Business Law Assignment: Critical Examination Of Partnership Act

Need Full Solution?

Request a FREE quote now!

Order Now


Task: A veterinary pharmaceutical company has employed a group of four pharmacology scientists for many years. Occasionally they get together and attend local football matches. At a recent game they were chatting about branching out and setting up their own company. They each have financial assets and skills that they would like to bring to the business. Let’s assume they consult you on Monday morning following the game.

What business structure would you recommend? What would be the advantages and disadvantages of each business structure in this context? 

The four of them envisage that by the end of its first financial year their business would have gross assets of at least $10m, employ 40 people full time and have a gross revenue of $20 million.

If this were the case by the end of the year, how would you classify their business?

One of the scientists rings you and leaves a message. In the message she states ‘can you explain to me what a legal person is?’ What will you tell her? 

If you recommended that the scientists create a company what would be the steps that they would need to take 

Question 2
Kyle and Jackie are hairdressers. They met during the TAFE Hairdressing course and as both lived in the inner southern suburbs of Adelaide they decided to work together. They had little money of their own and so they invited one of their customers, Lynn, a medical practitioner to join their business. Lynn provided $100,000 to the business. At the end of each week they divide up the ‘profit’ three ways.

When they first were in business they used their residential flat as the place to perform their hairdressing but as numbers of customers grew they went searching for a suitable shop. Kyle found an ideal commercial space on King William Road at Hyde Park and entered a lease. He signed the lease in his name.

About 4 months after they moved into the new premises Jackie applied some hair dye to Betty, one of their customers and Betty suffers serious burns to her scalp as a result of Jackie’s careless actions. Betty is treated at the hospital and is now having 6 monthly visits to a dermatologist and expects that these will continue for the next 5 years. Each of these visits are charged to Betty at $400 per visit.

Kyle is the lead singer in a 80s revival band and given that the band members try to re-create the style of the 80s Kyle uses the premises each Saturday afternoon to attend to all the other band members, blow-drying, cutting and colouring their hair. For this work, he is paid separately by each band member and does not disclose this to Jackie or Lynn. 

Answer ALL of the following questions:
Please let Kyle, Jackie, and Lynn know 1. if they are in a partnership, and if so, who the partners are in the partnership. You can support your answer with the Partnership Act and relevant case law.

2. Who is accountable for making lease payments if they are three months late for the hair salon premises? Provide evidence from the Partnership Act and relevant case law.

3. Use the Partnership Act and case law to back up your claim that Kyle is in breach of his partnership obligations since he performs his Saturday afternoon band haircut.

4. How can Betty find out who is behind this company if she wants to file a lawsuit against it to recoup the costs of her doctor appointments and hospital bills? Cite any legislation or case law to back up your response.

Use the Partnership Act and case law to back up your claim about who Betty would sue and who would be responsible if she discovered the identities of the business owners.

In response to Issue 2

1. The issue of partnership formation

Whether Kyle, Jackie, and Lynn constitute a partnership under the Partnership Act is the question that was considered in the business law assignment.


Partnership is defined by Section 1 (1) of the Partnership Act of 1891 as the relationship between individuals who are jointly operating a business with the intention of making a profit, which may also include an incorporated limited partnership[1]. Based on the definition given in the business law assignment, it has been determined that four requirements must be met. These requirements are as follows:

• Any trade, profession, or occupation qualifies as a business, according to the legal ruling in Hope v. Bathurst City Council (1980) 144 CLR1[2]. • The partnership business should be operating consistently and should be a commercial venture. Additionally, a single adventure may be seen as business depending on its breadth, according to the ruling in the 1985 court case United Dominions Corp Ltd v. Brian Pty Ltd[3].

• Either all of the partners may carry on the business, or one partner may do so on behalf of the other partners. Partners can still act independently, although certain actions may still be required of both parties. Partners should have reciprocal obligations and rights. Additionally, the agency is not necessary for the creation of the partnership[4] either.

• Finally, it ought to be used to make money.

Along with the aforementioned factor, a partnership may also be formed by stated or inferred agreement[5]. Additionally, it is stated in this Business Law Assignment that each partner has the power to govern the partnership business in accordance with section 24 of the Partnership Act[6]. Additionally, Section 24(g) states that only current partners can approve the entrance of a new partner into a firm. [7] If the partnership agreement contains no ratios, the profit may be divided equally among the partners in accordance with section 24(1)(a)[8]. Section 6 of the Partnership Act, which is referenced in this section of Business Law Assignment, also specifies who is regarded as a partner in a partnership firm[9]. The most typical are listed as follows:

• If there is shared ownership, in that case, he or she is regarded as a partner.

Participation in the company's profits is the primary indicator that a partnership exists, as is the need that all partners bear equal responsibility for the company's losses. A person who is qualified to exercise partner rights is regarded as a partner of a partnership firm.

Application in the present study
As can be observed in the current Business Law Assignment case scenario, Kyle and Jackie chose to collaborate while contributing financial resources. With the approval of the other partners, Lynn also joined a partnership firm and made a financial contribution. They all agreed to split the profits equally. A hair salon is operated by all three partners. It has been claimed that the aforementioned company structure qualifies as a partnership under the Partnership Act of 1891. The following reasons are listed in this Business Law Assignment:

Hairdressing business includes in the phrase of trade and profession. It is carried out by partners continually. It is carried out by all three partners. It is the business that is run by more than two people; in this example, it is run by three people.

Profit generation is the business's primary goal.

It has been claimed that all four components of a partnership are present in the current case scenario based on the aforementioned feature that has been discussed in this Business Law Assignment. Additionally, it is not necessary to have written records of all agreements in order to form a partnership. Because Kyle, Jackie, and Lynn concurred to split profits, they are regarded as partners.


It has been determined that Kyle, Jackie, and Lynn are partners and that their business is a partnership firm after taking into account the analyses discussed above from this Business Law Assignment.

2. Partners' obligations in the event of lease rent default


The question concerned who was responsible for paying the unpaid lease on the hair salon's premises.


Each partner is regarded as an agent of the partnership firm and the other partners for the purpose of the partnership's activity, according to Section 5 of the Partnership Act of 1891, which was taken into consideration when designing this Business Law Assignment[10]. Any partner's actions that are connected to the regular operations of the company, of which the partner is a member, bind both the partner and the company. Additionally, as stated in the legal decision in Wang v. Rong [2015] NSWSC 1419[11], all partners of the firm are jointly liable for any debt of partnership under section 9 of the Partnership Act 1891. In other terms, it can be claimed that each partner in a firm is accountable jointly with every other partner if any person is deemed a partner and any debt is committed by the firm at that time[12]. However, liability is only extended to a partner's estate in the event of their passing[13]. Additionally, in accordance with Section 5 of the aforementioned Act, it is important to take into account whether the firm is conducting business normally when determining the culpability of other partners for debt and obligations committed by one partner.

Rules being used in the situation at hand

In the current case scenario of the business law assignment, it has been observed that business was previously conducted in a private apartment, but that it later moved to a commercial location where it began operations and entered into a lease agreement. Kyle signs the rental agreement. The fact that Kyle personally signed the lease agreement is irrelevant in this situation. The same is true for the reason that this activity is connected to the regular course of business, which also ties in other partners.


Based on the aforementioned Business Law Assignment provision, it has been determined that all partners are accountable for payment under section 5 and section 9 of the Partnership Act 1891 in the event that lease payments for hair salon premises are three months late.

3. Partnership duty violation problem

The question raised in this section of the business law assignment is whether Kyle is in violation of his partnership obligations as all members come the premises on Saturdays for hairdressing purposes and he obtains a charge from each member separately without disclosing it to his partners.

Partners are required to comply with fiduciary duties, which are as follows -

  • The relationship among partners is based law of agency.
  • It is based on an assumption of trust and mutual confidence among partners. Each partner of the firm owns duty towards other partners of good faith and fairness[14].
  • It is the duty of a partner to act in good faith and activities should assist in providing benefit to the partnership firm. In the legal case of Helmore v Smith [1887], it was held that the relationship between partners in fiduciary nature[15].
  • It is the duty of partner not to make a secret profit from their position, except where is permission is given to partner is the express manner[16].
  • The partner should not engage in such type of activity which assists in rising of self-conflict interest.

Partnership Act 1981 also explains some statutory duties of partners, such as –

  • As per section 28 of the cited Act, it is the duty of a partner to make full disclosure to other partners related to all matters of business of the partnership[17].
  • It is the duty of a partner to account for any profits or any advantage gained from any activities related to business. In the
  • According to section 29 of the cited Act, it is the duty of partner to the account of any personal profit derived from any transaction related to partnership, or any use of the property of the partnership, without consent of other partners[18].
  • Section 30 of the said Act, stated that partner cannot compete with the partnership firm without the consent of partners[19].

Application of rules in the present study
In the present case scenario of Business Law Assignment, Kyle uses the business premises for hairdressing of band members and he is paid fee separately, however, did not disclose it to other members. It has been seen that by using the property of the partnership, Kyle was derived profit. It is the duty of Kyle to account for the fee received by band members. Along with this, the duty of full disclosure of other partners is also breached by Kyle.

By considering above study developed within the Business Law Assignment, it has been concluded that Kyle is in breach of fiduciary as well as statutory partnership duties because he did not make full disclosure of all matter related to partnership business (Section 28) and also did not account for personal profit generated by him in terms of a fee (section29).

Message me