Elements of a Partnership

Dsiucss about the Play Fair Development Corporation Pty Ltd V Ryan.

In this given scenario the issue that can be identified is whether Drasic is liable to pay $5,000.00 to Fast Bikes.

In this given scenario the law governing the operations of Partnerships in Australia is applicable. The Partnership Act 1963 sets out the regulations relating to the operations of partnerships. The definition of a partnership has been provided in section 6 of the Partnership Act 1963. In this section it has been clearly specified that Partnership can be defined as the relation that exists between the persons who carry commonly with aim of making profit. It can be stated that the following elements must be present for a business to be termed as a partnership:

• Carrying on Business
• Commonly
• With an aim of making profit

It can be stated that it is essential to establish that the partners engaged in repetitive business transactions as opposed to a single and isolated business transactions. In the notable case Smith v Anderson (1880) 15 Ch D 247 the court had illustrated the need for establishment of repetition and continuity of business transactions. However the essential element of establishing an intention carry on business had been overlooked in some cases such as Elkin & Co Pty Ltd v Specialised Television Installations Pty Ltd [1961] SR (NSW) 165 and Play fair Development Corporation Pty Ltd v Ryan (1969) 90 WN (NSW) 504 the courts acknowledged that a partnership was valid even in a single venture.

It can be mentioned that for establishing a partnership, it has to be proved that the partners carried on the business in common on behalf of all the partners. However, as held in the notable case Re Ruddock (1879) 5 VLR (IP & M) 51, all the partners are not required to take an active part or role in the business venture. In another case Keith Spicer Ltd v Mansell [1970] 1 All ER 462, it had been held by the court that there was no partnership as the parties involved in the transactions intended to carry on business together, however they had formed a company for doing so.

This is the last important element of a valid partnership. For the establishment of a partnership it is essential to prove that such partnership operated for the purpose of earning profits. This is the basic difference between a partnership and any association formed for the promotion of the social, religious, recreational and educational activities as held in the case Wise v Perpetual Trustee Co Ltd [1903] AC 139.

Liability of Drasic in a Partnership

After a partnership is established, it can be said in accordance with the provisions as provided in section 10(1) of the Partnership Act 1963 that any act or instrument which is related to the business of a partnership is binding on the partnership and all the partners, if the act had been done in the name of the name of the firm and in a way showing the intention of binding the firm. It has been further provided in section 16(1) of the P.A that each and every partner in a partnership except in case of a incorporated limited partnerships liable jointly and severally with the other partners for every liability of the firm.

In this given scenario it has been clearly provided that Madison and Drasic had created a partnership with a view to carry on the business. It can be stated that the partnership formation was not an isolated event, as illustrated in the case Smith v Anderson (1880) 15 Ch D 247. It had also been provided in the agreement that the two of them would be working together to carry on the business. Further, in this given scenario it is evident that the partnership had been formed for the purpose of making profit which was shared equally between the partners. Therefore, it is clearly evident that a partnership had been formed between the two. 

Therefore, after having established that the business structure, chosen to carry on the business of the parties was a partnership, it is important to apply the relevant provisions of the Partnership act 1963 to the operations of the partnership. It can be said in accordance with section 10(1) of the Partnership Act 1963 ,that any act or instrument which is related to the business of a partnership, is binding on the partnership and all the partners, if the act had been done in the name of the name of the firm and in a way showing the intention of binding the firm. Therefore, Drasic is liable to pay the $5000 dollars as he was a partner of the firm. This claim can be substantiated by the application of provisions of section 16(1) which states that the partners are jointly and severally liable for the liabilities of the firm.

Conclusion

Thus to conclude, it can be stated that Drsic is liable to pay the $5000

Whether  there has been breach of contract by  Halls & Co (Halls) in contract with Feast for Weeks(FFW) and what damages can be claimed for the breach.

Damages for Breach of Contract

One of the legal remedy which is available in relation to the breach of contract is that of damages. This form of legal remedy is generally provided in form of monetary award for the purpose of compensating the party whose rights have been violated. In the case of Addis v Gramophone [1909] AC 488 the court ruled that the main purpose of giving monetary damages to an aggrieved party is to place such party in a situation which it would be in if the contract was not breached.

However damages are calculated based on few other elements like duty to mitigate loss, remoteness and causation.

In the case of The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196   it had been stated by the court that a person would only be entitled to get damages where the loss has been caused to the aggrieved party due to the breach of the contract and would not have taken place otherwise.

The case of Hadley v Baxendale (1854) 9 Ex Ch 341 has discussed the rules in relation to remoteness of damage in contract law. In this case it had been stated by the court that an aggrieved party whose contractual rights have been breached will be compensated where the damages have reasonably been caused in a natural way from the breach of the contract and also those losses which the parties reasonably supposed to be present at the time contemplation between the parties took place. These rules had also been discussed in the case of Czarnikow Ltd v Koufos (The Heron II) [1969] 1 AC 350.

In the case of Payzu v Saunders [1919] 2 KB 581 it had been ruled by the court that the claimant will not be allowed to claim damages where they have allowed their losses to be increased. They have been imposed with a duty under law to take the reasonable and necessary steps for the purpose of reducing the losses incurred by them.

In the case of Poussard v Spiers (1876) 1 QBD 410 it had been stated by the court that the parities to the contract are provided a dual remedy of damages as well as repudiation (discharge of contractual right) where it has been analyzed that the term which has been breached by the party is a condition of the contract. A condition of a contract is a term which is used by the parties to the contract to get into the contract.

Legal Remedies for Breach of Contract

FFW while getting into the contract for the purpose of renting the hall had clearly signified Halls the importance of getting the hall in the morning. It was specifically made clear by jerry that he would not able to organize the event if she does not get the hall by morning. This term had been duly accepted by Halls and a valid contract between the parties had taken place. The term had actually been relied upon by Jerry to get into the contract and without such term being present there would have been no contract made by Jerry and thus the term is a condition. The breach of condition provides the right to damages and repudiation as per Bettini v Gye. The condition has been breached by Halls as they are not letting the hall to FFW before 5pm rather than the promised 7am.  In relation to damages as per Addis v Gramophone the court would place such FFW in a situation which it would be in if the contract was not breached.  Further as per Monarch case a person would only be entitled to get damages where the loss has been caused to the aggrieved party due to the breach of the contract and would not have taken place otherwise. Evidently the losses would not have been caused to FFW where the breach of contract was not done. In the given situation the breach of contract was the sole reason of the loss which have been incurred by FFW as without such losses it would not have to refund the tickets and loose of $10,000 spent on food and drinks along with the $6,500 for the hire.

However under the rules in relation to remoteness of damages as provided by the case of Hadley v Baxendale it can be stated that FFW would only be able to claim damages reasonably have been caused in a natural way from the breach of the contract and also those losses which the parties reasonably supposed to be present at the time contemplation between the parties took place. Here the damages from natural breach are of $6500 for hire, profits for the tickets and loss of $10000 in food and drinks. The $5,000 which would have been received in relation to the documentary is not a reasonable or agreed loss as such details were not given to Halls. Further Jerry threw the food and drinks in the bin where he could have saved drinks worth $4000 and thus under the duty to mitigate loss as per the Payzu v Saunders case he cannot claim for that $4000.

Online Contract

Conclusion

There has been breach of contract by Halls in contract with FFW and damages can be claimed for the breach as discussed above.

Online contract https://dollarbargains.com.au/pages/terms-of-service

The three terms are as follows

“You agree not to reproduce, duplicate, copy, sell, resell or exploit any portion of the Service”- This is a warranty. This is because it is not a term on which the parties relied on to get into the contract according to Bettini v Gye 1876 QBD 183.

“We will provide goods of a reasonable quality”- this is a condition of the contract. This is because the parties will only purchase the goods if it is of a reasonable quality and fit for its purpose. where such obligations are breached the party will have the right to rescind the contract as per the case of Poussard v Spiers (1876) 1 QBD 410

“Certain content, products and services available via our Service may include materials from third-parties.” This is a warranty. This is because it is not a term on which the parties relied on to get into the contract according to Bettini v Gye. Where such terms are breached the parties will only be liable to damages and not to rescind the contract.

where a term has been classified as a condition of the contract the parities to the contract are provided a dual remedy of damages as well as repudiation (discharge of contractual right) as it is a term whuch had actually been relied upon by the party to get into the contract and without such term being present there would have been no contract made.

Where a term has been classified as a warranty of the contract the parities to the contract are provided a remedy of damages only. This is because it is not a term on which the parties relied on to get into the contract

As per the case of Hong Kong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 a term which cannot be either classified as a warranty or a condition is an innominate term.

References

Addis v Gramophone [1909] AC 488

Bettini v Gye 1876 QBD 183.

Czarnikow Ltd v Koufos (The Heron II) [1969] 1 AC 350

Elkin & Co Pty Ltd v Specialised Television Installations Pty Ltd [1961] SR (NSW) 165

Hadley v Baxendale (1854) 9 Ex Ch 341

Keith Spicer Ltd v Mansell [1970] 1 All ER 462

Partnership Act 1963

Payzu v Saunders [1919] 2 KB 581

Play fair Development Corporation Pty Ltd v Ryan (1969) 90 WN (NSW) 504

Poussard v Spiers (1876) 1 QBD 410

Re Ruddock (1879) 5 VLR (IP & M) 51

The Monarch Steamship v Karlshamns Oljefabrika [1949] AC 196  

Wise v Perpetual Trustee Co Ltd [1903] AC 139.