Corporate Law Australian Partnership Act

Questions: 1. Explain how a partner can be sued from the operations of the partnership.Be sure to consider liability within the partnership as well as liability to outsiders.2. Will is the only director of Pizza Plus Pty Ltd (Pizza Plus) a small company which makes and sells pizzas in Australia.Wills wife Betty is a director of Dominos Australia Ltd (Dominos) which also makes and sells pizzas in Australia and has justintroduced in Australia the first pizza delivery by drone. This drone delivery has been very successfulBetty is also a shareholder in her husbands company, Pizza Plus. Betty takes from Dominos secret details about the drone delivery service and the customer lists and gives them to her husband and his company, Pizza Plus. Pizza Plus uses these details and startsits drone service and sales increase greatly. A month after starting this new service one of Pizza Plus drones falls and hits Jill, acustomer, on the head, causing serious injuries.a) What types of corporate liability can Piz za Plus Pty Ltd be exposed to because of Bettys actions?b) Can Jill take legal action against Pizza Plus and explain what areas of law could be involved. Answers: 1. According to Australian partnership Act 1963-Section-6, partnership is a legal relation between two or more people hauling on a business with a view of investment, profit and loss. In part 6 of this partnership act, it is stated that partnership involves an external partnership in some provisions of business (Australian Capital Territory, 2015). Furthermore, section-13 of Partnership Act 1963 depicts that each partner of a firm other than incorporated limited partnership will be liable jointly with the other partners for obligations and debts of firm that are incurred at the time while the partner is a partner of the firm. However, a partner will be liable for obligations and debts of the partnership if the partnership is not satisfying clearly the debts and obligations and has a greater extent as stated in partnership agreement (Barron, 2013). Therefore, a partner can be sued from the operation of partnership Act if they involved in a partnership and will held be liable for any t ransaction in the partnership. Liability of Partners to Outsiders: The partnership Act recognizes different kinds of partners such as active or general partners, silent or sleeping partners which may be involved in the management of the firm. In this way, the principle of outsider liability is originated from the case of Re Baird (1870), which is stated in Partnership Act (Adams and Nehme, 2015). This principle depicts that if in a firm the transaction arises due to the normal or usual course and any third party is dealing with the partner as a lack of authority, than the firm will be liable for transaction as the principle of transaction. The liability will be imposed on the all partners by tort and virtue of Partnership Act (NSW s 5; SA s 5; Qld 8; WAs26; Tas s 6; Vic s 9; NTs9; ACT s 9;). Furthermore, the partner can be sued from the operations of partnership and will be liable for any act of partners if the arisen issue is a kind of business and usually carried by the firm. According to partnership operations, if a partner does act within the scope of business but the transaction is not being done in a usual way. Then, the other partners will be not liable for the act of that partner. For example: in case of Jenkins v Goldberg (1889), a partner borrowed fund at 60% interest rate on behalf of the firm which was an unusual way, because the interest rate was far in excess in comparison of normal commercial interest rate (Arbabzada, 2016). Therefore, other partners will be not liable for this action and cannot be sued for this. On the other hand, in case of Holland and Whittington (HW), P is the client of the firm. H as a senior manager dealt with P, but H junior manager gave advice for the investment. P lost a considerable amount and then H junior manager disappeared. I n this situation, P can sue for theirs loses because court held that the advice of investment was in the usual course of the firm therefore the partners are liable for fraud of junior manager. Hence, the outsiders can sue from the rest partners if they do not recover their amount from the engaged partner. 2 (A). In the given case, Betty used secret details of Dominos about the drone delivery service and customer lists and give them to other company. Therefore, the given situation is a clear case, where a corporation has been involved in wrong doings by seeking to get inside information of a competing company. So, the corporate liability arises and also, as the director of the company was fully aware and involved in this offence, directors personal liabilities also arise. The corporate theory emphasizes a wider range of practical issues that are related to corporate law. In Australia, corporate liability for wrong doing and responsibility are remarkable for a number of reasons (Arofa et al, 2015). In this way, they exhibit a clear tendency towards the concept of blameworthiness that will lead to criminal corporate liability for the organization rather than a contractual model of corporation. Furthermore, there are major expansions in Australian law for the strictness of sanctions emplo yed as a method of accountability for corporate misconduct. According to Criminal Code Act 1995, an individual commits offence against section 271.5, 271.6, 271.7, 271.7D or 271.7E if he is conducted to the constitution of offence that occurred within a territory and the conducted constitution of the offence is engaged by Constitutional Corporation (Austlii, 2016). Furthermore, the corporate employer may be sued for the action of its employees by the theory of vicarious liability. According to vicarious liability it is responsibility of employer that if it does not discuss the responsibility of employees then employer would be liable for damages and injuries (Giliker, 2010). According to competition act, the company may be held liable to cause the competition away from both of the companies as Dominos Australia Ltd and Pizza Plus Pty Ltd (Morandin and Smith, 2011). Along with this, Pizza Plus breached the terms, policies and conditions defined in the Australian corporate law 2001. This is the case of like insider trading in which the confidential information of the company is used by the investors for personal benefit. Similarly, Will used the confidential information of Dominos Australia Ltd for competing against the company and achieving the higher growth (CCH Australia, 2010). The company may be held liable because the way of competing and w inning the market used by company is not legally fair. The company may be held liable for the public interest because the information stolen by the Pizza Plus will affect the business of Dominos Australia Ltd which causes the wealth loss to investors. (B). Yes, Jill can take legal action against the Pizza Plus Pty Ltd. According to Australian law, it is the responsibility of management and director that they have all the business information confidential. In this case, according to Law of Torts, Jill can take legal action against the Pizza Plus Pty Ltd. the law of tort describes that an individual is liable to take legal action if individual face the loss, injury, and any damage from the other person then individual can sue case against the responsible people and firm for compensation (Calo et al, 2016). As per the law, the liability of tort arises when an individual suffers from damage and injury due to violation of contract by any other person. In this type situation, the person who breaches the rules by implementing new services in organization without having the full information about the project then organization will be liable to pay compensation. In context of Jill, the Jill can sue the case on Pizza Plus Pty Ltd as they im plemented the drone delivery service on basis of Dominos Australia Ltd services. Further, on basis of Corporations Act 2001, it is required that company or firm doesnt disclose any secret information of company to others (CCH Australia, 2010). If they does and caught by law they would be liable for entire case. The case between Liebeck v. McDonalds Restaurants 1992 is an example case in which company is liable for customers injury. In this case, coffee cup was fall on the Liebeck and he suffers from the burn injuries. After this StellaLiebeck sue a court case against the McDonald and court accepts the plea of Liebeck. In this case, court founded that according to law of tort, McDonald is liable for entire case and court give the order to McDonald for the StellaLiebecks compensation (Rosenfeld, 2015). On the other hand, in case of Jill and Pizza Plus the Australian product testing laws breaches. In this case, it is possibility that Pizza Plus implement the concept of drone delivery service without any testing and it has some technical issues which cause the drones falls. If any person suffers injuries due to lack of testing then the company or firm would be liable for entire case which implements concept of drone delivery service (ACCC, 2016). According to Australian product testing law, In case of Jill and Pizza Plus, it is the responsibility of company that they would conduct product testing related to service s of Drone delivery system to provide the better services and reduces the risk of injuries. But Pizza Plus does not test the services of Drone delivery system and it cause of Jills serious injuries. The case of Procter Gamble related to Clairol Touch of Yogurt Shampoo in 1979 is the example case for the product testing. In this case, company does not conduct any testing related to shampoo quality and after using this product many customers face the various skin diseases (Frohlich, 2014). Further, court accepts the plea of peoples and gives order to company for customers injuries compensation and to stop the sale of that product. On the basis of this, it can be said that Jill is liable to take legal action against the Pizza Plus. References: ACCC, (2016) Product testing [online]. Available at: https://www.productsafety.gov.au/product-safety-laws/compliance-surveillance/product-testing (Accessed: 25 January 2017). Adams, M. A., and Nehme, M. (2015) Business Organization. Melbourne: Oxford University Press. Arbabzada, Z. (2016) Law of Associations. [Online]. Available at: https://studentvip-notes.s3.amazonaws.com/901-sample.pdf (Accessed: 25 January 2017). Arofa, E., Yunus, A., Sofyan, A. and Borahima, A., (2015) Corporate Criminal Liability for Corruption Offences in Indonesian Criminal Justice System.International Journal of Advanced Research,3(8), pp.246-250. Austlii, (2016) Commonwealth Consolidated Acts [online]. Available at: https://www.austlii.edu.au/au/legis/cth/consol_act/cca1995115/sch1.html (Accessed: 25 January 2017). Australian Capital Territory (2015) Partnership Act 1963. [Online]. Available at: https://www.legislation.act.gov.au/a/1963-5/current/pdf/1963-5.pdf (Accessed: 25 January 2017). Barron, M. (2013) Fundamentals of Business Law. Australia: McGraw-Hill Education. Calo, R., Froomkin, A. and Kerr, I. (2016) Robot Law. UK: Edward Elgar Publishing. CCH Australia, (2010) Corporations Act 2001, ASIC Act 2001, related regulations, current as at 1 January 2010. AU: CCH Australia Limited. Frohlich, T. (2014) The 10 Worst Product Fails of All Time [Online]. Available at: https://time.com/13549/the-10-worst-product-fails-of-all-time/ (Accessed: 25 January 2017). Giliker, P. (2010) Vicarious Liability in Tort: A Comparative Perspective. UK: Cambridge University Press. Morandin, N. and Smith, J. (2011) Australian Competition and Consumer Legislation 2011. AU: CCH Australia Limited Rosenfeld, J. (2015) Liebeck v. McDonalds: The Hot Coffee Controversy [online]. Available at: https://www.rosenfeldinjurylawyers.com/news/liebeck-v-mcdonalds-the-hot-coffee-controversy/ (Accessed: 25 January 2017).