Business Law

Capacity to Contract - Malaysian Jurisdiction

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The issue of capacity is relevant to determine the validity of the contract. It is assumed that persons with the relevant capacity enters into a contractual transaction, sometimes, persons with limited capacity are seen to have entered into contractual transactions. Such persons are minors, intoxicated persons and mentally incapacitated.

The question now boils down to how does the law handle such contracts? What is its status legally speaking/

In Malaysia, the issue of capacity in contractual transactions are governed by S10 Contracts Act 1950. The section states that there must be free consent of "parties competent to contract".

Moving on S11 of the Act defines these competent persons. Accordingly the following are the persons who are deemed to be competent in accordance to the Act:
(a) one who has attained the age of majority
(b) sound of mind
(c) not disqualified by any law he/she is subjected to.

In S12 of the Act, a further attempt to explain soundness of mind has been made which is as follows:
(a) for the purposes of entering into a contract a person is deemed to be sound if at the time of making, the person is capable of understanding it and of forming rational judgment as to its effect on his interest.
(b) if a person is usually unsound but occassionally is of sound mind, may make a contract when the person is sound of mind
(c) where a person is usually sound of mind but occassionally of unsound mind, may not make a contract when being in the situation of unsound mind.

MINORS

A person will attain majority when reaching 18 as per Age of Majority Act 1971.

It has been seen that minors are a class of people who require protection from the consequences of being immature. This developed to the common law principle that as a general rule any contract entered into by a minor is not binding unless it falls within the recognised category of exceptions.

Under the Act - contracts entered into by a minor person is void and not merely voidable.
Cases: Tan Hee Juan v Teh Boon Keat (1934) MLJ 96 HC ; Government of Malaysia v Gurcharan Singh & Ors (1971) 1 MLJ 211 HC ; Leha Binte Jusoh v Awang Johari bin Hashim (1978) 1 MLJ 202, FC

EXCEPTIONS

Contracts for necessaries
S69 - suppliers of necessaries are to be reimbursed. Meaning to say if a minor contracted for necessaries (food, lodging, clothes), such contracts are not void. However, the Act does not define necessaries. Hence the judicial pronouncements in Gurcharan's case could be followed. Necessaries were to be defined broadly and not limited to goods and could include scholarships to pursue studies. Today, l;aw related to scholarships have been amended - S 4a & 5 Contracts (Amendment) Act 1976.

Fraud by Minors

If minor misrepresents as a major, cannot be proceeded under the tort of deceit in common law as it would be a means of indirectly enforcing the contract.

Under the Act, all such contracts except where it is a necessity is void and it is so even if the minor has misrepresented.

Restitution

A minor could be ordered to make restitution or return the goods obtained through his/her fraud. It is a limited remedy and available only where the minor has acted fraudulently and the goods are still in his/her possession and is identifiable.

Marraige Contracts

Marriage contract is an exception. Section 4(a) of the Age of Majority Act 1971 provides that a minors ability to enter into a marriage, divorce, dower and adoption is not affected.

Nevertheless, a person below the age of 21 though of majority age need to still get the consent of his/her father in a written form before the marriage.

Employment Contracts

Section 13 Children and Yound Persons (Employment) Act 1966 - any child or young person is competent to enter into a contract of service.

Director's Duties (Australian)

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DIRECTORS’ DUTIES

§ Directors’ duties describes the obligations imposed by law upon directors, other officers and employees of a company

§ Definition of director : Section 9 – person who is either validly appointed to the office of director or one who acts in that position

§ Directors must act in the company’s best interest rather than their personal interest

§ S179(1) – directors’ duties are imposed by the Corporation Act and other laws including general (i.e. common) law

§ The main duties are:

o Care and diligence

o Good faith

o Use of position

o Use of information; and

o Avoidance of insolvent trading

§ Duty to Exercise reasonable degree of care and diligence

o Common Law

§ Exercise reasonable care, skill and diligence in decision making on behalf of the company as a whole, members and others who deal with the company

§ Care – responsibility in performance of the duty

§ Skill – talents, training and knowledge

§ Diligence – reliable, punctual and conscientious

o Statutory

§ S180(1) – exercise care and diligence when making business judgments

§ Acting with degree of care and diligence means director will exercise skill in decision making – Daniels v Anderson

§ Standard: The degree of care and diligence that would be exercised by a reasonable person in the director’s position and circumstances

§ Business Judgment Rule

· S180(2) – provides a defence for S180(1)

· business judgment" means any decision to take or not take action in respect of a matter relevant to the business operations of the corporation.

· For the defence to apply the director must show:

o Made the judgment being analysed in good faith for a proper purpose -180(2)(a); and

o Did not have material personal interest in the subject matter of the judgment – S180(2)(b); and

o Informed themselves about the subject matter of the judgment to the extent they reasonably believed to be appropriate s180(2) ©; and

o Rationally believed that the judgment was in the best interests of the company –S180(2)(d)

· Duty to Act in Good Faith

o Common Law

§ Fiduciary Duty to act in good faith

· Act in good faith and best interest of company

· To exercise the powers with utmost honesty, fairness and loyalty

· Good faith is to act for the company as a whole and not for the majority of its members – Mills v Mills

· to consider the various stakeholders : members, employees, creditors, clients

§ Exercising powers for a proper purpose

· When powers are used for the purpose intended they are being used properly

· Person who alleges that director has exercised power for an improper purpose has the burden of proof

· If actual purpose is within the scope of the legal purpose for which the power may be exercised the directors have acted properly and vice-versa

o Statutory

§ S181(1) - good faith… best interest .. and proper purpose

§ Objective test

§ Genuine mistakes do not exclude directors from liability.

§ Duty not to use the position of director improperly

o Common Law

§ Avoid conflicts of interest by placing the companies interest first

§ Any behavior contrary to the proper discharge of a director’s duties, obligations or responsibilities constitutes improper use of position

o Statutory

§ S182 – avoid making use of position for own or third party advantage

§ Duty not to misuse information obtained as a director

o Common Law

§ Not use personal knowledge and contacts gained from position for own benefit

§ Trading with inside knowledge

§ Green & Clara Pty Ltd V Bestobell Industries Pty Ltd

o Statutory

§ S183 - prohibit usage of information obtained by virtue of the office improperly – for personal or third party advantage

§ Duty to Prevent Insolvent Trading

o Common Law

§ Company is solvent only if it can pay all its debts as and when it becomes due and payable

§ Prolonged difficulty in making payment may be indication of insolvency

o Statutory

§ S588G – duty to prevent insolvent trading

§ By failing to prevent the incurring of debt the director is liable if he knows or has grounds for suspecting or a reasonable person in his position would be aware

Indoor Management Rule

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ü Indoor Management Rule

o Common Law

§ Turquand’s Case

§ A third party is allowed to presume that all internal rules of the companies has been complied with unless the third party has knowledge of such non-compliance

o Statutory

§ S128(1) – a person dealing with a company is entitled to make certain assumptions in relation to those dealings.

§ Assumption is made by a person dealing with the company as provided under S129

§ The assumptions provided for in S129 relate to the internal procedures of the company having been complied with

§ Those are assumptions that a person dealing with the company is entitles to make

§ The limitation is s128(4) A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect.

Company Contracts

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Doctrine of Ultra Vires

v Previously company was capable of engaging only in those activities for which it had been established which were identified in its objects clause.

v Ultra vires means going ‘beyond the powers’

v When a company goes beyond its object clause it is said to be acting ultra vires and therefore the actions were considered to be invalid.

v Case: Ashbury Railway Carriage & Iron Co v Riche

o Held: Since construction of railway was not within the objects of Ashbury, contract was UV for company and therefore void. Cannot be enforced against the company.

v Abolition : s124

o Company has all the powers of an individual that is a natural person

o Company can do anything it wants and not limited by its objects clause

o Company’s legal capacity not affected by the fact that the company’s best interests are not served by doing it – S124(2)

o S124 does not authorize the company to do acts prohibited by law

o Company constitution may limit company’s capacity by containing an express restriction or a prohibition of the company’s exercise of any of its powers

o However the exercise of a power by the company is not invalid merely because contrary to express restriction / prohibition in the company’s constitution – S125(1)

o Company may state objects of the company- but an act of the company not invalid merely because contrary to or beyond any objects – S125(2)

o S128(4) – if outsider dealing with company knows or suspects that the company has breached object clause – outsider is not allowed to assume that the company has complied with its objects.

Dealing with Companies

ü Company can only act through or be represented by individuals

ü The directing mind and will of the company

o Common Law: Concept of artificial legal person

§ Companies are regarded as artificial persons

§ However this is a legal myth as companies need to act through human agents

§ Where an agent of the company acts within the power conferred on them by the replaceable rules / constitution of that company, the acts of the agent are treated as if they were the acts of the company.

§ Organic Theory

· Directors are known as the directing mind and will of the company

· Only senior management will be considered as such

· Lennard’s Carrying Co v Asiatic Petroleum

How does a company make a contract?

ü Common Law Position

o Can enter into contracts in 2 ways

§ Directly – by affixing the company’s common seal to the contract in accordance to the constitution

· Company’s capacity to make contract on its own is limited to formal contracts under seal

§ Indirectly – individuals acting as agent on behalf of the company

ü Statutory Provision

o Section 126 and 127 - authority of a company’s agents

§ S126(1) – company’s power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the company’s express or implied authority and on behalf of the company. (indirectly)

§ Can exercise the power without using common seal

§ S127 – contract can be entered by the company itself (directly)

· If company has common seal can execute a document by affixing its seal to the document and witnesses either by 2 directors or by a director and company secretary

· Since common seal is optional, can execute document without it but must be signed by 2 directors of the company or 1 director and company secretary.

Australian Corporation Law

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INCORPORATION

Ø Company is regarded as a separate legal entity, a separate artificial person

Ø The company’s ‘brain and limbs’ are the human persons who perform tasks on behalf of the company.

Ø Case: Salomon v Salomon

Ø Incorporation shields members from the company – veil of incorporation

Ø Circumstances when a court may lift the corporate veil:

o Common Law

§ Fraud – if company is used as a vehicle for fraud

§ Re Darby’s Case

§ Avoiding legal Obligations - if company is used as a sham so as to avoid an existing legal obligation under contract or statute

§ Gilford Motor Co Ltd v Horne

o Statute

§ Director’s duty to prevent insolvent trading by company: S588G (director is personally liable)

§ Uncommercial transactions: S588FB – insolvent company has disposed of assets prior to the commencement of winding up

§ Officers guilty of offence if the company finances dealings in its shares – S260A

Ø S117 – to incorporate a company lodge application with ASIC

Ø S117(5) – obtain consent of directors and members

Ø Section 45A(2) – requirements of a small proprietary company – to satisfy 2 out of 3 requirements

o (a) consolidated annual gross operating revenue less than $25 mil

o (b) consolidated gross assets less than $12.5 mil ; or

o (c)Employ less than 50 full time employee

Ø Section 45A(3) – Large proprietary – more then those mentioned above.

REPLACEABLE RULES / CONSTITUTION

Constitution (internal rules) control the relationship between the company as a separate legal entity and its members and officers

After 1 July 1998 – company can choose to:

o Use replaceable rules – s141; or

o Adopt own constitution 136(1); or

o Combination of constitution and replaceable rules – s134

Replaceable rules govern internal administration and management of companies

S141 provides an index to the sections that are replaceable rules

o E.g. s198A(1) – business of a company is to be managed by or under the direction of the directors

Replaceable rules will apply unless modified or displaced by the company’s own constitution – S135(2)

A company’s constitution and replaceable rules that apply to the company have the effect of a contract:

o Between the company and each member – S140(1)(a); and

o Company and each director – S140(1)(b); and

o Member and each member – S140 (1) (c )

Contract between company and member – company can take action against its members to force them to comply with the relevant provisions in the constitution if they are unwilling to do so.

S140(2) – member not bound by a modification to the constitution made after the date on which they became a member if it increases their liability to the company – unless they agree in writing.

contract between company and director – contractual effect

s136(2) – special resolution to adopt, modify or repeal company’s constitution

Partnership Law (Western Australia)

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PARTNERSHIP LAW

Definition

Partnership Act 1895

Section 7(1) -relation between persons carrying on a business in common with a view to profit

Elements that needs to be proven:

(a) Carrying on business

- Carrying on implies that a repetition of acts

- Series of acts which constitutes a business

- Case: Canny Gabriel Castle Advertising Pty Ltd & Anor v Volume Sales (Finance) Pty Ltd

o A co named Fourth Media Management Pty Ltd (FM) entered into contracts with singers Elton John and Cilla Black for performances in Australia. Volume Sales (VS) agreed to finance the contracts.

o Agreement between FM & VS:

§ FM assign half interest to VS on singers contracts;

§ Arrangement considered as joint venture

§ VS finance through loan – described as loan to JV which was payable before distribution of profits

§ Profits shared equally

§ Policy matters agreed by both parties

§ Bank account of VS opened and operated as VS deems fit

§ Loan repaid if contract with singers fails

o After agreement entered, FM granted charge over interest in box office proceeds of contract to Canny Gabriel.

o Question: Will VS’s interest prevail over the later created charge?

o If arrangement was partnership, then VS interest would prevail over charge.

o Held: THERE WAS PARTNERSHIP

o Why: Agreement exhibited all the indications of a partnership but did not describe the parties as partners and did not expressly provide for the sharing of losses.

o Reason for the decision:

§ Parties became joint venturers in a commercial enterprise with a view to profit;

§ Profits were shared;

§ Policies were to be jointly decided

§ Parties concerned with the financial stability of one another

(b) In common

- It is not a requirement for all the partners to be actively involved in the running of the business

- But must be clear those who are running the business are doing so for all partners and not for themselves

- Mutuality of rights and obligations must exist

- Parties must intend that the business will be profitable

- Refers to pecuniary gains

CREATION OF PARTNERSHIP

May be created by :

1. Written agreement

2. Oral agreement; or

3. Implied by conduct

Written Agreement

- Not compulsory but recommended

- Where agreement exist court will endeavour to give meaning to the intent of the agreement even if against the Act

- Where agreement is silent, Act will be used to fill the gaps

Oral Agreement

- May be formed verbally

- Disputes would be difficult to resolve

Implied by Conduct

- Words or conduct lead others to believe that a partnership exists, then they will be stopped from denying the existence of the partnership

Determination on the existence of a partnership

Common law and Act have rules to assist court to determine whether a partnership exists.

Common Law Rules

· Intention

o Intention of parties manifest in words and actions

o Written agreement may be able to assist in objective decision making

o Court will look objectively at the action of partners to determine whether they intended to be partners

o Law can decide partnership exists, even if the parties themselves do not agree – Canny Gabriel

· Agency;

o Proof of parties acting as an agent for the other in the business relationship

And

· Sharing of profits and losses

o Evidence of sharing of profits and losses

o Case: Cox v Hickman

§ B &J Smith traded in partnership under the name of ‘Stanton Iron Co’ and was in financial difficulties

§ Deed of arrangement with creditors were entered – assigning the business and partnership pty to trustee

§ Trustee given power to carry on the business under new name

§ Future income to be divided rateably between all the creditors

§ If the creditors paid off the business was to be returned to the Smiths

§ Cox and Wheatcroft were the creditors appointed as trustees

§ Cox never acted as trustee and Wheatcroft did it for a short time

§ Once W stopped to act remaining trustees incurred debt with Hickman

§ Hickman wanted C & W to be liable for the debt

§ Held: no holding out that C & W were partners and H had no knowledge of them or of the deed of arrangement – they could deny liability although as creditors they were to share the profits rateably as it was insufficient to make them partners

Statutory Rules

3 statutory rules: Section 8(1A)

a. Rule 1: Co-ownership

b. Rule 2: sharing of gross returns; and

c. Rule 3: sharing of profits and losses

Rule 1: Co-ownership

· Co-ownership of property does not amount to partnership – regardless sharing profit or not – Section 8(1A)(1)

Rule 2: Sharing of Gross Returns

· Sharing of gross returns does not create a partnership – Section 8(1A) (2)

· No statutory definition of ‘return’ but at common law it is taken to mean profit

Rule 3: Sharing of Profits and Losses

· Receipt of share of profits of a business is prima facie evidence that the person is a partner but not conclusive – Section 8 (1A) (3)

· No statutory definition of profit

Relationship of Partners with outsiders

The relationship can be dealt as follows:

· Law of agency;

· Power of partner to bind;

· Liability of partners to persons outside the firm

· Extent of liability to persons outside the firm

· Holding out: liability by estoppels of apparent partners of a firm

· Liabilities of incoming and outgoing partners

Law of Agency

Ø Principal authorizes the agent to act on P’s behalf to place P in a contractual relationship with a third party – agency

Ø P gives agent actual authority to act

Ø In the eyes of the third party – agent has apparent authority to act on P’s behalf – third party is here known as outsider and is not expected to know the actual authority that has been given to the Agent

Power of Partner to Bind

Ø Each partner is both an agent and principal to every other partner in the firm

Ø Scope of agency is for the purpose of the business of the partnership

Ø Actual authority may be express e.g. contained in an agreement or implied from partners course of conduct

Ø Actions of partners who do anything for carrying on in the usual way, business of the kind conducted by the firm will bind the firm and other partners.

Ø S26 PA 1896 – acts of every partner – doing an act necessary or usually done in carrying on business of the kind carried on by firm… bind partners as if he were their agent appointed for that purpose. UNLESS partner has no authority and person he is dealing with (a) knows the lack of authority or (b) has no belief he is a partner

Ø Case: Baird’s Case – fiduciary relationship

Liability of Partners to persons outside the firm

Ø Liability means : debt, obligation or liability of any kind

Ø Whether it is incurred within the scope of the partnership business and is effected in the usual way?

Ø If yes: partners are bound – S26

Ø Case: Mercantile Credit Co Ltd v Garrod

o 2 partners in a garage business fell into dispute when one partner sold a car to a 3^rd party

o The partner sold without authority and sale was in breach of partnership deed

o Partner sold a car which did not belong to the partnership

o 3^rd party tried to get purchase price back from innocent partner

o Question: Was the act of selling the car in the course of carrying on business in the usual way? If yes, innocent party liable.

o Held: Selling cars was in the ordinary business of the garage and innocent party liable

Ø Exception is only when the partner does not have authority to act for the firm in the matter concerned and third party did not believe him to be a partner.

Ø Acting without express authorization but by being partner confers authority to bind partnership if the following is satisfied:

o Transaction was entered into by a partner;

o Transaction was within the scope of the kind of business carried on by the firm;

o Transaction effected in the usual way; and

o Outsider knows or believes the person acting is a partner or must not know the lack of authority to act.

Ø Transaction entered into by a partner

o Partners will be bound to a transaction made with an outsider when transaction made by one or more partners

o If not made with partner cannot be liable

Ø Transaction within the scope of the kind of business carried on by the firm

o whether transaction is within the scope of business carried on by the firm is a question of fact

o Case: Polkinghorne v Holland

Ø Mrs. P was a client of a firm of solicitors

Ø Received advice from one of the partners about an investment in which the partner was financially interested

Ø Investment was a failure

Ø Mrs. P incurred heavy losses

Ø Brought an action claiming damages

Ø Question: Whether the remaining innocent partners were liable for her loss?

Ø Held: They were liable

Ø Why? Court acknowledged it was difficult to determine what was within the course of a solicitor’s business. The giving of financial or investment advice was within the usual course of business of that firm of solicitors. When enquired about investment. Should furnish information and assistance or point out what inquiries may be made and if required undertake them or seek for assistance of those who will give such advice.

Ø Transaction must be effected in the usual way

o Transaction will not be binding if it was carried out in an unusual way

o For the act to be usual in the business of the firm, it must be reasonably necessary and not merely convenient for carrying out of that type of business

o Case: Union Bank of Australia v Fisher

Ø Held: Handing over of original documents to a solicitor although convenient was not a usual practice.

o Even if action by partner is within scope of business but carried on in an unusual manner the other partners may not be bound

o Case: Goldberg v Jenkins

Ø A partner borrowed money on behalf of the firm at over 60% interest when the comparable rates were 6% - 10%

Ø Held: such borrowing was ‘beyond the usual’ way of the firm and thus firm not bound

Ø Reason: the partner would have been able to obtain loans within rates of 6% -10% and looking at 60% - the person lending money on those terms knows that the person borrowing is not conducting an ordinary business transaction.

Ø Outsider knows or believes the person acting is a partner or must not know the lack of authority to act

o Even if all the previous criteria is satisfied but the outsider knows of the lack of authority – it will not bind the other partners

o Case: Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd

o A company called Tamble entered into partnership agreement with Hexyl for the construction and operation of home units on land owned by Tamble

o Effect of partnership agreement is that Tamble will enter into the contract for the construction of this building in its own name as principal

o Tambel entered into a building agreement with Construction Engineering

o At the time of agreement Construction Engineering did not know of the existence of the partnership nor believe Tambel to be a partner

o Dispute on entitlement of payment arose

o Construction Engineering claimed that contract was made on behalf of partnership

o Held: Hexyl was not a party to the building contract

o Reason: Construction Engineering did not know or believe Tambel to be a partner

The extent of the partners’ liability to persons outside the firm

Ø Extent of liability in contract and tort varies

Ø Liability in Contract

o Every partner in a firm is liable jointly with other partners for all debts and obligations of the firm incurred while the partner is a partner – Section 16

o Joint liability – partners must be sued jointly and not individually

o If all are not sued, partner who is sued can bring the other partners as co-defendants

o Case: Polkinghorne v Holland

Ø Liability in tort and crime

o If partner commits a tort while acting on behalf of the firm in the ordinary course of its business with third parties, liability will be joint and several – Section 19

o E.g. negligent advice given to outsider

o Several liability means that each partner remains individually liable as partner of the firm e.g. misapplication of money or property received or in the custody of the firm –Section 18

o Case: Mann v Hulme

§ M & R were solicitors in a partnership

§ Mr and Mrs H clients of the firm

§ Dealt with R who prepared their wills and discussed on making investments on their behalf

§ Invested their money on second mortgage and assured that the investment will be safe

§ Mr & Mrs H sued in that the money received by R was misapplied

§ Question: Was innocent partner liable? Yes – relates to cases whereby money or property received by the firm in the course of business which has been misapplied

Holding out: the liability by estoppels of apparent partners of a firm

Ø any person held out as a partner may be liable – Section 21

Liabilities of Incoming and outgoing partners

Ø only liable for partnership liabilities incurred while a member of the partnership

Ø not liable for anything before joining partnership or after ceasing to be a partner – Section 24

RELATIONSHIP BETWEEN PARTNERS

Internal relations between partners examined as follows:

· fiduciary duty of utmost faith

· model set out rules

· variation of partnership’s rules by consent

· partnership property

· accounts

· accountability for secret profits

· not to compete with the firm

Fiduciary Duty of Utmost Faith

§ relationship of trust

§ act in good faith and honesty

§ avoid conflict of interests

§ to act in best interest of the other partners

§ not make personal profits or take advantage of the relationship

§ fiduciary duty

§ Case: Birtchnell v Equity Trustees

o Relation is based on some degree of mutual confidence that acts will be for joint advantage

§ Chan v Zacharia

Model set of rules governing the relationship between partner

§ Although written agreement can provide for the working of the partnership the Act gives a model

§ These will apply where the partners do not have a written partnership agreement – Section 34

§ 1A) The interests of partners in the partnership property, and their rights and duties in relation to the partnership, shall be determined, subject to any agreement, express or implied, between the partners, by the rules set out in subsections (1) to (9).

(1) All the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses, whether of capital or otherwise, sustained by the firm.

(2) The firm must indemnify every partner in respect of payments made and personal liabilities incurred by him —

(a) in the ordinary and proper conduct of the business of the firm; or

(b) in or about anything necessarily done for the preservation of the business or property of the firm.

(3) A partner making, for the purpose of the partnership, any actual payment or advance beyond the amount of capital which he has agreed to subscribe, is entitled to interest at the rate of 6% per annum from the date of the payment or advance.

(4) A partner is not entitled, before the ascertainment of profits, to interest on the capital subscribed by him.

(5) Every partner may take part in the management of the partnership business, and shall attend diligently to the partnership business, and shall not be entitled to any remuneration for acting in the partnership business.

(6) No person may be introduced as a partner, without the consent of all existing partners.

(7) Any difference arising as to matters connected with the ordinary course of the partnership business may be decided by a majority of the partners.

(7A) A decision for the purposes of subsection (7) must be arrived at in good faith for the interest of the firm as a whole, and every partner must have an opportunity of being heard in the matter.

(7B) Subsection (7A) extends to powers conferred by a majority of the partners by express agreement.

(8) The partnership books are to be kept at the place of business of the partnership (or the principal place, if there is more than one), and every partner may, when he thinks fit, have access to inspect and copy any of them.

(9) No change may be made in the conduct or regulation of the partnership affairs without the consent or authority of a majority of the partners, and no change may be made in the nature of the partnership business, or the place where it is carried on, without the consent of all existing partners.

Variation of the rules by consent of the parties

§ Rights may be varied with the consent of all the partners

Partnership Property

§ Comprises of all property and rights and interest in property brought into the partnership

§ Such property must be applied by the partners exclusively for the purposes of the partnership

Render Accounts

§ Render true accounts and full disclosure

Private Profits (Secret Profits)

§ Must account for all secret profits

Duty not to compete

§ Carries on any business of the same nature that competes with the firm, partner must account for and pay over to the firm all profits made.

DISSOLUTION

Can be ended as follows:

§ Expiration of fixed term

§ Partner giving notice

§ Death / insolvency

§ Bankruptcy

§ Illegality

§ Order of court

Section 35 - Expulsion of partner

(1) No majority of the partners can expel any partner unless a power to do so has been conferred by written agreement between the partners.

(2) Where such power is conferred, it may be exercised only in good faith with a view to the benefit of the firm, and the partner whom it is sought to expel must have an opportunity of being heard.

Agency Law

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Basic Information on Agency Law

What does Agency Law entail?

Corporations Act 2001 (Cth)

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The Australian Corporations Act was enacted in 2001 to consolidate all state acts to have a uniform applicability. With the passing of the legislation, Australian Securities and Investment Commission (ASIC) was formed to safeguard the sections of the the Corporations Act 2001 ('Act').

There has been proposals for amendment to the Act for financial reporting provisions under the Act.

http://www.ey.com/Publication/vwLUAssets/Corporations_Act_2001_proposed_simplifications/$FILE/Corporations_Act_2001_%20proposed_simplifications.pdf

Corporations Act 2001
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/

Elements of a Contract

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MALAYSIA

A valid contract will be deemed to exist when the following elements are present:

Offer - this is also known as a proposal, a necessary element for the formation of an agreement. The requirements of offer is stated in Section 2(a) Contracts Act -...where one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, is said to make a proposal'. (the key elements have been highlighted and underlined)

          The person making the proposal is known as the 'promisor' (commonly known in the Commonwealth
          jurisdiction as Offeror). A proposal is capable of being an agreement only when it is accepted by the
          person to whom it is addressed.

         Some requirements of a proposal:

definite promise
there is intention to be bound when accepted
acceptance does not vary any terms of the initial proposal

2. Communication of Proposal

Will be complete when it comes to the knowledge of the person to whom it is made (S4(1) CA 1950)

3. The manner in which the Offer is made

Could be expressly made i.e. written or oral
Impliedly through conduct

4. Compare with Advertisement

An advertisement is not deemed to be an offer but rather an attempt to induce the other party to make an offer. This rule is such for business convenience.(Coelho v The Public Services Commission & Guha Majumder v Donough). In determining whether it is an offer or invitation to make an offer is dependant on the intention of the parties. Nevertheless, the courts have often recognised bi-lateral (two parties) advertisements are considered to be invitation to make offers whereas uni-lateral (world at large advertisements as was considered in Carlill v Carbolic Smoke Ball) are considered to be offers.
Display of products, tenders and auctions are also considered to be an invitation to make offer rather than making the proposal. The case that best illustrates on display of products / goods would be Pharmaceutical Society of GB V Boots Cash Chemist Ltd.

Taking a law unit for the first time?

2011-05-23T08:41:00.000-07:00

I have taught for some years now, law units to non law students. I am always met with the same lamentation - law is difficult - period.

Teaching and learning theorists will call this classical conditioning. A mind set prior to experiencing the unit for themselves. This adds up to becoming doubly difficult hurdle for the lecturer entasked to lecture the unit.

Reading is the key and most important concept a student has to appreciate. There is no way one is going to be able to get through the unit without reading. This reading coupled with an inquisitive mind will get the student far. No doubt some areas of law like Corporations Law could seem a little daunting given the sections and sub-sections to be understood, however, understand the principle behind the legislation, that would be able to assist in getting it entrenched in the memory for eternity.