CHAPTER 5 LEGAL ASPECTS OF BUSINESS (Business Structures & Relationships)  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

BUSINESS ORGANISATIONS  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition Sole Trader Partnerships Unincorporated Bodies Companies Trusts

ADMINISTRATIVE ORGANISATIONS  ASIC- for Corporations in Australia  APRA- Superannuation & Insurance Products  ACCC- Trade Practices matters, competition policy - Franchising Code Compliance issues  Office of Fair Trading NSW – Fair Trading Act 1987 (NB the Fair Trading Act has been repealed in respect of any provisions that may conflict with the new ACL- see Ch 20 AGBL) - Associations - Business Name Registration - Limited Partnerships  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

DEFINITION OF ‘AGENCY’ –An “agent” is a person who has authority to create legal relations between a principal and third parties. A principal/agent relationship is a type of contract. Therefore the majority of common law contractual principles will still apply to the law of agency.  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

CLASSIFYING AGENTS An agent may be: A special agent A general agent A universal agent A del credere agent  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

FRANCHISING Franchisors in Australia MUST comply with the Franchising Code of Conduct; This is administered by the ACCC; ACCC website provides a wealth of information on franchising and its legal requirements in Australia. See The Franchising Code of Conduct has been amended as of July 2010 to incorporate all new franchises and renewals after that date.  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

AUTHORITY An agency can arise through the granting of actual authority. This is often known as actual agency. It also may arise by apparent authority, sometimes called ostensible agency. This is the agency you appear to have, often because of your title.  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

CREATION OF AN AGENCY There are several ways of creating an agency, that is, the vesting of authority in the agent estoppel actual authority apparent authority or ostensible authority ratification the doctrine of undisclosed principal necessity  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

DUTIES OF AN AGENT An agent has the following duties: to follow instructions to act in person to act in the interests of the principal and avoid conflicts of interest to maintain confidentiality to make full disclosure to avoid intermixing of his own funds with those of his Principal to avoid taking secret commissions  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

RIGHTS OF AN AGENT The right to indemnity and reimbursement The right to remuneration The right to a lien The right to a stoppage in transit  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

DEFINITION OF A ‘PARTNERSHIP’ “The relationship which exists between persons carrying on a business in common with a view to profit”: Partnership Act 1892 (NSW). This definition is uniform among State and territorial statutes in Australia. It involves an agreement between two or more parties to enter into a legally binding relationship and is essentially contractual in nature. Note that partnerships may have only 20 partners unless they are “outsize” partnerships under the Corporations Act 2001 (Cth), provided that they come within a certain type of industry.  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

THE ESSENTIAL ELEMENTS OF A PARTNERSHIP The three essential elements of a partnership are: the carrying on of a business in common with a view to profit See Partnership Act 1892 (NSW), 1963 (ACT), 1958 (Vic), 1891 (Tas), 1891 (SA), 1895 (WA), 1891 (Qld).  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

DISSOLUTION OF A PARTNERSHIP A partnership is dissolved in the following ways: -by expiry of any fixed term; -by agreement between the partners; -at death / bankruptcy of a partner; -if a partner lacks capacity; -by the court.  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

LIMITED LIABILITY PARTNERSHIPS Part 3 of the Partnership Act 1892 (NSW) allows for the creation of limited liability partnerships. These must have at least one General Partner who carries the liability. The other partners are known as Limited Partners and may not take part in management of the partnership. Limited Liability partnerships must be registered with the NSW Office of Fair Trading.  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

INCORPORATED LIMITED PARTNERSHIPS  In 2004 the Partnership Amendment (Venture Capital Funds) Act was passed in NSW to create a new corporate entity to raise venture capital  This new entity has similar characteristics to a corporation  Must be registered  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

TRUSTS A trust is a creation of equity whereby a person ( the trustee) holds property on behalf of another person ( the beneficiary). Trusts can be: - express - implied - constructive. In some cases trusts can be “resultant”: see AGBL at [5.740].  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

CORPORATIONS A corporation in Australia is an artificial legal entity which has a separate legal existence from its members. It has perpetual succession and may sue or be sued in its own name. Its members have limited liability, which means that they are liable for only amounts (if any) unpaid on their shares.  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition

CORPORATIONS (cont) In Australia all corporations must be registered with ASIC (Australian Securities & Investments Commission) pursuant to the Corporations Act 2001 (Cth). Corporations are broadly classified into public and private, each having specific requirements and obligations under the above statute.  2011 Thomson Reuters Legal & Regulatory Ltd. All Rights Reserved. PowerPoint  slides to accompany A Guide to Business Law, 19 th Edition