Your knowledge of the law of partnership, the law on the effect of incorporation
Your knowledge of the law of partnership, the law on the effect of incorporation


Please note that the word limit of 2 000 words is a total for both questions (ie, it is not 2 000 words for each question) and is inclusive of references and bibiography. I would however expect that students should be able to answer both questions in far less than 2 000 words.


Question 1 [10 marks]

Frances, Mary and Jane meet as students of dentistry. After graduating they form a dental practice in Sydney of which they are all equal partners and which they call Happy Smiles. They agree that, as partners, they will each have authority to enter into contracts of up to $ 20 000, but that contracts in excess of that amount require the express concurrence of all partners. When Frances and Mary are away on holiday overseas, Jane sees that a new medical supply company, Sleeping Gas Co Ltd is offering a special deal on the usual brand of anaesthetic gas used by Happy Smiles. She signs a contract in the name of Happy Smiles, to buy 6 cylinders of gas for $ 5 000 each. She also signs an order to buy a small truck from Dan's Auto Lot Ltd, thinking that, if she were to get a truck driver's licence, Happy Smiles could expand into the road haulage business. When Frances and Mary arrive back from their holiday, they refuse to authorise payment for the gas or the truck and, along with Jane (who they are no longer talking to) have now been sued by Sleeping Gas Co Ltd and Dan's Auto Lot Ltd. Advise Frances and Mary as to their liabilities, citing relevant legal authority.

Question 2 [10 marks]

Mark worked as route manager for United Trucks Pty Ltd in Queensland from 2003-10. A term of his contract was that if he should leave the company, he could not engage in the trucking industry in Queensland for five years. In 2011 he registered a company called Sunshine Trucks Pty Ltd. Mark owns 99% of the shares. The other 1% is owned by his brother, Greg, whom he elected as sole director and CEO. Sunshine Trucks operates from Townsville and carries goods all over Queensland. All contracts for haulage of goods are signed by Greg in the name of Sunshine Trucks Pty Ltd. Greg also signed a contract on behalf of the company, taking out a loan of $ 2 million from Grasping Bank in 2011 as start-up capital. The company did well during 2011, 2012 and the first half of 2013, but in July 2013 was not able to repay a loan instalment of $ 100 000 owing to Grasping Bank Ltd. Mark comes to you for advice after receiving two letters: One from United Trucks Pty Ltd requiring him to cease the operations of Sunshine Trucks Ltd in Queensland, the other from Grasping Bank Ltd threatening to sue him for $ 100 000. Advise him, citing all relevant legal authority.


This assessment item will allow you to demonstrate:

Your knowledge of the law of partnership, the law on the effect of incorporation and the

legal relationships within these types of business organisation and with outsiders ;

Your ability to apply legal rules to hypothetical practical situations at a basic level;

Your ability to conduct research using provided materials as well as other resources;

Your ability to structure your answer and use a clear writing style by identifying issues,

stating the law, applying the law and reaching a conclusion;

Your ability to apply academic standards of presentation and referencing

Your ability to complete an assessment

Leave a Reply

Your email address will not be published. Required fields are marked *