Assessment item - Problem questions

Task - You must answer the two problem-type questions below, using the ILAC (Issues, Law, Application, Conclusion) format, a worked example of which is in the Resources folder.

Question 1-  

Peter, Aidan and Adrian are partners in an accounting firm. There is a partnership agreement which states that each partner may enter into contracts worth up to $ 10 000, but that any contract in excess of that amount requires the prior agreement of all partners.

Peter and Aidan are away doing an audit when Adrian sees an advert for a set of accounting journals being sold by a local accountant, Tom, who is retiring. The set would cost in excess of $ 25 000 if all the back issues were bought from the publisher, so Adrian thinks that the asking price of $ 15 000 is very good, and he agrees to buy them for the firm.

He also decides that because he studied surveying before he studied accounting, the firm would make money if it branched out into surveying, and so she buys a set of surveying instruments for $ 8 000 on behalf of the firm from Edgar.

When Peter and Aidan return they are furious to find out what Adrian has done and refuse to accept delivery of the journals or the surveying equipment or to pay for them. Advise Tom and Edgar as to their legal position, citing relevant law.

 Question 2-  

Richard was employed selling slimming products in Victoria for Nu-Slim Pty Ltd from 2008-13. A term of his contract was that if he should leave Nu-Slim, he could not sell slimming products' in Victoria for three years. In 2014 he registered a company called Fat-Away Ltd. Richard owns 99% of the shares. The other 1% is owned by his sister, Frances, whom he elected as Managing Director and CEO. Fat-Away Pty Ltd operates out of Melbourne and sells slimming powder throughout Victoria. All sales are signed by Frances on behalf of of Fat-Away Pty Ltd.

Frances also signs a contract on behalf of the company, taking out a loan of $ 500 000 from United Bank in 2014 as start-up capital. The company did well during 2014, 2015 and the first half of 2016, but in July 2016 was not able to repay a loan instalment of $ 40 000 owing to the bank.

Richard comes to you for advice after receiving two letters: One from Nu-Slim Pty Ltd requiring him to cease the operations of Fat-Away Pty Ltd in Victoria, the other from United Bank Ltd threatening to sue him for $ 40 000. Advise him, citing all relevant legal authority.  You should assume the validity of the terms of the contract entered into between Richard and Nu-Slim Pty Ltd.

Rationale - This assessment will allow you to demonstrate your ability to:

• engage in legal research;
• identify the legal issues arising out of novel factual situations, to analyse the applicable law and to differentiate between which rules are applicable and which are not and then apply the law to the problem;
• to explain and summarise the applicable law in such a way as to create a report for a client which states what liabilities arise from novel factual situations

 And more specifically:

• your knowledge of the law of partnership
• your knowledge of the law and the law relating to the incorporation of companies and the separate legal identity of corporations
• your ability to undertake an assessment task relevant to the workplace and professional practice.