Nature of Partnership in the Construction Industry
According to the concepts and forms of business, Miraculous Property Designs has been formed under general Partnership business structure. A partnership in the business setting has a close similarity to personal partnership. The nature of the business involves two or more parties coming together and forms a pool through contribution. The main aim of pooling money is always directed towards achieving a common purpose in the long run. In the case of Miraculous Property Designs, it is evident that Mowgli, Sven, Ariel, Elsa and Timon came together as skilled architects and contributed a pool of $100000 each for the establishment of their new venture. A Partnership also involves sharing individual skills and resources and sharing the good and bad times. Partnership has got some specific legal relationship that is arrived at by the two or more individual to carry on the business process as co-owners. The business has multiple owners, where each has got special interests in the course of the business. In most cases, some partnerships involve individuals who participate in the day to day activities of the business. However, other partnership agreements have partners who have limited participation. According to the South Australian act 1891, partnership is not a separate entity from its owners. The income tax from the business is paid by the partners, but according to section 24 part 1(a), the profits and losses are shared among the partners based on the agreements. Therefore, just like in the case of sole proprietorship, partnership is a pass-through business. As a result, the losses and profits of the business pass through the individual owners. Considering all the characteristics involved in the establishment of Miraculous Property Designs, the business agreement revolves under partnership clause. Even though the optimistic nature of the four partners does not allow them to talk about losses, but it is important to note that, in case of any losses, the partners are expected to sit and discuss on how to bear the losses accordingly.
On the same account, Miraculous Property Designs being a general partnership company doesn’t need to be registered. Therefore, the South Australian act of 1891 has specific rules in the determination of whether the partnership exists. First, there should be a joint tenancy, joint property, tenancy in common, shared property or part ownership of anything owned by the company and the partnership should share the profits realized by the use of the joint property. Secondly, the partners should have an agreement of sharing the gross returns recorded from the course of the business process. Besides, according to the South Australian act, the government and the partnership organisation does not need to enter into a written agreement to govern the relationship between them. Each partner automatically becomes liable to the business from the day of its establishment. According to section 2(a) of partnership act 1891, person who shares the profit of the business with other individuals “prima facie” eventually carries on the business as a partnership. Other factors that may determine the existence of partnership include sharing of responsibilities of the business and managerial functions. However, a single factor is not satisfactory to prove that the partnership exists. It is essential to do a case-by-case analysis.
South Australian Partnership Laws and Regulations
According to the South Australian Act 1891, division 2 section 7, a general partner in a normal partnership other than an incorporated or limited partnership is entitled to act as an agent to the firm and other partners for the purpose of carrying out the business. Therefore, the role was taken by Timon in conducting paid public lecture on contemporary housing designs and at the same time displaying the models and drawing of “Miraculous Property Design” is generally approved in partnership deed. However, Timon should act so in regards to the company and other partners. Also, the money realized from the activity should be disclosed to the firm and be shared among all the partners in case the activity is fully authorized. The acts of every partner who engages in any activity that relates to the usual process of the business being undertaken by the firm that the partner is bound to and is a member of with other partners should be regarded as an activity of the partnership organization. The case stands so unless the partner in so acting has no authority to act for the firm in any business related way and the person with whom the partner is dealing with has full information about the partner’s lack of authority or does not believe a partner to be a partner.
Therefore, with or without the knowledge of other partners in the business, Timon, being a general partner and an agent of the firm by law is authorized to act on behalf of the firm. But in the case of the “Miraculous property Designs,” Timon is not authorized to perform the sales and marketing functions of the firm. The role of sales and marketing is mandated by the agreement of the partners to Ariel. As a result, considering the partnership act, Timon Is not authorized to act on behalf of the company in regards to sales and marketing of products. Therefore, Timon is neither obligated to reveal to the partnership the details about his public lecture, nor does he have to share the returns with other partners.
When Elsa takes in the side step to enter into a contract with the Wow advertising agency, she does that on behalf of all the partners and to promote the primary purpose of the business. From Elsa’s actions, it is evident that she has intentions to bound all the partners and the firm in the advertising contract, though she gives her designs priority. Also, from the aspect of the partnership, Elsa being a general partner is allowed to act on behalf of the company and bind the firm and other partners in other contracts. According to the South Australia law 1891 section 6(a), any instrument or act that relates to the business of venture other than the limited or incorporated partnership, and done in using the firm’s name or any other manner showing the right intentions to bind the firms in relevant business process by one of the partners or any other authorized person who is not a partner is not only binding to the person, but also to the firms and other partners. Therefore, the contract entered by Elsa by the Wow advertising agency to showcase the firm’s products does not only benefit her, but also it is done in the interest of the designs of other members. In that case, the contract does not only bind Elsa to the agency but also the firm and other partners involved.
Designation of Roles and Responsibilities in a Partnership
Considering a partnership structure, every partner in the firm other than the incorporated limited partnership is in a joint relationship with other partners for all the obligations and debts of the firm. The responsibility is taken by other partners when the actions by the other partner occur when he or she is still a member of the company. Taking a case where Mowgli negligently designs an elaborate roof during the house design process, which later collapses during the hailstorm, the act can be reviewed under the firm’s liability for wrongs. According to the partnership act section 10 (1), where there is any wrongful omission or act by any partner in the firm other than an incorporated limited partnership acting in the general course and processes of the firm or with the granted authorities by the partners or co-partners, injury or loss caused to an individual who is not part of the firm or any penalty is incurred, the firm is always liable to the loss, penalty or injury to the same level of the partner so acti9ng or neglecting the act in the process. As a result, Sven’s holding is liable to all the damages incurred by the house owner due to negligence by Mowgli. However, for Sven to protect his holding from the wrongdoings of Mowgli, the wrongful act and negligence of the partner of the governing body can be taken not to be part of the ordinary process of the business through, proving the fact that the partner did not obtain the agreement or authority of the partners and other members of the firm or some fraction of them to be appointed to act on behalf of the firm.
According to the regulations of the corporation act 2001, Companies do enter into signed contracts with other parties. A company being an artificial person, the said contracts are always entered into by various authorities and representatives in charge. Usually, the responsibility to enter into a contract is always given to senior persons in the office. The agreements are always drafted in a signed clause that binds the company and the other party. The representation clause that explains the contracts have the explicit direction that shows that the person signing the contract has been mandated and has the authority to sign the agreement. Often, the board of directors always authorizes one of them to or any other senior person in the company or a legal counsel to take charge of relevant agreements. The power to delegate the duties is generally provided in the “article of association” during the formation of the company. Agreements which are of low value or that are part of the day to day transactions may be delegated to even mid-level managers. Besides, when signing the agreement, it is essential for one to understand that party making the signatory has the authorization. According to the principle of constructive notice, it is mandated that all the parties improved in the contract must be aware of all the writing in the article of association.
Partnership Liability in the Construction Industry
A while ago, company seal, also referred to as corporate seal, was a device that acted in place of company directors and gives authority to all company processes. According to section 127 part 1 and 2, the seal contained company registration number and was a fundamental requirement when sealing contracts, share certificates, deeds and to make them valid. However, the recent change in the legal system does not recognize their use. Currently, Companies act in its provision states that a common seal is no longer necessary. Instead for a company to enter into a contract, the formal agreement must be signed by two officers or any single director and another independent witness as per the guidelines of section 126 of the corporation act. Besides, section 127 outlines that, a formal authority in contract us given when a common seal is involved or when one director and a secretary are involved. Therefore, in the case of Moana Pty Ltd, it can be said that the contract that Heihei signed by the motor company in the purchase of a new luxury car does not bind the company. This is because, during the contract, Heihei did not use a common seal s127(1), which was not part of the company during registration to enter into the contract. Also, the contract did not involve signatories of two high ranked officers of the company or the sign of one director with that of a witness s127 (2). The company is not therefore bound into that contract.
On account of Heihei, when she entered into the agreement to buy the car with the Jaguar car dealers is a valid contract. A contract is as a written or spoken agreement between two people of legal age and that is enforceable by law. Therefore, the moment Heihei signed the contract agreement with Jaguar, she personally entered into the contract of purchase of the car since her consent was approved and other legal considerations. Sina is not liable to the contract as the contract does not bind him. For a contract to be binding there must be a sign from the party in question and full consent. Basically, Heihei proceed to the contract based on her personal interest and did not involve the company directors, making the contract void in regards to the company and its directors.
According to the section 204 part 1 and 2 of the corporation act 2001, any public company must have at least one office secretary who foresee on the day to day functions of the administration. The secretarial position in the company is very important as the person in charge of such office are mandated with the responsibility of ensuring that the company meets various requirements in its business functions as stated under the corporation cat. As a result, the secretary takes full responsibility of the administrative functions of the firm. Besides, the secretary has the formal role to be the guarding on all the meeting processes of the company. They usually make relevant arrangements for the meetings, which include Annual general meetings and keep formal records and minutes of the meetings, process of decision making and keeping records of correspondence. However, section 204 part B of the corporation act gives some options to the proprietary companies in regards to the secretarial position. According to the guidelines, in practice, one of the directors of the corporation is usually plays the role of company’s secretary. As such, in absence of the secretary, the director will assume the relevant responsibilities as stated under the act. Also, the company cans chose to appoint any individual of legal age to assume the position of the secretary. The a person appointed is always expected to give his or her consent of approval in form of writing before assuming the position as per the guidelines of section 204 part C. Therefore, in the case of Miraculous Property design, the proprietary firm is not compelled to hire a new secretary to run their normal administrative functions. In that case, Sina, who is one of the directors, can assume the role or the company may chose any one of legal age to assume the office as directed by the act.
According to the Model Business Corporation Act, there are set corporate laws that are influential in shaping the working standards of various companies. According to section 45A(2) of the corporation act 2001, a normally operating company will be considered as a small proprietorship business when by the end of operating financial year based on at least two criteria. First, when the entity is controlled by the company has less than 50 full time employees at the end of the financial year. Secondly, proprietary limited company is classified as small if its gross operating revenue is les that $25million after one financial year. Also, a company may be rendered small if its operating assets are less than $12.5 million at the end of financial year. According to section 292(1)(2), Most large companies are always expected to give a lodge of their audited accounts after every financial year.
However, small companies only have to prepare audited financial statements as per the directions given by the Australian Security and Investments Commission (ASIC). Also, the orders for financial statements can be given out by members holding five or more percent of the shares in cases where the company is controlled by a foreign company. Therefore, if Moana Pty Ltd decides to lay off 10 employees at once, this is just one of the two minimum criteria in determining fate their corporate statute. It is important to note that, when they maintain their profits above the minimum $25million and keep their minimum required assets for operation, the company will still remain to be al large proprietary company. Besides, the mamageme3nt can consider lowering the company status to small proprietary to enjoy the wide advantages of small proprietary business as stated in Australian policies.
Reference
Ashworth, Allan, and Srinath Perera. Contractual procedures in the construction industry. Routledge, 2018.
Corporations Act 2001
Graw, Stephen. An outline of the law of partnership. Thomson Reuters, 2011.
Kaczorowska, Alina. Public international law. Routledge, 2015.
Morse, Geoffrey. Partnership law. Oxford University Press, 2010.
Partnership Act 1891 SA
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