Bentley Physiotherapy Clinic is operated as a partnership. The clinic was started by Tim in 2006. Kathy and Martin joined the clinic in 2008 and a partnership was created. The business is conducted according to a partnership agreement. The clinic provides comprehensive physiotherapy services to clients. Martin specialises in sports injury, Tim specialises in neurological physiotherapy and Kathy, an acupuncture specialist, conducts hydrotherapy and Pilate classes. Adam, a close friend of Tim's, is a business graduate and provides business and management advice to the firm. Although Adam invested $15,000 in the Bentley Physiotherapy Clinic to help set up a corporate health and fitness program, he made it clear to Tim that he did not wish to be a partner. The clinic is very successful and has an  excellent reputation.

Question 1

Adam is actively involved in promoting the corporate health and fitness program. He has helped set up a dedicated facility at the clinic. The program is aimed at improving employee productivity, reducing the risks of musculoskeletal injuries, reducing stress and decreasing worker's compensation costs. The facility is well equipped with a range of equipment. On recent business travels, Adam discovered some new high quality innovative exercise bikes and spin bikes that are in limited supply. He decided that the bikes would be a fine addition to the corporate fitness program. He therefore decided to order three exercise bikes and three spin bikes for a total of $9,500. He was certain the clinic would be happy to pay for the bikes. However, although Tim was willing to pay for the bikes, Martin and Kathy did not feel that the partnership could afford to pay for the bikes, especially as it was not necessary to get such expensive bikes. Martin and Kathy felt that Adam should pay for the bikes as he did not have the authority to order the bikes.

With reference to common law and statutory law, explain whether or not the partners are liable for the debt incurred by Adam.Question 2

Question 2

As a specialist in sports physiotherapy, Martin has a number of professional sporting clients. One of his clients is Sam who is an AFL football player. Sam has been receiving treatment from Martin for several months for chronic back pain. Following certain treatment involving spinal manipulation, Sam's condition worsened which resulted in major back surgery. Sam was unable to play football for two seasons resulting in a significant loss of income. Sam sued the partnership for loss of income and medical expenses. The partners denied liability. Tim and Kathy further argued that the partnership is not liable because Martin was using a particular treatment that was not generally practised in the clinic.

Discuss whether the partners may be liable for Sam's claim.

Question 3

Martin decides to leave the partnership. Tim and Kathy continue the partnership. Three months after Martin has left the firm, Erika joins the clinic.

Advise Tim and Kathy on the legal implications for the partnership of Martin leaving and Erika joining the firm.