Business Law For Apparent Authority Partnership

Issues

Describe about the Business Law for Apparent Authority Partnership.

Given that Andria is a partner in the accounting firm and has acted outside the agreement but fulfilled her duties as an agent. Should Tom and Edgar sue the accounting firm as a business since they were not aware of the partners’ agreement or sue Andria?

Given that the firm was not dealing with issues of survey, should Edgar be paid by the firm given that Adrian acted based on personal interest?

Has Adrian acted on the basis of apparent authority or has she breached the partnership agreement?

Did Adrian violate the partnership fiduciary duties by purchasing the items for the business without disclosure to other partners making them not responsible for the payment?

Law

In the case that a partnership business is not bond to restrictions as well as limitations within partnership business, each partner is mandated in the partnership to act as each other representative (Latimer, 2014).). The agreement among Adrian, Aiden and peter indicates clearly the kind of authority they should express. They have agreement that no member is allowed to carry out an investment going beyond $10000 and that amount exciding that should needs prior agreement. According to part 5(1) on the relation between partners and the third party act, there is partners’ power that binds their business (Comair-Obeid, 1996). The act performed by a partner within the authority binds all partners to the third party like in edger’s case (Emerson, 2009). This section states that any act performed by a member of within the purpose of the business binds all partners to the third party whether the outsider is aware of the agreement or not.

The provision of s 5(1) has relevant implications on the partnership business.  It states that in the absence of other partners the available partner has the authority to act on behalf of other partners. The ostensible authority granted to partners is however restricted by the kind of business in practice. Purchase of a personal asset is not within the business concern and the buyer is responsible for the payments alone.  Section 7 states that an act performed without the business is the partner concern. For instance if Adrian could have purchased the item as her property the peter and Aiden should not pay for the assets but Adrian herself. The second advantage is to the third party who can sue the business and the court would act in his or her favor based on unawareness (Paquin, 2012). This section protects the third party even if the partner acts past his express authority limits. The third party has a right if he can prove that he was not aware of the terms of agreement among the partners. If the other partners cannot prove the third party was aware then they has to pay for the purchases. The s 5 (1) allow the third party to make a case and win. In case of no clear statement on the agreement all the partners are responsible for the payment. A clear example of third party unawareness is the judgment by the Mercantile Credit Ltd v Garrod [1962] 3 All ER 1103, a case in which two mechanic partners had condition of not dealing with selling of cars and one of them did sell a car. The other partner was held accountable since the court favored the third party based on the agency law and section 5(1) of the third party relation to the partnership.    

Law

 A third party has got also a write to sue individual partner since if other partners provide evidence showing that the outsider was aware of the terms of agreement (Emerson, 2009).  The act of Adrian can also be viewed in the perspective of a breach of fiduciary duty and compensate Tom and Edgar alone.  

Tom and Edgar can either hold the partnership liable based on the aspect of section 5(1). They can sue Aiden, Peter and Adrian basing their argument on unawareness of the partnership agreement. Even though Adrian acted beyond the terms of their agreement which states that any investment above $ 10000 needs prior agreement. it is possible that the court will rule on the side of offender which in this case is Tom and Edgar. They can win the case and receive their payment if they can prove that they had no knowledge on the partnership agreement. But in case Aiden and Peter can approve that they were aware then it will force them to take another course and sue Adrian as an individual. Tom and Edgar can also take the Adrian to court as an individual. The same section of the act gives Peter and Aiden an opportunity which unbound them from the transaction. The act states that an act conducted by a partner outside the agreed express authority is out of their concern and the court would on their favor.

Considering Edgar’s  , he has the right of compensation since the amount agreed for his items fall below the agreement and can claim that Adrian acted according to the law of agency. It is likely that he can win the case based on the law of agency (Latimer, 2014).). Since the price agreed was within the terms of the partnership. The business should pay him $8000 which is amount less than $ 10000 which is stipulated in the partnership agreement. In case the other partners defend themselves claiming that Adrian breached the partnership fiduciary duties. Then it is advisable the two to sue Adrian as an individual to get their payment. 

Conclusion

It is advisable for Tom and Edgar to sue the partnership as per the section 5(1) of partnership relation to the third party. For them to win the case they have to prove that they were not aware of conditions of the partnership agreement. They can also sue Adrian as an individual and claim their payment according to section 5(1) under the commonwealth law.

Application

Being that Richard has started a business and operates in the areas which were not allowed by their contract with the Nu-slim ltd. should he compensate company or not. Is it right that the wants to sue him for contract breach. Is it a breach of contract or not?

Is the breach a warranty or conditional breach of contract?

Should Richard quit his business? 

Is Richard the owner of the business or the sister,if yes how can he defend himself against Nu-slim ltd?

It is evident that Richard has breached the contract and can apply the holding act not to be held responsible for his actions as per the agreement terms. It is also clear that the terms of Richard and his employer are of unfair terms (Helewitz, 2010). Section 23(1) of the ACL prevents the term of agreement between the two parties since the terms are unfair. There is proper procedure put in place in case the terms of agreement violates other party’s rights. Richard is allowed by the law to defend himself against the penalty of breach. Court allows a contract breach defendant affirmative mechanism to defend themselves against the penalty or damage. The rule does not work based on original claims like Richard getting involve in a business which he is more like the owner ending up breaching a contract (Steele, 2007). This is evident in the case of a young musician Dodd who enters into an agreement and fails to show up for the event. The court later ruled on his favor. He asserts the affirmative law and claims that he had no authority to make an agreement because he is a junior.  Since Richard has received the notice letter he should therefore see the attorney. Act 1977UCTA has two clauses with two methods of managing the problems under ss 2- 7. The clauses demands that the cause of the breach must be during the time of once duty and only applies to business liability (Latimer, & CCH Australia Limited, 2011).  According to Australian law stipulated in the act of Pierre v Apand (1999) 198 CLR 180 Richard can be considered in by the court if he can seek the advice of attorney in prior. The law states that the court will give considerations to a number where in most cases the decision is must. The court will check the proximity and foresee ability of the harm. They will review the other Ares in the company where cases have happened (Nass & O’Brien, 2013).

Conclusion

The contract between Nu –slim and Richard is not clear whether it is a warranty or a condition. Since the company never stated how important the contract was to them it therefore the courts liability. If in case the contract is warranty the breach is less serious and can (Australian Capital Territory, 2001)). The court is therefore obligated to determine most of relevant authorities. In viewing whether the breach is anticipatory or actual. Richard is permitted to take several alternative defenses by the law. The alternative includes illegality of the contract, estoppels,lack of capacity, unconscionable or indefinite.   

In considering of the contract between the bank and fat –away ltd the Richard is not obligated to pay the bank the refunds since he did not sign the contract and the contract he assigned with the Nu slim company in consideration to partnership act (Higgins,1970).. Since Richard has left everything for France who performs all legal duties of the business, the business is more like his sisters business and cannot be sued. It is therefore advisable that he remains dormant in the avoid court penalty. In the case of the bank, Richard is not bound to the contract since he never signed the contract (Pollock & Mulla, 1934). Richard can also defend himself in the court basing his argument on the validity of the contract between him and the Nu-slim company.   

It is advisable for Richard to take a stand based on the affirmative clause and defend himself. He has a number of alternatives to choose from and win the case. He can take defense based on unfairness of the terms and its possible the court would rule on his favor depending on how he can apply it. The defense based on conscionable states that no contract is valid if the terms of contract are seriously unfair to Richard (Bhat, 2009). The company takes advantage of him by forcing unfavorable clauses on him because it posses more power. Richard can also claim that he acted without knowledge on what he was doing. The breach defense mechanism allows him to claim that he had no capacity to sign the contract. The court is likely to pass judgment on his side as in the musician’s case.

 . It is possible for the court to rule on his favor based on the partnership act. Richard has obligated all duties to his sister making France to the owner of the business by the partnership act. In consideration to the contract between Fat away and the bank Richard can defend himself since he did not sign the agreement (Bailey, 2009)).  The contract was assigned by the sister who is the CEO of the company.

Conclusion

It is evident that Richard has breached the contracts by the law. Even though there is a breach by Richard the case cannot be won by the company based on the affirmative law of defense as per the law. The bank on the other hand can sue him since the sister has also legal rights on the business and perform all the signings on behalf of the company ( Pollock & IMulla ,1934).

References

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Higgins, P. F. P. (1970). The law of partnership in Australia and New Zealand. Sydney: Law Book Co.

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Rozenberg, P. (1998). Australian guide to uniform legal citation. North Ryde, N.S.W: LBC Information Services.

Latimer, P. (2014). Essential Australian business law.

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Comair-Obeid, N. (1996). The law of business contracts in the Arab Middle East: A theoretical and practical comparative analysis (with particular reference to modern legislation). London: Kluwer Law International.

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Paquin, J. (2012). Legal reform and business contracts in developing economies: Trust, culture, and law in Dakar. Farnham, Surrey, England: Ashgate.

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Steele, J. (2007). Tort law: Text, cases, and materials. Oxford: Oxford University Press.