving mutual differences
• Usual Contents Contd. :
• Usual Contents:
o Date of Agreement
Q Salary and Commission payable to partners
o Name and Address of the Firm
Q Duties, Functions and Powers of Partners
o Name and Address of the Partners
Q Rules regarding admission, retirement and death
o Nature of Business
Q Dissolution
o Duration of Partnership
Q Arbitration
o Capital invested by each partner
o Ratio to divide profits and loss
-GJ ----------------®
7 f Firm Name Advantages of forming a partnership

The advantages of Partnership:


• Name under which the business is carried on 1) Ease of Formation;
• Any name 2) Some partners have more ability to invest capital resources
than other partners;
• Should not be a name already adopted by a
• Better management;
reputed firm, to mislead public • High credit standing;
• Should not contain words: Govt., Jinnah, • Quick Decision;

Quaid-e-Azam, Crown, Emperor, King, Sharing of Risk;

Queen or words showing the approval or Possibility of expansion;

Business secrets;

patronage of Federal Government or any


• Ease of Dissolution.
Provincial Govt.
@) ----------------------------------~

I Disadvantages of partnership: I Types of Partnership­

1) Unlimited liability; (All are 'jointly and


• Particular Partnership;
severally liable' for his partners. If one
• Limited Partnership
partner incurs a liability, then the others will

• Partnership at Will;

also share it);

LJ No provision in contract between the partners for

2) Risk of dissolution;
• Duration of Partnership
3) Disputes between partners on business
• Determination of Partnership
matters; o Partners are free to dissolve Partnership at their
own will whenever they desire;
4) Limited in size;
CJ If any partner gives notice of dissolution in writing,
5) Frozen investment; the partnership is dissolved.
6) Lack of public confidence. I, 12­
ITypes of Partnershlps- cont. .. I Classes ~fPartners
• Actual or Active Partner
• Particular Partnership o Engaged in actual conduct of the business

o A person may become a partner with another u His acts binds the firm and other partners

person in particular adventures or undertakings. o Notice to be given in case of retirement


o On completion of such a venture, the partnership • Sleeping or Dormant Partner
comes to an end. o Does not take part in the conduct of business
o Contributes his share of capital and enjoys profits and
losses
o Not known to outside world
o Not liable to third parties for the acts of the firm.
~) o Not required to give notice in case of retirement
Iy
\...7

I Classes of Partners I Classes of Partners


• Senior Partners
CJ Has more investment in the firm and receives more • Partner by Estoppel or Holding Out
profit
o Represents himself as a Partner, by words
CJ Plays major role in the management of the business
spoken or written or by conduct
due to age, experience, capability and other skills

o Liable as a partner if credit is given to the firm


• Junior Partners based on his representation. He cannot deny.
CJ Opposite of senior partner
o If a partner does not give public notice and his
• Secret partners name is still used in the business, he is also liable
CJ Whose membership is kept secret from outsiders. to third parties
o Take active part in the management of firm o Deceased partner is an exception to this rule.
• Minor partner I )"
Position of Minor IPosition of Minor
• During his Minority
• A person who is a minor according to law to
• Rights
which he is subject may not be a partner in a o Right to receive agreed share of profits and

firm, but with the consent of all the partners property

for the time being, he may be admitted to the o Have access to and inspect and copy the

benefits of partnership. accounts of the firm

o If share in profits is not given, can sue (can do if


• A minor can only be admitted to the benefits he wants to sever his connection)
of an already existing partnership
• Liabilities
o Only to the extent of share in profits and

properties (not personally liable)

'"7 --------------------------------+f~

I Position of Minor I P~~iti~ns

• On Attaining Majority • Lunatic: cannot become a partner


o Within six months should give notice whether he • Alien Enemy: cannot become a partner
is joining the partnership or not.
• Alien Friend: can enter into contract
o If notice not given he shall become a major
partner. • Woman: Married or Unmarried can be a

partner

• Insolvent: Cannot become a partner; ceases


to be a partner from date on which order was
passed by court
,~
I Diss~i~t:i~~~f a Firm IRights and Liabilities of partners
&
• Dissolution by Agreement; Consequences of Dissolution of
• Compulsory Dissolution; Partnership
• Contingent Dissolution;
• Dissolution by notice; • Please read at your own;
• Dissolution by court;
• Insanity;

)t )2.

- ~ - .......... ftl.ft\.. I'fll

• •

~ ~~~\R, CYou/ ..