Partnership Law and Apparent Authority

There are two issues involved:

1. Can Lynton bind the herbal partnership business with the contract established by Lance on behalf of the firm?
2. Can lance be held personally liable for exceeding his authority to the firm and the other partners?

Relevant Law

There are several ways in which business can be carried on in Australia, for instance, by a company, sole trade ship, trust or by partnership. Partnership is a form of business which can be carried on with the help of more than one person who are sharing common motive/intention while carrying on the business activity with the sole intent to share the earned profit and losses amongst themselves. These are the core elements required for partnership formation and are held in (Wang v Rong, 2015).  (Lawyers 2017)

The persons who form the partnership are the partners and as per (Re Agriculturist Cattle Insurance Co, 1870), they are agents of each other and the form, that is, an act by one will bind the others and the firm.  (Egert 2007)

Every partner must duly cater their duties, that is they must not make any secret profits, avoid conflicting interest, must act fiduciary, etc. if any agent exceeds his authority then it is nothing but an act of breach of duty and he can be thus held personally liable for the loss that is incurred by the firm because of such excessive use of authority.

The agents carry on the acts for the firm within the power which is attributed to them. This attribution of power can be in two manners, that is, firstly, actual authority which is delegated to the agents of the firm directly by the firm itself and is evaluated in (Hely-Hutchinson v Brayhead Ltd , 1968). This can be done by the firm wither in written or oral form called the express authority or by implication called the implied authority;

Secondly, apparent authority is a kind of authority wherein a presumption is raised by the third party that the person with whom he is dealing is the agent of the firm. The presumption is raised based on the representation made by the agent of the firm clarifying that such person has the power to enter into contract on behalf of the firm. Thus, any contract amid the third party and such representative is valid and is bind upon the firm provided the third party is acting in good faith and is held in (Freeman & Lockyer (A Firm) v Buckhurst Park Properties (Mangal) Ltd , 1964).  (Latimer 2012)

Application of law

The law is now applied.

1. Lance is one of the partners of Herbal Product Business (there are three partners in total). The firm has granted him power to establish contract on firm behalf but only to the value of $20,000. This authority is expressly granted to lance by the firm. Any contract up to the value of $20,000 is binding on the firm and the partners and they must honor the same.

But, lance exceeded his authority and enters into a contract with Lynton who was the sale person of Mighty Motors, He bought a uite @ $25,000. At this stage it is submitted that since Lance has undertaken a contract beyond his authority thus, the same must be non enforceable.

But, Lynton is aware of the Herbal business and its three partners but there was no where mentioned that Lance authority to bind the business is only up to $ 20,000. Thus, by not making any disclosure, a representation is made by the firm based upon which Lynton has entered into a contract with Lance. Thus, Lance has assumed an apparent authority and the contract made by him for worth @$25,000 is valid and is enforceable.

1. Lance is in violation of his duty as an agent and has exceed his power, thus, he can be held personally liable for the contract that is entered by him.

Consumer Protection Law and False Advertising

Conclusion

Lynton has full power to hold Herbal liable for the contr5act made by Lance as the contract was valid under the apparent authority of Lance and Lynton was acting in good faith. Also, Lance is held personally liable and is accountable to the firm and other partners.

1. Is Lance bound by the contract for the car sale with Saqlaim?
2. Is Xiaojing be sued by the consumer for the sale of moisturizer and the claims made in the advertised?

In order to provide protection to the consumers there is Australian Consumer Law that is framed. The consumers are entitled to sue the manufacturer or the supplier if any of the provisions of the Act is not comply with.  (Corones 2012)

Every manufacture is obligated to act not in deceptive or misleading manner while dealing in commerce and trade and if he does then the same is the breach of section 18 of the Act. in  (Commercial Bank of Australia v Amadio , 1983), the acts are held to be deceptive and misleading resulting the contract unenforceable in nature.  

When the party who is dominant position takes advantage of the position of the inferior to his own gain, then the acts are considered to be unconscionable in nature as per section 20 of the Act. The party is held to be inferior as he lacks knowledge, age, literacy, soundness of mind etc. Any representation by the seller which is not true and which results in misleading the consumer are not permitted as per section 29 of the Act.

When false and misleading statements are made regarding the characteristic, style, quality of the product the same is violation of section 33-34 of the Act.

Application of law

1. Saqlaim bought the car from Xiaojing. Saqlaim does not understand English and Lance (sales person of Xiaojing) is aware of the same and he takes advantages of the inferiority of Saqlaim and with his charismatic English he enters into the contract with him. Thus, there is clear breach of section 20 as the acts are unconscionable. So, Saqlaim has power to cancel the contract.
2. Xiaojing made a claim that the moisturizer sold by it is a product which slows the ageing effect. But, the claim was false. This claim was made to misled and deceives the consumers. So, there is breach of section 18, 29, 33 and 34 of the Act and the consumer can sue Xiaojing.

Conclusion

Lance acts are unconsiousable in nature and thus Saqlaim can terminate the contract. the clai by Xiaojing  is breach of section 17, 29, 33 and 34 and thus consumers can bring an action against Xiaojing.

Is Xiaozing liable to pay extra $100 which is promised by her to Felix?

When an offer is communicated by an offeror to an offeree which is approved by the offeree then it is an agreement. The parties are required to be capable and must possess legal intention. The agreement should be hold along with some value called consideration to make it legal and enforceable.  (Latimer 2012)

The promises when made by the offeror and the offeree should be supported with some value (monetary or non monetary) so that the promises are enforced by the parties in law and such value is called consideration and is held in (Chappel v Nestle , 1960). Consideration must be adequate regardless it is sufficient or not. Any agreement not supported with consideration makes the contract gratuitous and is held in  (Coulls v Bagots Executor & Trustee Co Ltd, 1967).

But, as per (Roscorla v Thomas , 1842), only those considerations are valid which are made against the promises of future or present. Consideration of past promises are irrelevant and of no significance. As per (Pao On v Lau Yiu Long , 1980), past consideration are held to be good when the acts are done with an understanding that the same will be later reimbursed.

Application of law

Felix is a major of 20 years. He is employed by Xiaojing as casual pick lavender. So, there is a valid contract that is made amid Xiaojing and Felix wherein Xiaojing is paying $25 to Felix for his work. Thus, the consideration that supports their contract is $25.

Later, a promise is made by Xiaojing wherein it was stated that she was so happy with the work of Felix done by him yesterday of clearing the garden beds, that, an extra $100 will be paid to Felix by her.

Now, this promise is against the work which is already undertaken by Felix. So, the consideration of $100 is for the promise which was past in nature as thus as per  (Roscorla v Thomas , 1842), the same is invalid.

However, at times past considerations are considered to be valid and by applying the law in  (Pao On v Lau Yiu Long , 1980), if the acts that are undertaken by Felix is because on the promise made by Xiaojing, then, the promise by Xiaojing is valid and is enforceable in law.  

Conclusion

Xiaojing has made the promise for an act which was already performed by Felix. Thus, the consideration which was given by Xiaojing is for a past act and thus is not valid in nature.

Reference List

Books/Articles/Journals

Stephen Corones. (2012). The Australian Consumer Law. Lawbook Company.

Paul Latimer. (2012). Australian Business Law 2012. CCH Australia Limited.

Case laws

Chappel v Nestle (1960).

Commercial Bank of Australia v Amadio (1983).

Coulls v Bagots Executor & Trustee Co Ltd (1967).

Freeman & Lockyer (A Firm) v Buckhurst Park Properties (Mangal) Ltd (1964).

Hely-Hutchinson v Brayhead Ltd (1968).

Pao On v Lau Yiu Long (1980).

Re Agriculturist Cattle Insurance Co (1870).

Roscorla v Thomas (1842).

Wang v Rong (2015).

Online Material

Egert, G. (2007). Defining a Partnership: The Traditional Approach. Retrieved November 23, 2018, from https://epublications.bond.edu.au/cgi/viewcontent.cgi?article=1332&context=blr

Lawyers, P. (2017). partnership Dispute. Retrieved November 23, 2018, from Partnership dispute: Wang v Rong [2015] NSWSC 1419: https://www.pcclawyers.com.au/news-centre/265-wang-v-rong-2015-nswsc-1419.