Case Study 2
Issue
The key issue is whether the partnership will be held liable for the contract formed by Lance and can other partners take legal action against him?
Rule
A partnership is a business structure which is formed by an agreement between two or more individuals. The object of the partnership is to carry out the business in common by the partners and distributing income or loss between the partners. The liability of the partners in a partnership is unlimited. It means that they can be held personally liable by the court to pay off the debts of the business. The golden rule of partnership provides that partners are liable for the actions of other partners and the partnership. Section 10 of the Partnership Act 1892 provides that other partners will be held liable if a wrongful act is committed by one partner while acting in the ordinary course of the business (Austlii, 2018). A partnership did not have a separate legal entity like a corporation, thus, partners are not different from the partnership. In National Commercial Banking Corporation of Australia Ltd v Batty [1986] HCA 21 case, the High Court provides that if the partner conducts an act without leaving his/her actual authority, then other partners of the firm will be held liable for the actions of the partner (Jade, 2018). Each partner has a fiduciary duty towards one another to ensure that they act in good faith and ensure care and diligence while taking business actions to avoid loss to another partner.
Application
In the given case study, other partners are bound by the contract formed between Lance and Lynton. Partners decided that they will purchase a car for the business and Lance was instructed not to spend more than $20,000 on the car. The action of purchasing a car comes under the definition of ordinary business of the partnership since the car was for business use. Thus, as per section 10, other partners are liable as per the contract formed between Lance and Lynton. In this case, Lance acted outside his authority, and he did not comply with the instruction of other partners. However, other partners are still bound by the terms of the contract as given by National Commercial Banking Corporation of Australia Ltd v Batty case. Furthermore, other partners can take legal action against Lance for his action. They can file a suit against Lance for reimbursement of the loss suffered by them at a personal level because Lance did not act in good faith while taking business decisions. In this case, Lance breached his fiduciary duty towards other partners based on which he can be held personally liable to reimburse other partners for damages.
Conclusion
In conclusion, the partnership can be held liable for the decision of Lance and other partners are equally responsible as well. Furthermore, other partners can file a suit against Lance for reimbursement because he did not act in good faith.
Issue
The issue is whether consumers have a remedy against the wrong advertisement made by Xiaojing? Whether Saqlaim is bound by the contract made by him to purchase the car?
Case Study 3
Rule
The Australian Consumer Law provides provisions regarding the protection of customers in Australia by regulating the operations of businesses. Section 18 of ACL provides a broad range of probation on businesses based on which a person must not engaged in any conduct relating to trade or commerce which can be considered as misleading or likely to do so. Another key provision is given under section 29 of the Act which provides prohibitions on business from making false representation regarding their goods or services (Legislation, 2018). Any misleading information given by businesses in advertisements could cause harm to the purchasing decisions of customers which can reduce competition in the market by leading customers to favour the products which actually did not have the features which are promoted. A good example was given in ACCC v TPG Internet Pty Ltd [2013] HCA 54 case. In this case, the court confirmed that section 18 of ACL protects the interest of customers from so-called ‘headline’ advertisements (John and Willekes, 2014).
These advertisements are considered as misleading notwithstanding that fact that they have a disclaimer included which qualifying the representations in the headline statement. Furthermore, terms of a valid contract are binding upon its parties as long as the elements of the contract are fulfilled by the parties which include offer, acceptance, consideration, intention, and capacity. However, in Commercial Bank of Australia v Amadio [1983] HCA 14 case, Amadio did not know English very well, and the bank took advantage of this and did not disclose all the terms of the guarantee. The court considered it an issue of unconscionable conduct because the contract was formed without proper knowledge of Amadio. Thus, it was set aside by the court (ACL, 2018).
Application
In case of Xiaojing, the advertisement breached section 29 of the ACL because it is misleading. In the advertisement, false representations are made about the description of the product and the product did not match the requirements of the advertisement. Thus, in this case, Xiaojing is liable for breaching section 29 of the ACL. In the case of Saqlaim, all the elements of the contract are fulfilled by the parties. However, as discussed in Commercial Bank of Australia v Amadio case, a contract which is formed when one party is not fluent in English and other party takes advantage of this fact, then the issue of unconscionable conduct arise based on which the contract can be set aside by the parties.
Conclusion
In conclusion, customers have a remedy under section 29 of the ACL based on which they can hold Xiaojing liable for issuing a false and misleading advertisement. In the case of Saqlaim, the contract can be set aside because Lance formed the contract by taking advantage of poor English of Saqlaim.
Issue
The key issue is whether Felix has a right to claim $100 from Xiaojing as promised by him?
Rule
After complying with the terms of the contract, the contracting parties are bound by its terms. They have to comply with the terms included in the written or oral contract. Certain elements must be fulfilled by parties which include an offer, acceptance, consideration, competence, and intention. The doctrine of promissory estoppel protects the contracting parties because it stops a person from going back on a promise. In the case of Crabb v Arun DC [1976] 1 Ch 179 a leading judgement was given by the court to understand this doctrine. In this case, it was held that this principle prevents a person from making a promise based on his legal rights which he/she is not going to fulfil (Samuel, 2016). Certain elements are given which are necessary to be fulfilled in order to implement the doctrine of promissory estoppel. The first element is that the parties must have a pre-existing contact which is modified by them based on a promise.
Liability of Partners in a Partnership
In Combe v Combe [1951] 2 KB 2015 case, it was held that without a pre-existing legal obligation which has not been modified, the principle of promissory estoppel could not be applied. Secondly, the promise made by the party must be clear and unambiguous. In Woodhouse A.C. Israel Cocoa Ltd. v Nigerian Product Marketing Co. Ltd. [1972] AC 741 case, the court provided that a clear and unambiguous promise can be implied by the parties as well. Thirdly, the promise must change the position of the parties as given in Alan v El Nasr [1972] 2 WLR 800 case. In this case, the court emphasised the importance of change in the position of the promisor after making the promise (Russell, 2012). It was given that detrimental reliance is not a requirement for implementing the provision of promissory estoppel. Lastly, it is necessary that it must be inequitable to let the promisor go back to his/her promise.
Application
In the given case study, Felix can rely on the doctrine of promissory estoppel to get $100 from Xiaojing. In order to rely on the doctrine, it is necessary that all four essential elements are fulfilled in the given case. Firstly, there was a pre-existing legal relationship between Felix and Xiaojing since he was working as a casual to pick lavender. The condition of their pre-existing contract is modified because Xiaojing promised Felix that he would pay him $100 for his good work. The promise was clear and unambiguous. It changed the position of both parties since Xiaojing owed $100 to Felix. Finally, it is inequitable to let Xiaojing go back on his promise since Felix is a student who worked hard to do a good job, and he was let down by the promise of Xiaojing.
Conclusion
In conclusion, all the elements of promissory estoppel are fulfilled in this case, thus, Felix can file a suit against Xiaojing to recover $100 as promised by him.
References
ACCC v TPG Internet Pty Ltd [2013] HCA 54
ACL. (2018) Commercial Bank of Australia v Amadio. [online] ACL. Available at: https://www.australiancontractlaw.com/cases/amadio.html [Accessed 3rd August 2018].
Alan v El Nasr [1972] 2 WLR 800
Austlii. (2018) Partnership Act 1892. [Online] Austlii. Available at: https://www8.austlii.edu.au/cgi-bin/viewdb/au/legis/nsw/consol_act/pa1892154/ [Accessed 3rd August 2018].
Australian Consumer Law
Combe v Combe [1951] 2 KB 2015
Commercial Bank of Australia v Amadio [1983] HCA 14
Crabb v Arun DC [1976] 1 Ch 179
Jade. (2018) National Commercial Banking Corporation of Australia Ltd v Batty. [Online] Jade. Available at: https://jade.io/j/?a=outline&id=67268 [Accessed 3rd August 2018].
John, R. and Willekes, A. (2014) Consumer law: Deceptive advertising: Is it a question of audience?. Law Society Journal: the official journal of the Law Society of New South Wales, 52(3), p.42.
Legislation. (2018) Competition and Consumer Act 2010. [Online] Legislation. Available at: https://www.legislation.gov.au/Details/C2013C00620/Html/Volume_3#_Toc368657571 [Accessed 3rd August 2018].
National Commercial Banking Corporation of Australia Ltd v Batty [1986] HCA 21
Partnership Act 1892
Russell, C.A. (2012) Opinion Writing In Contract Law. Abingdon: Routledge.
Samuel, G. (2016) Epistemology and method in law. Abingdon: Routledge.
Woodhouse A.C. Israel Cocoa Ltd. v Nigerian Product Marketing Co. Ltd. [1972] AC 741
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