Law-2488 - Business and Corporate Law - Law Assignment Help

Assignment Task

RESEARCH ASSESSMENT TASK
Beth and Alice have been friends for many years. Over that time, they have shared a keen interest in costume jewellery which is well designed and handmade and in clothing accessories such as gloves, scarves, sunglasses, handbags and hats.
One day, during a conversation over lunch, Beth raised the idea of starting up a business together which would specifically cater for these items. Alice was very
interested in the idea and over the next few months, they met regularly to discuss what would be needed for them to start up such a business.
This meant that they discussed their financial situation and what they would be able to contribute to the leasing of a property, furnishing it, buying the requisite stock, and paying wages and utilities bills such as phone, gas, electricity.
Beth was wealthier than Alice. They therefore agreed that they would contribute different amounts of capital to start the business and would also share their profits and liabilities to reflect the percentage of their contribution commensurately with those contributions.
Beth’s capital contribution was 65% and Alice, 35%. As indicated, these percentages would reflect the percentage of their profits and liabilities.
It was also important for both of them to maintain the quality of their stock and they therefore agreed to the following:
1. That the clothing accessories purchases would be restricted to Chanel and Christian Dior and
2. That no jewellery other than costume jewellery of the type agreed upon would be purchased by either one of them.
A discussion also took place as to who would ‘hold down the forte’ and look after the shop for all the hours during which business was to be conducted and when neither Beth nor Alice could be there. To that end, they agreed to employ Emma.
After much research and discussion, they finally agreed to take the plunge. They found premises in an area in the Melbourne CBD which suited their purposes well in relation to size, the rental to be paid, and property location.
Before long, the shop was furnished, the relevant items in all the areas approved ordered, delivered, were put on display, and the doors were open for business.
The name of the business was ‘Upper Crust’ and that was registered as a business name, since neither Beth nor Alice wanted to use hers and business cards were printed showing the name of the business and both Beth’s and Alice’s names in full. Under the business name on the business card there was a statement which read: ‘Collectors and sellers of everything fine in jewellery and clothing accessories’. The card also described both Beth and Alice as ‘Principal business executives’. Both their names appear on the business cards. After the opening of the business, the following events occurred:
A. Some months after they opened their doors for business, Beth and Alice agreed that Alice would attend an international jewellery and clothing accessories fair which was displaying fine, hand-made costume jewellery, gold and silver jewellery and designer and non-designer accessories and which was being held in Melbourne. They both considered this necessary in order to keep pace with what was happening in the areas their business catered for and to place orders accordingly for items appropriate for the business they conducted.
Alice attended the fair and was gratified to see the quality of the items being sold.

Required:
Beth wants to know whether she is liable for the purchases made by Alice.
In your advice to Beth, you must discuss:
1. Whether a partnership exists between Beth and Alice in full detail and with reference to each element of what constitutes a partnership.
Use relevant case law and sections from the Partnership Act 1958 (Vic) to back up your answer.
2. Whether Alice’s purchase binds the firm, giving reasons for your answer.
Use relevant case law and sections from the Partnership Act 1958 (Vic) to back up your answer.

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