Fundamental Feature of Partnerships Scenario - Assignment Example

Case Study 2 Name Name of Institution Case Study 2 Part 1 - Contracts Question 1.1 Part A A fundamental feature of partnerships is that the persons in the partnership are mutually liable meaning that they act as agents of each other. This means that Tim Cahill and Harry Kewell have the authority to conduct business on behalf of each other. Additionally, Cahill will be held liable for the debts and obligations of Kewell and vice versa. In the given scenario, there is no indication that Cahill was not authorised to conduct business on behalf of Kewell. This means that the management of the pub retains the legal right to sue both partners in the case of a breach by Cahill. This was established in Mercantile Credit v Garrod [1962] 3 All ER 1103 where one party sold a car despite an agreement that the garage’s business was not to include the sale of cars. The court ruled that both partners would be liable owing to the assumption that garages can also sell cars.1 This case can be applied to the given scenario to come up with the conclusion that Cahill and Kewell will be responsible for each other’s acts and omissions during the course of business. It is also worth mentioning that partners have the obligation to inform other partners about their activities that will have an impact on the business. Cahill’s decision to go on holiday should not be a reason for Kewell to refuse to comply with the terms of the contract. In summary, a contract signed by Cahill can be enforced against Kewell due to the fact that Cahill was authorised to act as an agent of C&K Scaffolding and Partners. Part B Having established that the contract signed by Cahill can be enforced against Kewell, the next step will involve examining the formation of the contract. The scenario shows that Cahill made verbal representations regarding the installation of a spot light ramp and a technical tower. The scenario also shows that the written contract did not make any reference to the installation of the spot light ramp and the technical tower. This raises the issue of assessing whether there was a misrepresentation. It is worth noting that a representation can either be oral or in writing. For there to be a misrepresentation, there has to be a false statement of fact that induces the offeree into the contract2. In the given scenario, the restaurant had to organise a special event to celebrate its first birthday. Cahill made a verbal assurance that the firm would install the spot light ramp and the technical tower. The contract was entered into on the basis of the statement, thereby satisfying the requirement for the presence of misrepresentation. Therefore, C&K Scaffolding and Partners can be sued for breach of contract. In such a case, the firm can be required to build the spot light ramp and the technical tower as a remedy for the breach of contract. In addition to the spot light ramp and the technical tower, there is the issue of scaffolding. There was a clear statement before the signing of the contract that the structure would have to be certified as safe. This raises the issue of whether the statement was a condition in the contract or a warranty. Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 established that the degree to which a term is vital in the contract can be used to determine whether the term is a condition or a warranty. Additionally, a term is likely to be viewed as a condition if it is made immediately before the signing of the contract.3 An evaluation of the scenario shows that certifying the safety of structure was of extreme importance to the pub as the stage could be accessed by numerous patrons who are under the influence of alcohol. The timing of the term also facilitates the conclusion that there was a condition. Therefore, C&K Scaffolding and Partners can be required to certify the structure given that they are in breach of contract. Question 1.2 Under the Sale of Goods Act 1895 (SA), the contract for the purchase of the hand towels can be considered as a sale by sample.4 This is because of the implied term that the 200 handle towels will match the quality of the hand towel that was inspected. Under the Act, the buyer will not be considered to have accepted the commodities until there has been a comparison between the sample and the goods that have been delivered. This will have a direct implication as the pub will be in a position to reject the goods since they do not correspond with the sample that formed the basis of the decision to buy from the Soccer Super Store. Additionally, the buyer will have the right to sue the Soccer Super Store for breach of contract. Question 1.3 In general, a contract comes into existence when one party offers a commodity for sale, the other party accepts the offer, and consideration is exchanged for the commodity. In the given case, Martin’s writes on the white board that the t-shirts will be sold at $13 each instead of $30. In this case, Martins mistake will still be considered as an offer, Therefore, any consumer who comes to the bar and completes the purchase will have ownership of the t-shirts. This is regardless of the fact that there was a mistake in the pricing of the t-shirt. On the other hand, if the seller notices the mistake at the register before accepting payment, the seller will have the right to correct the pricing and offer the good at the correct pricing. In the case of Melanie, she has handed over the cash but the sale has not been completed. This means that the store will not be obligated to sell the t-shirts at the lower price as the contract cannot be considered as complete since the seller has not accepted the $65 for five t-shirts. Question 1.4 Text messaging can be considered as a form of instantaneous communication. Entores Ltd v Miles Far East Corp [1955] 2 QB 327 established that the postal rule of acceptance will not apply to the use of instantaneous communication to communicate offers and acceptance. The court ruled that the contract is formed when the message of acceptance reaches the seller or buyer.5 In the given scenario, both parties accept an offer at the same time. However, the acceptance is delivered to both parties. Under the rule of instantaneous communication, the contract will be formed when the acceptance reaches either of the parties. Therefore, the table top football game will have been sold to Tina at $1,500. This is because I received Tina’s message to cancel the earlier counter offer and accept the $1,500 before my acceptance of the price of $1,000 was received by Tina. Part 2 – Leasing Property Question 2.1 The Retail & Commercial Leases Act 1995 (SA) contains provisions that are aimed at protecting small to medium businesses whenever they commit to leases.6 One of the key requirements in law is that a prospective tenant has to be provided with the proposed lease agreement at the onset of the negotiations. In the given scenario, it is apparent that the lessor has satisfied this requirement by supplying the prospective lessee with a standard leasing contract. The possession of this standard leasing contract should allow the potential tenant to understand the roles and responsibilities that will be expected from both the tenant and the landlord. It is worth mentioning that a court will require the landlord and the tenant to undertake whatever is in the lease agreement should there be a dispute between the parties. While the standard leasing contract is essential to the formation of a contract, it does not provide the prospective tenant with all relevant information that will influence the decision to lease property. According to South Australia Small Business Commissioner, the landlord must also provide the prospective tenant with a disclosure statement before the signing of the lease.7 The same requirement also applies to cases of renewal of leases. The Retail and Commercial Leases Act 1995 specifies the contents of the disclosure agreement. The written statement should include the address of the property, the terms of the lease, the area of the property that will be leased, and the permitted uses of the shop. Additionally, the disclosure statement should contain information on the date on which the property can be occupied, the rent payable and the mechanisms of adjusting the rent, the access hours, and any other rent payable and how they will be calculated.8 It is apparent that this information will be critical in the given scenario. Despite the fact that the available property was also used as a bar, there might be considerable differences in the leases. For instance, the previous lessee might have been allowed to access the premises for a shorter duration than the prospective lessee. The provision of the disclosure statement should allow the new lessee to understand such issues and to determine whether it would be sensible to lease the available property. The provision of the disclosure statement is also critical as it will allow the two parties to alter the lease agreement before it is signed and becomes enforceable. This will go a long way in preventing conflict between the lessee and the lessor. Question 2.2 By definition, a lease grants the tenant the exclusive utilization of property for a set duration in exchange for rent. This allows the tenant to determine the parties that can access the property for the duration of the lease. In certain cases, the lessee and the lessor might fail to include terms governing access to the property. In general, the tenant will not be allowed to interfere with the tenant’s rights to utilise the property. However, the Real Property Act 1886 (SA) mandates that there are certain implied terms that apply to lease agreements. These include giving the landlord the power to enter the property for inspection and repairs.9 In some cases, the lease will have certain express terms that will affect the exclusivity of the property. In such cases, any disputes will be resolved by examine the relevant terms and applying them to the facts. The given scenario indicates that the lessee and lessor inserted a specific clause that would govern the lessor’s rights to access the property and undertake repairs. This means that the clause will govern all cases where the tenant wants to access the two properties. The clause states that the lessee must give written consent for any process that the lessor wants to undertake provided that the process does not interfere with the lessee’s use of the premises. This is an important clause in the standard lease as it protects the bar’s ability to use the entire property without interference. The legal obligation of the lessor will be to ask for approval whenever they need to access the property to undertake any process or dealings. On the other hand, the legal obligations of the lessee is to allow such access provided that it does not interfere with business. Therefore, the owner of the business will need to contact the parties that had made enquiries about booking the area at the back of the premises. If these parties present serious offers and book the area over the next two weeks, the tenant will have the right to refuse the landlord’s request. If, on the other hand, the parties that had made the enquiries do not seek to book the area, the lessee will be under the obligation to grant access to the lessor to install the fake soccer pitch. In summary, the legal obligations of the lessee is to allow the lessor to access to the property as long as the access is not detrimental to the pub’s operations. Question 2.3 Under the Law of Property, items that are attached to land in a manner that they become part of the land can be referred to as chattels. On the other hand, the chattels which become part of the land but retain their characteristic as personal property can be referred to as fixtures. In the given scenario, the main issue involves determining whether the soccer ball light is a fixture that remains the personal property of the owner or a chattel that has become part of the property and thus belong to the landlord. The scenario shows that the extremely large soccer ball starts of as the personal property of the owner. However, its attachment to the bar by screws will raise issues as to whether the soccer ball will be part of the land. In this case, the issue can be resolved easily if there is a clause in the contract that determines the items that can be referred to as fixtures. Here, the tenant will be in a position to protect his additions to the property by retaining the right to take the additions when he/she vacates the premises. In the absence of such a clause, contract law will provide precedence and determine whether the soccer ball is a chattel or a fixture that can be removed from the land. In Australian Provincial Assurance Co Ltd v Coroneo10, the court had to determine whether seats bolted to the floor were chattels or fixtures. The ruling was that the seats were chattels, with the court providing a test that would apply to similar cases. The first consideration in the test was the degree of annexation, a factor that covered the method of attachment, the damage that would result from the removal of the object, cost of removal, and whether the object could be removed without sustaining damage. The second consideration was the purpose of the removal. Common law also established that attachment to the land creates the presumption that the attached item is a fixture.11 Finally, the common law also recognizes that tenants might attach ornamental items for temporary purposes. In such cases, the tenant will retain the right to remove the fixture at the end of the tenancy on condition that substantial damage will not result from the removal.12 In the given scenario, it is apparent that the soccer ball is an ornamental fixture that is designed to enhance the look of the bar. However, there is no indication that the soccer ball is a temporary addition to the bar. Additionally, the soccer ball light is attached to the bar by screws indicating that significant damage will result from its removal. This factors combined with the application of the fixtures test means that the tenant will not be in a position to take the spinning soccer ball at the end of the tenancy. References Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd [1984] VR 947 Entores Ltd v Miles Far East Corp [1955] 2 QB 327 Mercantile Credit v Garrod [1962] 3 All ER 1103 Real Property Act 1886 (SA) Retail & Commercial Leases Act 1995 (SA) Retail Leasing, 2015, South Australia Small Business Commissioner, available Sale of Goods Act 1895 (SA) Smith v Land & House Property (1884) 28 Ch 7 Spyer v Philipson [1931] 2 Ch 183 Read More