ILAC: Partnership Hypothetical
Edward, Jake and Charlie have a stock broking business called ‘Magic Millions’ located in Forks, Queensland that they have been running at a reasonable profit for a period of 4 years. Edward and Charlie run the financial aspect of the business, while Jake is responsible for bringing in new clients. In early January 2011, Bella joins the firm on equal terms with Edward, Jake and Charlie and is put in charge of advertising and supporting Edward and Charlie with advising the firm’s clients.
On the 5th of February 2011, on arriving at work one rainy morning, Jake slips and falls on the tiles just inside the front entrance to the firm’s building. In doing so, he drops a bottle of machine oil that he was asked by Edward to purchase with the firm’s petty cash to service one of the firm’s photocopiers. The bottle of oil breaks and spills on the floor. Jake cleans up the glass and other items but is in such a hurry to get to a client meeting that he forgets to ask the maintenance man to clean up the oil and put up a ‘Caution: Wet Floor!’ sign. An hour later, Mr Laurent, a client of the firm, enters the building and slips on the oil breaking his arm and leg. Mr Laurent is very angry at such negligence and wants to sue the firm for damages.
Issue 1 - Was there intention between Edward, Jake, Charlie and Bella and thus, does a partnership for ‘magic millions’ exist?
Issue 2 - Can the firm, ‘Magic Millions’ be held liable for Mr Laurent’s damages?
Issue 1 – Statue law; Legislation: Section 5 Partnership Act 1891 (Qld) Defines a partnership as:
“the relationship which subsists between persons: carrying on a business, in common ,with a view of profit.”
Common law: United Dominions Corp Ltd. v Brian Pty Ltd (1995) - If there is intention by the parties on commencement of the partnership that the business is to be of a commercial nature (to make/share a profit) ‘with a view to a profit’ is satisfied.