Duty of Partner to Give Accounts - Essay Example

Partnership Step 1 The area of law with which the mentioned case is related to is Duty of partner to give accounts under the Partnership Act of 19631. Step 2 It can be identified that, “Partnership is the relationship which exists between persons carrying on a business in common with a view to profit. It involves an agreement between two or more parties to enter into a legally binding relationship that is essentially contractual in nature”2. It is quite important to understand the concept of Agency as Partnerships are understood to be essentially relationships of agency. Agency is defined as an individual who is known as Agent, intentionally agreeing and accepting to act for or on behalf of someone else. Here someone else is referred to as the Principal. This is done with the mutual consent of both the parties involved3. It has been stated in the Partnership Act that the terms ‘partnership’ and ‘firm’ have the same implication.4 In context to the partnership agreement the roles, responsibilities and liabilities of partners need to be discussed. According to Sec 9 of the Partnership Act of 1963 it states that except for an incorporated limited partnership, a partner of a particular firm is considered as the agent of the firm along with the other partners present in the firm, for the reason of the business of the firm1. It also declares that apart from an incorporated limited partnership, an act carried out by a partner of a firm, for the reason of continuing in the customary method business of the type continued by the firm, connects that particular firm and remaining of the partners in the particular firm unless the partner who conducts the act has no right to act in any way for the particular firm in the specific matter and the person involved in the dealings with that particular partner either is well aware that the person is not authorized or is unknown about the fact or does not consider the particular partner to be the firm’s partner4. According to Sec 10 of the Partnership Act of 1963 it states that a certain act or any particular instrument in relation to the nature of business of the firm apart from an incorporated limited partnership is obligatory on all the existing partners of the particular firm and also on the firm too if it is carried out by any person who has the authorization to conduct such an act or perform the instrument irrespective of the fact that whether the person is a partner of the firm or not, in firm’s name or in any such way or intention where it involves the firm4. The liability of a partner according to Sec 13 of the Partnership Act of 1963 declares that every individual partner of any particular firm except for an incorporated limited supported partnership is equally accountable along with the other partners for the duties and legal responsibilities of that particular firm which was obtained when the particular person was still an existing partner as per the partnership agreement which proves it to be legal and also in case of the partner being an individual, after the demise of that partner the assets of the deceased partner would be liable in the course of management for the liabilities and obligations of that firm which was acquired while the already dead partner was still a partner that stays discontented, but subject to the previous payment of the individual debts of the deceased partner4. The most important duty of a partner that needs to be mentioned in relation to this case is according to Sec 33 (1) A particular partner of a firm apart from an incorporated limited partnership is responsible for giving accurate accounts and complete information regarding all the things that might affect the firm to the other partners or partner or to the legal personal spokesperson of the other partner4. Step 3 With reference to the above statements mentioned, it can be said that Doug Close’s position in the firm was that of a partner as well as that of an agent. He was a partner as he entered into an agreement of partnership with Barry Shave. He is also an agent as he has voluntarily undertaken to act for the other person i.e. Barry Shave and both of them had consent for this. From the case study, it is clear that one of the partners Doug Close did not inform the other partner Barry Shave about the facility availed for bank overdraft. Taking the above factors into consideration, it can be said that Doug Close will be liable for the debt assuming that they have equal rights in the partnership. In this case, if the partnership had not been equal and if Doug Close had more rights in the partnership then it would have been possible for him to not be liable for the debt that was acquired by him from the bank. However, as it has been assumed that they have equal rights in the partnership so, he should be personally accountable for the debt. The occurrence of the personal liability happened because the other partner was not informed regarding this action undertaken by Doug Close. It has been clearly mentioned in Sec 33 (1) of the Partnership Act 1963 that it is the responsibility of all the partners of the firm to provide exact and complete information regarding the accounts or any action that has been taken and that might affect the firm in the due course of the business. It is the responsibility of the partner to inform any such things to the other partner or to the personal legal representatives of the other partner. Thus, the Clause 30(1) of the Partnership Act of 1963 is applicable in this case. Step 4 From the above case and from the mentioned laws it can be concluded that it was the duty of Doug Close being a partner to inform the other partner Barry Shave about the bank overdraft facility that he had availed from the bank. And, as he failed to discharge his duty towards his partner and the firm properly so, he personally will be held liable for such an act. References Australian Capital Territory. 2009. “Partnership Act 1963”. Republication No 7, p.p. 1-87. Latimer, Stephen P. Australian Business Law. Australia: CCH Australia Limited, 2010. Lycos Inc. 1998. “Massachusetts Bar Exam Review: Agency & Partnership”. Agency & Partnership, p.p. 1-10. The University of Sydney. 2006. “Partnership.” Associations, p.p. 1-40. Bibliography Barker, D. Essential Australian Law. UK: Routledge, 2000. Duncan, David W. Joint Ventures Law in Australia. Australia: Federation Press, 2005. Read More