Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia This is the prescribed textbook for your course. Available NOW at your campus bookstore!

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Partnership and joint venture law Chapter 19

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 19-2 Partnership A partnership is the carrying on of a business in common, with a view of making a profit.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 19-3 Definitions Carrying on a business –continuity or repetition of action to be carried on in the future In common –acting on behalf of each other View to a profit –distribution of profits results

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 19-4 Tests for determining the existence of a partnership Common Law Rules - Intention - Agency - Sharing of profits and losses Statutory Rules - Joint ownership of property - Sharing of gross returns - Receiving a share of the profits

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 19-5 Partnership agreement Can be verbal, written or by conduct. A written partnership agreement is desirable as disputes are easier to resolve. Overrides the provisions of the relevant Partnership Act.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 19-6 Contents of a standard Partnership Agreement Names and addresses of partners Name of firm Place or places from which business will operate Duration of the partnership Capital contribution of each partner Interest of each partner Share ratio of profits and losses Whether salaries will be paid to partners Management duties of each partner Details of keeping accounts Limitations in the authority of partners Appointment of bankers Cheque signing Retirement of partners Admittance of partners Dissolution of partners Setting up competing business Resolving disputes Valuing of shares for retiring/deceased partners

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 19-7 Limitations for partners Capacity  Minors - not liable for partnership debts  Lunatics - limited if lunacy known  Bankrupts - must disclose bankruptcy

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 19-8 Relationship between partners Partners are in a Fiduciary Relationship: Partners must render true accounts. Partners must advise full information on all matters affecting the partnership. Partners must account for private profits made without consent of other parties. Partners cannot carry on a business of the same nature in competition with the partnership, without the consent of the other partners. Partners may assign their interest in the partnership to another person.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 19-9 Relationship between partners Rules regarding the relationship between partners if no Ppartnership Agreement exists: All partners are entitled to share equally in capital of the business. All partners are entitled to share equally in profits (and losses) of the business. Partners are entitled to be indemnified by the firm in respect of payments made and liabilities incurred. A partner who makes an advance or payment beyond their capital contribution is entitled to interest. A partner is not entitled to interest on capital subscribed until profits have been ascertained. Every partner may take part in the management of the firm.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Relationship between partners (continued) No partner will be entitled to remuneration for working in the partnership business. No person will be introduced as a partner without the consent of all other partners. Differences regarding ordinary matters related to the business of the partnership can be decided by a majority of partners. No change can be made to the nature of the partnership business unless all partners consent. The partnership books are to be kept at the place of business of the partnership. Partners cannot be expelled from the partnership.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Relationship of partners to third parties Partners will be bound by each other’s actions on the basis of an agency relationship, involving actual and apparent authority, where: transaction is within the scope of the business transaction has been affected in the usual way the third party involved in the transaction must either: - know or believe the partner is acting as a partner, or - be unaware of any lack of authority to act (includes non- partner who is believed to be a partner).

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Actual and apparent authority Actual - Authority to do acts specified in Partnership Act or Partnership Agreement. Apparent (implied) - Authority that the partner appears to have to third parties. E.g. - selling goods and chattels of the firm - purchasing on behalf of the firm

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Liability of Partners Contracts - Each partner is jointly liable. In tort - Each partner is liable jointly and severally. Criminal wrongs - Each partner is liable jointly and severally where there has been a breach of a statute that does not require intent as an element. In bankruptcy - If a partner is bankrupt, partnership may be dissolved. As trustees - No liability for the actions of other partners acting as trustees independent of the partnership. Holding out as partner - Liable as if partner of partnership. Outgoing partner - Continues to be liable for debts of partnership incurred before retirement.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Liability Joint liability  The partners must be sued jointly and not individually. Joint and several liability:  Every partner is liable jointly and individually.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Partnership property Includes all property brought into the partnership, or which is afterwards acquired on account of the partnership.

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Dissolution of partnership By action of the partners At expiry of time By giving notice By death of a partner By insolvency of a partner Where partnership property is charged

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Dissolution of Partnership By court action when Partner found to be of unsound mind Partner becomes permanently incapable of performing his/her part of the partnership contract Partner is guilty of conduct the court regards as calculated to prejudicially affect the carrying on of the business Partner persistently breaches the partnership agreement Partnership business can only be carried on at a loss Other circumstances that are just and equitable grounds for dissolving the partnership

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Dissolution Notice of dissolution Personal notice to persons who have had dealings with the firm Notification in government gazette Stationery altered Registered business names adjusted at Corporate Affairs Commission Distribution of Assets Loans from partners Creditors satisfied Property on basis of contributions of each party Debts and liabilities satisfied Surplus assets divided in proportion, reflecting profit sharing ratio

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Joint ventures An association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour, with a view to mutual profit. E.g.Mining ventures Property development Entertainment agreements Share farming agreements

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Comparison of joint venture and partnership

Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia Advantages of a joint venture Participants  are not liable for actions of other joint venturers  receive income separately  are able to compete with each other.