Business Organisations

Lecture 3

Partnership most common form of business as lawyer.

Partnership Act: s 1 definition: relationship b/w people to profit in a
business in common.
United Dominions v Bryant: Important authority. Narrow view of profit
(accounting perspective). If entitled to share in that = partnership
(likely). Gross profit is not proof of having share in profit.
Re Megevand ex parte Delhasse: Loan was just a loan, not a stake in
equity. Court said loaner was right to control profit and check books.
Babbalay v Consolidated Loan: Similar facts. Right to enter premise if
loan not repaid. Court said not business in common; it is a loan of
security.
Court will look to substance not form: Wilkshere v Kuernsy. Label is a
signal but not conclusive. Substance (net profits).
Indicator of partners sharing losses equally.
Cox v Hickham: decisive test for partnership if ability to bind and act
as agent for partner. Not decisive anymore. Can be partnership even if
no right to bind other partners.
Internal management control: Walker v Hirsh. If no say in control of
partnership, can still be a sleeping partner.
Mutual Trust & Confidence - in essence lifeblood of partnership. Not
essential for finding of partnership.
Capital contributions can be partner w/o contributing. Not essential
but an indicator.
Pure science theory of law rational and truthful. Court authority is
truth unless constitutionally valid by Parliament.
Law as social construction legal realism. Created and influenced by
people.
Partnership is not separate legal entity; it is a group of people in
business and ceases to exist when partners do.
Limited liability: s 5. Jointly and severable liable. Actionable authority:
have authority to do something. Ostensible authority: 3 rd party dealing
w/ partnership can assume partner had authority to do. Can still be
liable for actions. Example of corporate law partner giving property
law advice. Can be sued, as assumption is fair they gave advice as
partner of corporate law firm.
Fiduciary duty: equitable concept, strongest duty in law. Even if profit
w/o loss, breach of fiduciary duty eg gambling Trust money. Section
30: conflict of interest and competing against own firm.
Dean v MacDowell
Birtchnell v Equity Trustees
Limited liability partnership: Investor not involved in running of
business, can enter into agreement. Uncommon.
Unincorporated Association: golf clubs. Profit element can distinguish
b/w partnership and unincorporated association. Peckham v Moore:
suing no separate legal entity as its unincorporated association.
Joint Venture: difficult to distinguish w/ partnership.

Corporate law adopted at State level from England. State would issue
grant in respect to rules. Corporations Act at Federal level national
regulation.
Regulation not just rules. Social factors also direct behavior.
Corporation exists within legal framework and social influences. If
strictly rules, regulation will fail (car company paying off law suits).
State-based to National led to surge in business investment. Rules to
promote corporation.
ASIC not providing an obstacle to business. More fostering than
regulation.
Corporations Act: Pure science theory of law? Or human sociological
construct is corporation human, regulation goes beyond rules.