Australian Company Law - Essay Example

AUSTRALIAN COMPANY LAW Step Identify the area of law and the legal issue The current case under study is embedded directly in the Partnership Act of Australia. The issue looks at whether or not Catering WA can apply its internal constitutional provisions to hold Jasmine accountable for breaching the internal partnership provisions of the company as enshrined in the company’s constitution. Step 2 – State and explain the relevant law Under s17 of the Partnership Act 1963, it is stated and enshrined that: (1) If a partner in a firm other than an incorporated limited partnership who is a trustee improperly uses trust property in the firms business, or for the firm, another partner in the firm is not liable for the trust property to the people beneficially interested in the property. Under the Act as quoted above, there are three major entities defined in relation to the case and these are Catering WA as a corporate entity, Jasmine Trendy as a partner in the firm, and Adam, who acts as another partner. Given the positions of these three major entities, it would be noted from the case that s17 of the Act holds none else but Jasmine, who is a partner within the company liable for her acts, which has brought upon breaches of the company’s internal constitution. In a manner that Catering WA was never officially notified of the actions or intentions of Jasmine, the condition of the law that ‘if a partner in a firm other than an incorporated limited partnership’ becomes binding and excludes Catering WA from any wrong doing. In inference, it is only under a circumstance where Catering WA had acted in the negotiation by giving Jasmine the matching audacity to undertake the said purchases that the company would have had itself binding to the committed breach of use of the company money in making external purchases. On the part of Adam, there is only one premise under which he could be found liable in this instance and that is if premise (2) of s17 is found to apply in his case. In the said provision of the Act, it is stated that: (2) Subsection (1) does not— (a) affect any liability incurred by a partner because the partner knew about a breach of trust; But because Adam is outside Western Australia, he may well have a justification that even though the constitution of the company is in the public domain, he never had personal access to it and so could not be affected by the liability because he the partner ‘knew about the breach of trust.’ In the recent case Wright Prospecting Pty Limited -V- Hancock Prospecting Pty Limited [No 9] [2010] WASC 44, a practice of “prohibition in temporary reserves on entry into any arrangement to transfer the property without ministerial consent” was permitted primarily under the s 7 of the Property Law Act 1969 (WA) because the partner in the firm, which in this case was the Ministry entered into an arrangement to transfer property without duly recognizing the larger firm as a stakeholder in the agreement. Hitherto, both the external partner and the corporation its self could not be considered liable and so the internal partner had to force the liability all alone as in the case of Jasmine. Step 3 – Apply the relevant law to the facts In applying the relevant law to the facts, which of course would include the larger provisions of the Corporations Acts 2001 and the Partnership Act 1963, there would be three major premises of application that can be found. In the first place, s5H of the Corporation Act 2001 identifies Catering WA as a corporate entity, based on which the company is in a position to having its own internal constitution for running the company: once this does not conflict with the larger constitution of the country (quote). In line with this, and for the fact that the company had duly made its constitutions available to the public, there is every right for the company to insist on the clause that purchases exceeding $20,000 should be approved only by the Board of Directors. For Jasmine to plead innocence to this may not be acceptable because as the managing director, she is mandated to be aware of the legal provisions of the company (quote). In the second premise, the company rightly holds itself absent from the transaction that went as per the provisions of s17 of the Partnership Act. This way, Jasmine might be seen to have acted on her own audacity and in violation of the Partnership Act 1963, which demands the representation of the company as an ‘incorporated limited partner’ in such external purchases and contracts. From this perspective also, the company has every right to argue with the Partnership Act 1963 in their favor. In the final premise, the company is admonished to combine other provisions of the Partnership Act such as s15 which touches on Misapplication of Money to defend its stand not to accept the delivery and therefore buy for the purchase. The offense of misapplication of money is prescribed as Jasmine wrongfully applied monies exceeding her mandate. Step 4 – Conclusion Should Catering WA refuse to take hold of the purchase, it is not likely to be liable to any breach of contractual application. Rather, it is Jasmine who is likely to be liable for the purchase should the payment on the purchase be refused. This is because Jasmine wrongfully used her authority to order for contracts that summed up to a quantum far above what her powers as the managing director allows her to (quote). But in terms of the application of any further legal suits against Catering WA by Adam for non-adherence to their part of the contract to make purchases from it, Adam should be in a position to defend the premise that Catering WA was a legitimate partner in the contract that was signed. In the absence of such a proof, it is every likelihood that his case would either not stand or he would have a personal case against Jasmine. Partnership Act 1963 http://www.austlii.edu.au/au/legis/act/consol_act/pa1963154/s17.html Read More