The issue is to check that whether the partnership act will be bind with the contract developed by Lance and whether the other partners of the firm can initiate any action against him?
The partnership is a form of business where two or more person comes together to do a business and to share the profit earned out of the same. In Australia, every state has it is own legislation to deal with this business structure (Business.gov.au, 2018). In every partnership firm, partners decide the duties and powers of each partner mutually and for this reason, a third party cannot get to know about the same.
A Partner act as an agent of a partnership firm and other partners and for this reason, the firm and other partners are binds with the acts and deed of such partner. As per the decision was given in the case of Polkinghorne v Holland (1934) 40 ALR 353, the partners of the firm are liable in both manner i.e. jointly and severally for the act of another partner done in the ordinary course of business. It is a fiduciary duty of each partner to act in a decided manner. This is the reason that in those cases where partners act or enter into a transaction going outside of the decided limit, other partners can sue him/her. The case of Birtchnell v Equity Trustees (1929) 35 ALR 273 supports this argument. In this case, it has been given that breach of fiduciary duty leads the risk of legal actions.
In the given case, one of the partners named Lance has made a purchase of a car from Mighty Motors Pty Ltd. This partner was clearly instructed to not to spend over $20000 for this purchase. The car purchased hereby was for the business purpose and therefore the subjective purchase comes under the category of ordinary business of the company. The actual value of the car that Lance paid was $25000, which was more than the allowed one according to the mutual discussion and decision of all the partners of the firm. In this whole transaction, the third party was unaware of the limited authority of Lance. Applying the provisions of Polkinghorne v Holland, the firm and other partners will be liable towards the third party for this transaction.
Further, to apply the decision given in the case of Birtchnell v Equity Trustees, this is to be stated that other partners can sue Lance for the reimbursement of value that Lance spent above the allowed value i.e. the difference of $25000 and $20000, as Lance breached his fiduciary duty by not acting according to prescribed manner and instructions.
Conclusion
This is to conclude that the firm will be bound by this contract as because of agency relationship the third party had reason to believe that Lance is acting on behalf of the firm and has enough authority for the purchase of a car worth $25000. Further, other partners can bring an action against Lance for the breach of Fiduciary duty.
To check that-
Many of the factors are there, the existence of which does not leave consent as free and independent as the same was required to be under a contract. Unconscionable conduct is one out of such factor. It reflects a situation where offeror remains in a position to influence the free will of the offeree. In the cases of unconscionable conduct, one party take unfair advantage of the special disability of another party (Legal Match, 2018). Such disability can be anything such as old age, lack of education, illiteracy, or a combination of two or more). It was held in the case of Blomley v Ryan (1956) 99 CLR 362 that If Unconscionable conduct exists in the development of a contract then such contract cannot be held valid and the weaker party will not be bound with such contract.
Australian Consumer Law (ACL) is the lead legislation of the nation, which provides protection to consumers of businesses. The law is mentioned under the Competition and Consumer Act 2010. The legislation provides the manner in which business needs to treat their consumers. The act puts many restrictions on the misleading and false advertisements as the same brings many adverse impacts for the consumers. Section 29 of the act says that an organization can be held liable if the same make a false advertisement regarding the features of goods or services (Austlii.edu.au, 2018) Business generally publishes such advertisement to bring more and more customers and to defeat their market competitors. If to talk about remedies for breach of section 29 of the act, this is to be stated that such breach is an offense according to the section 151 of the act and the victim consumer can ask for the remedies from the liable seller(lexisweb.lexisnexis.com.au, 2018)..
Conclusion
Can Felix sue Xiaojing for the payment of $100?
The general rule says that for the enforcement of a contract there must be a consideration, however, the principle of promissory estoppel is an exception of this rule. This doctrine says that where a party makes any promises to another then equity provides a remedy to later party and the party who made such promise cannot deny performing the same. This doctrine makes promises legally binding (Upcounsel.com, 2018). In such a manner, this is to be stated that a contract must be there between the parties for the application of promissory estoppel. In the case of Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 High Court of Australia said that a legal relationship must be there or expected to be in cases of promissory estoppel (Constructionlawmadeeasy.com, 2018). It was also granted in this case that cause of non-performance of promise by defendant; plaintiff must suffer from a detriment. In addition to this, for a valid application of promissory estoppel, it is also necessary that after such promise, the legal position of the parties is required to be changed. Further, to apply the promissory estoppel it is necessary that such promise must be clear and free from every confusion.
The remedy under this doctrine is whatever the necessary to prevent/stop detriment go the offeree. The doctrine of promissory estoppel works based on a principle that an offeror must perform his/her promises in those situations where not doing so can lead an unjustified situation for the offeree.
In the present case, Felix was working as a casual employee for Xiaojing. He was engaged in the work of picking the lavender bag for a consideration of $25. A relationship of employer and employee was there between Felix and Xiaojing. Afterward, Xiaojing has made a promise to give $100 to Felix for his good performance. The issue of the case started when Xiaojing refused to perform the promise and to give $100 to Felix. For the application of the doctrine of promissory estoppel, this is to check that whether all the required elements were present there or not. Applying the provisions of Waltons Stores (Interstate) Ltd v Maher, this is to be stated that a pre-existing contractual relationship was there between the parties as Felix was working as a casual employee of Xiaojing. Further, the causes of this promise, the legal position of both of the parties have changed, as Felix was owed $100. In conjunction with this, non-performance of promise can bring detriment to Felix as being a student and casual employee, $100 is valuable for him.
Conclusion
Felix has a reason to rely upon the doctrine of promissory estoppel and he can sue to Xiaojing for the non-performance of the promise made by her.
References
Austlii.edu.au. (2018). Competition And Consumer Act 2010 – Schedule 2. Retrieved From: https://www5.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html
Birtchnell v Equity Trustees (1929) 35 ALR 273
Blomley v Ryan (1956) 99 CLR 362
Business.gov.au. (2018). Partnership. Retrieved From: https://www.business.gov.au/planning/business-structures-and-types/business-structures/partnership
Competition and Consumer Act 2010
Constructionlawmadeeasy.com. (2018). The effect of promissory estoppel. Retrieved From: https://www.constructionlawmadeeasy.com/Theeffectofpromissoryestoppel
Legal Match. (2018). What is an Unconscionable Contract. Retrieved From: https://www.legalmatch.com/law-library/article/what-is-an-unconscionable-contract.html
Lexisweb.lexisnexis.com.au. (2018). Overview — False, misleading and deceptive conduct. Retrieved From: https://lexisweb.lexisnexis.com.au/Practical-Guidance-Topic.aspx?tid=2310
Polkinghorne v Holland (1934) 40 ALR 353
Upcounsel.com. (2018). Principle of Promissory Estoppel: Everything You Need to Know. Retrieved From: https://www.upcounsel.com/principle-of-promissory-estoppel
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
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