Week One - Types of Business Entities (Case Law - Partnerships)

Question 1

What were the facts of Crib v Korn?

Answer 1

• Cribb owned a farm
• Mr Rano owned two paddocks (used for farming)
• Cribb provided the land, tools and livestock
• Mr Rano provided the labour
• Both individuals divided the proceeds
• Rano employed Korn to work on the farm
• Korn was injured and sought action against both Rano and Cribb, claiming they were partners

Question 2

What was the legal ruling in Crib v Korn?

Answer 2

• Rano and Crib were not partners
• They were not working together (Cribb was not working)
• Not a partnership, more a lease of land for return
• There was no business together towards a common end

Question 3

What were the facts of R v Willis; Exparte Martin (1879) VLR 149?

Answer 3

• A brewer owned a licensed hotel
• He agreed rent would be 1/2 of the profits of the business
• The brewer could inspect books according to the lease

Question 4

What was the legal issue in R v Willis; Exparte Martin (1879) VLR 149?

Answer 4

Whether the person was a partner?

Question 5

What was the legal ruling of R v Willis; Exparte Martin (1879) VLR 149?

Answer 5

• Not a partnership, rather an agreement for lease

* There was no business in common or evidence of both working towards a common end together

Question 6

What were the facts of Stubbs v Lakos (1994) IR110?

Answer 6

• An associate of a law firm was promoted to a partner
• His salary remained the same, without tax
• He was dismissed two years later

Question 7

What was the legal issue in Stubbs v Lakos (1994) IR110

Answer 7

*Whether the associate was a partner or an employee?

Question 8

What if the associate was an employee?

Answer 8

*If he was an employee, industrial law applied and he was entitled to statutory payments.

Question 9

What if the associate was a partner?

Answer 9

If he was a partner, none of this applied and the partnership determined the agreement.

Question 10

What was the legal ruling of Stubbs v Lakos (1994) IR110?

Answer 10

The associate was a partner and industrial law did not apply

Question 11

What were the facts of Allcard v Skinner (1887) 36 Ch D 145?

Answer 11

• A 33 year old woman named Mrs Allcard
• Joined a protestant institution called Sisters of the Poor
• She became a nun
• She gave property valued at 7,000 pounds to the institution in 1868
• She left the order in 1879 and sought recovery of the money

Question 12

What was the legal issue in Allcard v Skinner (1887) 36 Ch D 145?

Answer 12

Was there a fiduciary relationship? If so, the gifting of the property could be set aside.

Question 13

What was the legal ruling of Allcard v Skinner (1887) 36 Ch D 145?

Answer 13

• The contract was set aside, however, the delay of Mrs Allcard of 11 years meant she could not recover the 7,000 pounds.
• Lord Lindley, however, was critical of the influence of the Church during the fiduciary relationship, stating that undue influence had been exerted.

Question 14

What were the facts of Mercantile Credit v Garrod [1962] 3 ALL ER 1103?

Answer 14

• Mr Garrod and Mr Parkin were business partners
• They worked for the purpose of repairing cars and letting garages
• Their partnership agreement expressly prevented them from buying and selling cars
• Mr Parkin fraudulently sold a car to a third party, Mercantile Credit, without consulting his partner, Garrod
• Mercantile Credit believed they were dealing with the partnership and sued for the purchase price

Question 15

What was the legal issue in Mercantile Credit v Garrod [1962] 3 ALL ER 1103?

Answer 15

Whether the partnership was bound to the agreement and both partners liable? If not bound, only Parkin would be liable.

Question 16

What was the legal ruling in Mercantile Credit v Garrod [1962] 3 ALL ER 1103?

Answer 16

• Selling and buying cars came under the usual type of business conducted by a car garage
• It classified as activity implied by the kind of business Parkin and Garrod were involved in
• Both partners were bound to Mercantile, hence they were jointly liable for any losses suffered by Mercantile

Question 17

What important notion of Law in Context did Mercantile Credit v Garrod demonstrate?

Answer 17

The third party should be protected and it is logical that what is normal practice should be ensured.

Question 18

What were the facts of Lynch v Stiff?

Answer 18

• Mr Lynch was a law in practice for John Williams & Sons Solicitors
• Although his name appeared as a partner, he remained an employee of the firm
• He had previously been Mr Stiff’s solicitor
• The ownership of the firm changed, with John William’s son, John William Jr taking over
• He assured Stiff that Mr Lynch would continue to manage his business
• Mr Stiff entrusted 300 pounds to Lynch
• John Williams invested and misappropriated the money
• Stiff sued on the basis that he had been held as a partner (Lynch)

Question 19

What was the legal issue in Lynch v Stiff?

Answer 19

Whether or not there was authority to bind the firm? Whether the firm was liable on ostensible authority?

Question 20

What was the ruling in Lynch v Stiff?

Answer 20

• Lynch suffered through the representation
• Stiff had entrusted the firm with credit on the representation
• Lynch was found liable as a partner and had to provide money back to Stiff
• Stiff had relied on the misrepresentation made by John Williams