Frances, Mary and Jane meet as students of dentistry. After graduating they form a dental practice in Sydney of which they are all equal partners and which they call Happy Smiles. They agree that, as partners in the dentistry practice, they will each have authority to enter into contracts of up to $ 20 000, but that contracts in excess of that amount require the express concurrence of all partners.
When Frances and Mary are away on holiday overseas, Jane sees that a new medical supply company, Sleeping Gas Co Ltd is offering a special deal on the usual brand of anaesthetic gas used by Happy Smiles. She signs a contract in the name of Happy Smiles, to buy 6 cylinders of gas for $ 5 000 each. She also signs an order to buy a small truck for $ 15 000 from Dan's Auto Lot Ltd, thinking that, if she were to get a truck driver's licence, Happy Smiles could expand into the road haulage business.
When Frances and Mary arrive back from their holiday, they refuse to authorise payment for the gas or the truck and, along with Jane (who they are no longer talking to) have now been sued by Sleeping Gas Co Ltd and Dan's Auto Lot Ltd. Advise Frances and Mary as to their liabilities, citing relevant legal authority.