Week One - Types of Business Entities - Types of Liability

Question 1

What are the two main types of liability in a partnership?

Answer 1

Liability in contract

Liability in tort

Question 2

What is meant by liability in contract and where is its statutory foundation?

Answer 2

Partners are jointly liable for all debts incurred by any partner

Explained under s 9 Partnership Act 1892 (NSW)

Question 3

What is meant by liability in tort and where is its statute found?

Answer 3

Partners are jointly and severally liable in tort

All partners will be bound by any tortious acts, provided the acts are completed in the ordinary course of business or with the authority of the co-partners

Question 4

What is a key case for liability in tort?

Answer 4

National Commercial Banking Corp of Australia Ltd v Batty (1986) 160 CLR 251

Question 5

How may a partnership end?

Answer 5

• Ending of the partnership term
• The death of a partner can create a new partnership
• Departure/Withdrawal from the partnership
• Illegality (the partnership is found to be illegal)
• Court order (the court orders the partnership be dissolved)
• The partnership is dissolved

Question 6

Where are the measures for ending a partnership found?

Answer 6

Div 4 Partnership Act 1892 (NSW)

Question 7

Are Law Firms A Partnership?

Answer 7

Defined as a partnership, consisting of only legal practitioners (s 6(a)) or one or more practitioners or one or more Australian registered foreign lawyers (s 6(b) Legal Profession Uniform Law)

Question 8

Is an unincorporated legal practice also classified as a partnership?

Answer 8

Yes, it is

Question 9

What is an incorporated legal practice and what is its statutory basis?

Answer 9

Where the legal practice becomes a corporation and separate entity

Defined by s 6 of the Uniform Law (provided legal practice meets criteria)

Question 10

What does the Uniform Law proscribe for lawyers?

Answer 10

Requires solicitors to hold insurance, known as professional indemnity insurance