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Definition and elements of a partnership in Australia

The Final Take Home Exam is due on Tuesday 12 June at 10.00. It can only be submitted online through TurnItIn. Note that the system does allow for earlier submission. Value This assessment task is worth 60% of your result in the unit. Please note that there is NO hurdle requirement for this assessment. Style The paper should be typed with 12 pt character – any fonts type - and 1.5 line spacing fully justified paragraphs and 3cm margins on A4 pages. Word Limit Your word limit is 3,000 words including footnotes – if you ignore instructions as you should not have footnotes or endnotes – in TOTAL. The title page will not be counted in the word limit. Please note that the +/- 10% is already included in the word limit to make your life easier. This means that for every 300 words - or part thereof – that you go beyond the word limit you will attract a penalty of 0.5 points.

This means that if you write 3,001 words, you will get a penalty…! Format The first page is a title page which includes:

• your name;

• student ID;

• tutorial day & time;

• tutor’s name; and

• word count. This is to be followed by the first page of the assessment (numbered pg 1 – the title page is not numbered). Your assessment must be ONE document only, preferably in .pdf format, but acceptable as a .doc or .docx if you can't create a pdf. No other formats will be accepted. References and Research Cases can be referred to by just using the party’s names, i.e. Donoghue v Stevenson or its commonly used ‘nickname’ such as Snail in a Bottle. Make sure that we can identify the case though. Statutes can be referred to by their short name, i.e. Partnership Act or PA. No other references are needed or should be used, in particular referencing powerpoints or the textbooks is not acceptable.

The only acceptable sources are cases and statutes for this assessment. Nevertheless students may wish to undertake further research. Indeed the extent and quality of research into the principles, construction of relevant statutes, and academic commentary as to the resolution of contentious issues may improve an answer’s capacity to reflect the assessment 4 criteria and performance expectations. In order to assist your research, should you wish to undertake it, the recommended texts listed in the Subject Learning Guide might be a good starting point. One word of caution for research – the internet - wikipedia and google – as well as outdated textbooks have proven so far to be NOT recommendable for this subject. Bibliography Note that NO bibliography or reference list is needed as the only sources you are allowed to cite are cases and statutory provisions. However, if you feel the need to ignore these instructions, you can compile either a bibliography or reference list.

Liabilities of partners in a partnership

This list will NOT be included in the word count. Footnotes or Endnotes Footnotes or endnotes are not permitted. If you are unsure about the appropriate writing style, please consult our ‘Studying Business Law’ section on LMS. Plagiarism, Collusion etc. By submitting your work, you acknowledge that you have familiarised yourself with the rules regarding academic integrity for student’s work at La Trobe University, see ntegrity This means in particular that you acknowledge the rules on plagiarism, collusion and cheating. Plagiarism: means taking and using another person’s ideas or manner of expressing them and passing them off as one’s own. For example, by failing to give appropriate acknowledgement. The material used can be from any source (staff, students or the internet, published or unpublished works). Collusion: means unauthorised collaboration with another person on assessable written, oral or practical work and includes paying another person to complete all or part of the work. Cheating/ Writing Services:

Please note that providing writing services with the task and/or employing them to write the assignment is serious academic misconduct and can result in cancellation of your enrolment. In short, you acknowledge that:

1. The work is your own work.

2. You have not previously submitted all or part of this work for assessment in any subject, unless the subject coordinator for the current subject (or your research supervisor, if applicable) has given you written permission to reuse specific material and you have correctly referenced the material taken from your own earlier work.

3. You have read and agree to be bound by the Statutes, Regulations and Policies of the University relating to Academic Integrity 

4. You may be subject to student discipline processes in the event of an act of academic misconduct by me including an act of plagiarism or cheating.

5 Submission Details The Final Take Home Exam can only be submitted online through TurnItIn. Note that the system does allow for earlier submission. Please note that you are not receiving a similarity report, only the teaching team will have access to it. Make sure that you are submitting the correct file.

Mistakes will be costly this time as we will not chase you up on this nor are late submissions possible. Penalties for Late Lodgement IMPORTANT Please note that according to the University’s policies a late submission of a final take home examination is not permitted. This means that if your assessment is submitted late without a special consideration having been lodged, you will lose ALL points, see s 3(9) Assessment (Late Submission of Tasks) Policy. Special Consideration The policy on late submission is available at Students should back-up their work in multiple ways to ensure issues of disk corruption and loss of work are minimised. Extensions will not be granted for loss of work, disk corruption, or internet connection problems.

The Special Consideration procedure is explained at. Make sure that you are eligible and are submitting all documents through this online portal in time. Do not email your tutor, lecturer or subject coordinator, you have to request a special consideration ONLINE. Learning Objectives Assessed This assessment task is designed to test your achievement of assessing legal risks in the area of Business Organisation and some contractual and non-contractual risks and obligations.

Definition and elements of a partnership in Australia

What is the business structure in which the business is running and the statue of each party involved in the business?

Rule

Two or more parties can enter into an agreement to form a partnership which is a common business structure in Australia. It is governed by the Partnership Act (Vic) 1958. Section 5 of PA describes partnership as an agreement to carry out business in common between two or more parties whose objective is to earn a profit. There are three key elements which form a partnership between two or more parties. Primarily, parties should enter into an agreement to carry out a business and based on such agreement, their responsibilities and obligations are divided as well. However, in Smith v Anderson case, the court held that performing of an event which would not be performed in the future could not form a partnership between parties.

The business of a partnership must be carried out by the parties in common, and they must have equal responsibilities. Partners are not required to be active in the partnership as long as other partners are managing its operations on their behalf. Partners must have a view of profits, and they must manage the partnership to earn a profit. However, as per the judgement of Cox v Hickman, parties cannot be considered as partners based on the fact that they share its profits; the presence of other elements is necessary as well.

Application

A business for financial advice has been established by Julio, Carolyn and Trisha and each of them is playing different part in the business. The objective of the business is to earn profits by providing financial advice to parties. Julio, Carolyn and Trisha manage the operations of the business, and they are mutually obligated for its operations. Thus, they have entered into a partnership, and they are partners in the business. Sarah only shares profits in the business but did not play any role in its operations. Other partners are not operating the business on behalf of Sarah as well, thus, she is a creditor of the partnership.

Conclusion

Case 2

Issue

Whether Julio and other partners are liable to pay damages for the loss suffered by X?

Rule

A claim for damages can be raised by a party if they suffered loss due to a false statement of another party and they can file a suit for misrepresentation. There are three types of misrepresentation: innocent, fraudulent and negligent. Certain factors are necessary to form a suit for misrepresentation. In Bisset v Wilkinson case, the court held that the defendant must have a duty to avoid making any false statement which could cause an injury to another party and such duty is breached due to failure of maintenance of a standard of care which would have taken by a reasonable person. The court provided in the case that a statement which is just an opinion or estimate is not valid to form a suit for misrepresentation.

Liabilities of partners in a partnership

However, if the party which is giving the opinion or estimate is in the position to know the facts, then a suit for misrepresentation can be formed. Moreover, the aggrieved party must take action by relying on the false statement or else a suit for misrepresentation cannot be formed. The damages suffered by the aggrieved party must occurred directly due to the misrepresentation and must not be too remote. While giving advice to clients, professionals owed a duty of care to ensure that such advice is correct and it would not cause any harm to the party. In Rogers v Whitaker case, it was held by the court that failure of maintenance of a standard of care which is expected by a reasonable person with that professional status resulted in making him liable for misrepresentation.

If the professional is operating a business under a partnership structure, then other partner will be held liable for the actions of the partner. Section 9 and 13 of PA held partners liable under joint liability. If the actions of the partner are within the scope of the business and it was not a usual act, then other partners are jointly and severally liable along with the partner. In Polkinghorne v Holland & Whittington case, the court held other partners liable for the misrepresentation of a partner because the actions were not unusual and partner was acting within the scope of business.

Application

The advice was given by Julio to X regarding tax implications of purchase of a property turn out to be wrong because Julio did not know about the latest ruling of Australian Taxation Office (ATO). Due to the change in tax regulations, X suffered a loss, and he had to pay $15,000 extra as a tax on the property. The loss occurred due to the mistake of Julio who owed a duty to ensure that his advice is right and it did not cause injury to another party. A false statement was made by Julio because he breached his duty based on which X can hold him liable as per negligent misrepresentation. The actions of Julio were not unusual, and he was acting within the scope of the business while giving advice to X. Thus, X can hold other partners, including Carolyn and Trisha liable for the loss suffered by him due to negligent misrepresentation of Julio.

Conclusion

To conclude, X can hold Julio along with other partners liable for the loss suffered by him because a duty of care was breached by Julio while he was acting within the scope of the business. 

Misrepresentation and liability of partners

Case 3

Issue

Whether Julio and other partners are liable to pay damages for the loss suffered by Y?

Rule

A suit for negligent misrepresentation can be filed if a party made a statement of fact which is untrue and another party relied on such statement which resulted in causing damages to him. It is necessary that a duty of care is owed by the party who is making the untrue statement to maintain a standard of care. While evaluating whether a person is liable under negligent misrepresentation, the court analyse a number of factors which are given in the case of Wyong SC v Shirt which include practicability, gravity, justifiability and probability. The Wrongs Act 1958 has codified these elements based on which the court can hold a person liable for negligent misrepresentation. Section 59 of the act provides provisions regarding negligent misrepresentation of a professional while giving advice to a client.

A standard of care should be maintained by the professional which any reasonable person would with such expertise. Based on this principle, a judgement was given by the court in the case of Rogers v Whitaker. In this case, the court held a doctor liable for misrepresentation because he failed to provide appropriate information regarding the side effects of the treatment which any reasonable person would while acting in a similar position. In case the professional is providing its services from a partnership, then other partner can be held liable for the actions of the professional.

Section 9 and 13 of PA held partners jointly liable for the action of a single partner. Certain elements are required to be fulfilled to hold other partners liable for the action of one partner. The actions of the partner must be within the scope of the business and it must not be an unusual act. However, a professional cannot be held liable for the loss suffered by a third party who relied on the advice. As given in the judgement of Esanda Finance Corporation v Peat Marwick Hungerfords case, the court held that a party cannot be held liable for the loss suffered by a third party who relied on the false statement of the party without his/her knowledge.

Application

X shared the advice which he received from Julio to Y without telling Julio. As Julio did not know about the latest ruling of ATO, X and Y both had to pay extra $15,000 in tax. X is a client; therefore, Julio had a duty of care to protect the interest of X and did not give him any false advice which might cause loss to him. Due to a breach of a standard of care, Julio and other partners are liable to pay off the loss suffered by X. However, Y is not a client of Julio, and he did not owe a duty of care to protect the interest of Y. Furthermore, Y relied on the advice of Julio without his knowledge based on which Julio and other partners cannot be held liable by Y for the loss suffered by him.

Options for managing business risks

Conclusion

To conclude, Y is a third party, and Julio did not owe a duty of care to him based on which Y cannot hold Julio and other partners liable for his loss.

Case 4

Issue

What options are available for Julio, Carolyn and Trisha in order to improve the management of their business risks?

Rule

In order to change the process of managing the business, partners can mutually agree to different terms which assist them in improving the management of their business risks. Partners can add or delete terms from their partnership deed to change their responsibilities in the business based on which they can manage their business responsibilities. Furthermore, partners can change the structure of their business by forming a company. A corporation has a separate legal personality from its owners as given in the judgement of Salomon v Salomon & Co Ltd. The liability of the owners are limited based on which they cannot be held personally liable for the debts of the company. There are many advantages of incorporating a company which assist the members in managing their business risks.

A corporation has separate personality from its owners and it has its own rights and obligations. It can enter into a contract with third parties and purchase and sold assets. It can also file legal suits against third parties and other parties can file suit against it as well. As per the Corporations Act 2001 (Cth), it is divided into two categories which include a public and proprietary company. A public company can list its shares on the stock exchange and there is no limit on the number of shareholders. On the other hand, the members of proprietary company are limited and its shares cannot be listed on the stock exchange. These factors assist the owners in improve their business risks by managing their liabilities.

Application

Following are different options available for Julio, Carolyn and Trisha based on which they can improve the management of their business risk.

  • They can make changes in their business procedure while giving written advice to their clients. They can add a disclaimer to their clients while giving them legal advice which provides that the partners will not be held liable in case the client suffered any loss due to such advice.
  • They can form a partnership deed in which they can categorise responsibilities of each partner based on which other partners would not be held liable for the action of a particular partner.
  • They can also form a proprietary company based on which the liability of each partner will be limited. In this structure, the company will have separate personality, and the clients will not be able to hold partners personally liable for the debts of the company.

The best option, in this case, is that Julio, Carolyn and Trisha should form a proprietary company based on which they will able to improve the management of risks in the business. The liability of parties will be limited, and the clients will sue the company rather than partners in case of a breach.

Conclusion

To conclude, in order to improve the management of business risks, Julio, Carolyn and Trisha should incorporate a proprietary company which would reduce their business risks.

To conclude, a partnership has formed to run the business and Julio, Carolyn and Trisha are partners in such business. Sarah is a creditor because she did not involve in the operations of the business.
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My Assignment Help. (2020). Partnerships In Australia And Liability For Misrepresentation Damages Essay.. Retrieved from https://myassignmenthelp.com/free-samples/lst5ccl-company-and-commercial-law/providing-financial-advice.html.

"Partnerships In Australia And Liability For Misrepresentation Damages Essay.." My Assignment Help, 2020, https://myassignmenthelp.com/free-samples/lst5ccl-company-and-commercial-law/providing-financial-advice.html.

My Assignment Help (2020) Partnerships In Australia And Liability For Misrepresentation Damages Essay. [Online]. Available from: https://myassignmenthelp.com/free-samples/lst5ccl-company-and-commercial-law/providing-financial-advice.html
[Accessed 28 March 2024].

My Assignment Help. 'Partnerships In Australia And Liability For Misrepresentation Damages Essay.' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/lst5ccl-company-and-commercial-law/providing-financial-advice.html> accessed 28 March 2024.

My Assignment Help. Partnerships In Australia And Liability For Misrepresentation Damages Essay. [Internet]. My Assignment Help. 2020 [cited 28 March 2024]. Available from: https://myassignmenthelp.com/free-samples/lst5ccl-company-and-commercial-law/providing-financial-advice.html.

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