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Steve and Garry carry on business as motor mechanics in partnership. Steve, without Garry’s knowledge and contrary to the terms of their written partnership agreement, entered into the following transactions on behalf of the partnership:-

 

(i) Steve contracted to purchase from Charles 100,000 shares in Thereisnomoneyinthis, a speculative mining exploration company. 

 

(ii) Steve engaged   Dave   to   repair   the   firm’s   car

 

(iii) Steve purchased various very expensive car accessories from Eddy. 

 

(iv) Steve entered into a 20 year lease agreement with Fred for garage premises for the partnership’s mechanical business in a rent payable pursuant to the Lease Agreement was twice as much as the market 

 

rental for that area. 

 

(v) Steve borrowed $10,000 from Bill for the purpose of going on a business trip for the firm, but Steve spent the money on personal luxury items. 

 

(vi) Discuss the rights of the third parties to enforce these agreements against the firm. What difference would it make to your answer if the third parties had known that Steve was acting contrary to the terms of the written partnership agreement? Use case authority and sections from the Partnership Act where relevant. 

 

[10 Marks]

 

 

 

Part B

 

David, a well-respected member of the partnership,Investors’,decides‘Lostresign Caus with effect from 30 November 2014. Despite his early notice, the firm fails to notify clients of

 

his departure because of its focus on the forthcoming festive season. Early in January 2015, a new staff member (excited about being given responsibility for a new investment project) decides to send clients information about an investment opportunity via a circular. Unbeknown to the new staff member (and also David, who left six weeks earlier), the circular was not updated and carries David’s name asElizabeth , partnerlong-standingclient,. is encouraged

 

4

 

 

to invest by seeing David’sname on the circular (having heard informally that he was considering retirement) and sends $250,000 to the firm for investment in the recommended project. Subsequently, the project is abandoned and all invested monies are lost. In due course, the firm is held liable in relation to its clients.

 

 

Discuss fully the applicable law and David’s positionregardingpersonal liability for any part of Elizabeth’s $250,000Usecaseauthority. and sections from the Partnership Act where relevant.

 

 

[10 Marks]

 

 

 

Part C

 

On 1 April, Ryan posts an offer to supply a quantity of 25 special motor parts (adapted to suit Cars R Us’s specifications)CarsRUsforpriceof $500toeach. This offer reaches Cars R Us

 

on 4 April.  On 5 April, Cars R Us sends a letter to Ryan stating:   “Please   advi

 

in your offer includes machining costs”.In   responseRyanpostsaletterthetoCars nextR da

Us stating:   “The   motor   parts   are   $500   eachCars inc

R Us on 8 April.  On 10 April at 2pm, Cars R Us sends a letter to Ryan   stating:acceptyour “We

 

offer for   25   special   motor   parts   at   $500   eac

 

Ryan at 3pm on 11 April. However, on 9 April, there is a change of plans by Ryan. As a result, Ryan sends a letter to Cars R Us at 1pm on 9 April seeking to cancel the earlier offer and stating that the price of the motor parts is now $600 each not including the cost of machining. This letter is received by Cars R Us at 4pm on 10 April.

 

 

 

 

Is there a valid simple contract between Ryan and Cars R Us for the supply of special motor parts? If yes, what are the terms? Justify your answer fully, citing case authority wherever relevant.

 

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COU6505 Ethical Considerations in Online Counselling

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