Discuss about the Business Law for Financial Investment.
1. Partnership is a contract binding two or more persons to invest their finances, time and labor to earn profit. The profits are shared according to the percentages that have been included in the contract and losses are also divided the same way. (Restubog et al. 2013) Each party must engage in such a way that they bring something to the partnership to make it a binding contract, for example, one party can bring finances and be the one who invests while the other can bring all the ideas, innovations and the overall thinking process, but at least something should be included which each party.
Many points are to be included in the written agreement to be made by the partners, one of them being if the partnership is a limited partnership or a limited liability partnership. If the partnership is a limited partnership, the partners split the liability amongst themselves, for debts which can’t be paid. The partners’ responsibilities will differ according to their ‘type’ of partnership; general partners are personally liable for all the debts while limited partners are restricted to paying the debts according to the amount they have invested. (Llewellyn 2016) On the other hand, limited liability partners (LLP) are not liable to pay all the debts of the business, but only the amounts that they have invested. All the partners’ responsibilities and their respective share of the profits’ are to be written in the partnership agreement. The type of partnership should be chosen wisely in accordance to the amount that can be paid back if debt arises.
An ordinary business partnership on the other hand states much different things. All the partners are liable for all the losses they make and they have to pay taxes on their profits. (Siedel & Haapio 2016) Moreover, anything bought for the business or partnership is also to be accounted for and all the partners have to pay their bills regarding their respective transactions. So in this case, if the partners purchase any item or equipment for the shop, they are to pay for it and will be personally liable for it. (Slade 2013)
Discussion regarding decision making will also have to be made in the agreement. Not all partners will be able to make important, strategic decisions. The decision making capacity will depend upon the level of expertise of the individuals and the amount that each individual will invest in the business.
The issue at hand in this situation is the decision made by two of the partners who were not legally bound, according to the contract, to make any sort of decisions regarding the partnership. Moreover, all the partners, with the exception of James, only wanted to invest in the partnership and did not want anything to do with the daily interference or any kind of decision making. (Wang & Hsieh 2014) One of the partners, Peter, has deviated from his original intention which was to not take any interest in the matters of the partnership as he visits the shop everyday and interacts with the customers. He went as far as going along with the other partner, Graham, to Betty’s (a customer) place, who wanted to sell Beatles memorabilia to them and even made a promise to pay her via cheque the next day. Graham and Peter had defied the partnership agreement which clearly stated that the decision making powers were solely granted to James and I.
Rule
When the partners had signed the agreement, it meant that they had agreed to abide by whatever they had read on that piece of paper regarding their partnership; the liability owed, their decision making powers and the division of profits and losses. (Guest 2016) By making a decision and not even letting the other partners know, Peter and Graham have breached their partnership contract. Now comes the part where it is to be discussed that how these partners shall be treated. The clauses should already be included in the written agreement and these partners according to those clauses. The partners can either vote to remove the partner, but the partner might sue and that be a huge problem for the business as it will be held up in legal proceedings. (Vantilborgh et al. 2014) If for some reason the clause is not inserted in the agreement, the partners should act according to the law of their respective state or province. Following the issue of the breach of contract is the promise made to Betty to buy the memorabilia from her. The promise has been made and they are bound to pay her and get the memorabilia, but they are not legally bound according to the partnership regarding decision making.
Application
According to the facts of the matter at hand and the rules that have been discussed above, the two partners should be removed as they clearly breached the contract and all the agreements which were specifically communicated to all the partners. Peter started showing interest in the shop and visited regularly and even interacted with the customers, but anything against the matter was not mentioned in the written agreement hence that does not create an issue, but making a decision to buy stuff when not in the power legally to do so is taking one step to many. These partners, Peter and Graham, should be removed from their partnership and Betty should not be paid as these partners were not legally bound. An alternative, if the other partners decide to go lenient, can be that Peter and Graham should be forgiven and let off with a stern warning, the punishment being that they alone will pay the $5000 for the memorabilia and in the future would not make any such decisions.
Conclusion
As it has already been stated, the partners have a decision to make. They can either be stern in their decision making, removing their fellow partners over a breach of contract, or they can go lenient and let them off with a mere warning and a penalty for doing such an act. (Eng 2013) It all depends on the approach of the partners and the rules and regulations set out in the written agreement already made.
The issue here is the fiasco that Ringo has caused following his employment. An avid and hardcore Beatles fan, Ringo gets himself into an argument with Mick, a café owner, over personal differences between the Beatles and the Rolling Stones. Succumbing to his anger and frustration, Ringo punched Mick resulting in a broken nose and bruising on his face. The medical charges were $4000 while the loss to the business due to the closing of his café for the day resulted in $2000 and now the pressure is on the partners, whether they are liable to pay for Mick’s costs or not.
Rule
The rule, again, would be found from the written agreement of the partners. Employing this particular employee is a decision made by me and James, and any action will be taken according to the written agreement of the partners; either I will be liable for all the costs or all the partners will be liable. (Bently & Sherman 2014) Ringo is mere employee, and he was employed by me, hence it makes me or the partners liable to pay for the damage that has been done by him and compensate for any injury sustained by any customer or a passerby. Another factor that has to be seen is whether Ringo fought him in the shop or somewhere outside regarding a personal vendetta. In this case, Ringo has fought Mick inside the job which makes the employers liable as well along with the employee. Mick is liable to sue both Ringo and the partners in this case and get compensation from both.
Application
If the facts and the rules are to be considered, two decisions can be made depending upon the approach of the partners; either fire Ringo or keep him and let him off with a warning. If the customer was hurt by and equipment or obstacle in their shop, or an injury was inflicted due to the employees working there, the partners would be liable and hence they should cover the medical expenses and business losses of Mick. (Falk et al. 2015) Even if they forgive Ringo and keep him on the job, Mick would still have to be compensated otherwise he’ll sue and the compensation has to be done by the partners or Ringo if he is sued as well and the claimant wins.
Conclusion
The partners, having employed Ringo, are answerable for his wrong doings. Ringo’s actions have taken place inside the shop hence both he and the owners are liable. Anyhow, Mick would have to be compensated, and Rick’s removal, or him keeping his job depends on the partners.
4. As per the Consumer and Competition Commission of Australia, it is strongly prohibited not to copy anyone’s product or service with the same format or logo. In current scenario, James has designed some shirts which just look like the logo of Apple Company. The only difference is that it includes the Beatles within the logo, the rest is just the same like the logo of Apple. Now, Apple has claimed that they have tried to reach our customers by designing a similar shirt which has a logo just like the logo of Apple.
Now, the Competition and Consumer Commission of Australia is allowed to take some actions against James because it might fall under an unethical act when it comes to business competition. Moreover, ACCC might cancel the registration of James for designing such an item which does not comply with the rules and regulations of ACCC. So, the claim from Apple Company is quite valid and must be noticed because this would definitely breach the definition of competition within the company.
References
Bently, L. and Sherman, B., 2014. Intellectual property law. Oxford University Press, USA.
Eng, S., 2013. Analysis of Dis/agreement-with particular reference to Law and Legal Theory (Vol. 66). Springer Science & Business Media.
Falk, A., Huffman, D. and Macleod, W.B., 2015. Institutions and Contract Enforcement. Journal of Labor Economics, 33(3 Part 1), pp.571-590.
Guest, D.E., 2016. Trust and the role of the psychological contract in contemporary employment relations. In Building Trust and Constructive Conflict Management in Organizations (pp. 137-149). Springer International Publishing.
Llewellyn, K.N., 2016. The common law tradition: Deciding appeals (Vol. 16). Quid Pro Books.
Restubog, S.L.D., Zagenczyk, T.J., Bordia, P. and Tang, R.L., 2013. When employees behave badly: The roles of contract importance and workplace familism in predicting negative reactions to psychological contract breach.Journal of Applied Social Psychology, 43(3), pp.673-686.
Siedel, G. and Haapio, H., 2016. Proactive Law for Managers: A Hidden Source of Competitive Advantage. CRC Press.
Slade, A., 2013. The role of Articles 7 and 8 of the TRIPS Agreement in the development of intellectual property law and policy (Doctoral dissertation, University of Oxford).
Vantilborgh, T., Bidee, J., Pepermans, R., Willems, J., Huybrechts, G. and Jegers, M., 2014. Effects of ideological and relational psychological contract breach and fulfilment on volunteers’ work effort. European Journal of Work and Organizational Psychology, 23(2), pp.217-230.
Wang, Y.D. and Hsieh, H.H., 2014. Employees’ reactions to psychological contract breach: A moderated mediation analysis. Journal of Vocational Behavior, 85(1), pp.57-66.
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