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Enterprise Law
Student’s Name
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Question One
a) Without asking Tiarna, Tim orders a new lens for the camera
from Lachie Lenses believing that the lens will deliver far superior footage,
however, Tiarna says she never would have agreed to this if she had been asked.
Lachie Lenses has demanded payment of the outstanding invoice of $1,500 from
Tiarna.
Based on the above scenario, it is both Tim and Tiarna are legally bound to their joint
partnership since they contributed mutually to the startup of their video production business
(Gleeson, 2016). This implies that both Tim and Tiarna are mutually liable to the profits and
losses accrued from their business operation. Thus, the legal issue in this case is that of
Tiarna incurring a liability of paying the outstanding invoice of $ 1,500 for which her consent
was not sought in advance by Tim. The underlying legal provision that justifies potential
liability of paying the outstanding invoice of 1,500 US dollars is that Lachie lenses were
contracted by the Tim under the company’s name which is Isla Videos.
The legal provision that justifies the liability of Tiarna to pay the pending amount
indicated in the invoice is the joint and several liability provision. The mentioned legal
provision states that joint partners in a given legal business may be held severally or jointly
liable for the full extent of the debts incurred in the course of the partnership business
(McKendrick, 2014). However, Tiarna has an opportunity to seek for the legal justification
in the corporate court that can justify her refusal to pay for the pending amount of money for
the Lachie lenses. It would be justifiable for Tiarna to forfeit the payment of the outstanding
invoice value since her consent was not seeked by Tim while he was procuring the new
lenses for the camera. Thus, the court is likely to follow the case launched by Tiarna.
This scenario involves a business relationship between Tim and Tiarna who are the
owners of Isla Videos, a video production company. One legal matter is that new camera
equipment was purchased by Tim though without the consent of Tiarna but currently the
vendor in question Lachie Lenses is seeking to be paid some amount from the partnership.
This raises issues of partnership law such as; mutual agency and Joint and several liability.
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Tim and Tiarna are agents of each other – this means that they can legally act on behalf
of the partnership without necessarily involving the other partner. When Tim ordered the new
lens, he probably had the right to sign the relevant contract for the Isla Videos partnership.
This is supported by case law that acknowledges that partners enjoy broad freedom to
conduct normal business activities.
However, as pointed out by Tiarna, she would not have consented to this expenditure in
the first place if she had been asked. There is some truth to this since partners bear a legal
responsibility to act in the best interest of the partnership. If the decision to upgrade
equipment was made by Tim solely for his personal interest or where Tiarna was against the
decision, it may have been a breach of his duties and therefore expose him to a claim.
Based on the rules of joint and several liability, the same way Tiarna is also
presumably liable for the debt in Lachie Lenses. Going by the legal requirements, each
partner is legally liable for all the partnership debts and other losses which may be incurred;
other than in the normal course of the business. There are other forms of liability that the
partners may agree to accept and they too can be held responsible for the amount of
partnership debts in full. This is intended to ensure that vendors are paid – thus Lachie Lenses
can address the law against either Tim and Tiarna or Isla Videos as a business. This is in light
that if the improvement of camera equipment has bearing on the operations of the partnership
then the debt falls under the partnership category as defined by the case law. The possible
legal arguments that Mbali can use to explain the expense would be that it was illegal or
saying that it was outside the scope of what Tiarna was authorized to spend within the
partnership agreement signed with Tim. However, such claims may not be effective owing to
the joints liability rules pertaining to agency in partnerships. She is most likely to find her
best argument within the principles of equity and fairness that should prevent her from being
made to suffer the consequence of compromise through being held liable for the debt as there
was no consent. In these circumstances, an appeal to justice and reasonableness of an action
may pay, in such a situation. Hence while there is at some level truth in Tiarna’s complaints
against her partner Tim, partnership law likely blames both of them for this sum. The best
way for them to go may be to agree to pay Lachie Lenses in equal portions then sort out the
matter of consent and authority amongst themselves. The issues, which resulted in spending
and in the resolution of disagreements between the partners, would be avoided better with
clearer guidelines in relation to the decisions made.
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b) Heading to a “a very important” customer’s premises for video
filming Peter (whilst under pressure from Tim to arrive on time) is speeding and
crashes into a car stopped at a set of traffic light. Nobody is injured, however,
there is $5,000 of damage caused to the other driver’s car.
The legal issue involved in this case is the damage of the other diver’s car by peter who
is an employee of video production business belonging to both Tiarna and Tim. Thus, Tiarna
being one of the partners in the Isla Videos business, she has potential liability of the
damaged vehicle of the third party (Poole, 2016). On the legal grounds, both Tim and Tiarna
are liable for the damaged that was caused by Peter on the third party’s car. Legal provisions
of a Joint partnership state that both of the partners in a partnership business have to mutually
incur the liabilities incurred by the business. Thus, according to the law of partnership contact
both Tim and Tiarna are liable to share equally the incurred damage of the third party vehicle
(Murray, 2015). Another legal factor that justifies the owner of the car that was damaged by
Peter who is an employer of Isla Videos is that, the car was hit by Peter while it was
observing the traffic lights. Thus, this scenario justifies that peter did not take into account of
the safety rod driving regulations due to the pressure from Tim.
The legal questions of the first scenario are that Peter, an employee of Isla Videos
which belongs to Tiarna and Tim, damaged another driver’s car while speeding to a customer
filming. Thus, even though Peter was driving the car, both Tiarna and Tim, as his employers
and owners of Isla Videos, can be considered legally responsible for the $5,000 in damages
caused. This is in light of legal provisions stating that employers/businessmen may be held
legally responsible for tortious actions of employees while performing their functions (Poole,
2016).
Here Peter was driving at a high speed with his car camera running as he was working
on a trip for a significant customer under the pressure of Tim with regards to time. Therefore,
Tiarna and Tim, as Peter’s employers, should be legally responsible for his negligence in the
accident and property damage. In the same respect, the law also usually provides that partners
are jointly and severally liable for the liabilities which the partnership business undertakes
(Murray, 2015). This way both So Tiarna and Tim would be liable for the accident and the
injured driver can sue any or both of them for the $5,000. Their responsibility is absolute and
it therefore does not matter if they were at fault or not. Therefore the legal implication is that
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Tiarna is held liable for the accident in the absence of directly contributing to it, under the
doctrines of legal vicarious liability and legal partnership liability.
In the second scenario, the main legal question is whether it is legal for Tim to engage
and establish a new rival video filming company for wedding ceremonies without informing
or seeking approval from Tiarna while they both operated Isla Videos together. This brings
legal concerns connected with the responsibilities that Tim has as the business associate of
Tiarna. The former is that partners owe a fiduciary duty or duty of loyalty, which requires
them to perform in the best interests of the partnership and not in their self-interest to the
detriment of the partnership (Yockey, 2014). By starting a competing business, Tim is
automatically putting into conflict of interest and thus he is in violation of the legal duty of
loyalty to the partnership as he is engaging in his separate business ventures (Gleeson, 2016).
In this case, Tiarna could sue Tim for breaching partnership responsibilities.
Moreover, the partnership law in general does not allow partners to engage in a similar
business as that of the partnership without the approval of the other partners. Here, Tim and
Tiarna had contemplated on expansion through venturing into production of wedding videos
since it could be a new department for Isla Videos. When Tim embarked on the wedding
video business on his own, he seized the opportunity for himself not the partnership. This is a
breach of the legal requirements that require Tim not to compete with the partnership without
permission, as well as the duty of loyalty to the partnership. It is clear that Tiarna has legal
grounds to sue Time for breach of legal duties of a partner. His actions were in violation of
the basic partnership principles that demand partners to act in the partnership’s best interest.
He similarly competed directly with Isla Videos and as a result took away their profits by
denying them the chance to reap big from their lines of products. Tiarna can take legal action
to recover the lost profit to Isla Videos or if he/she wishes, can terminate the partnership.
c) Without consulting Tiarna, Tim started a separate business video
filming specifically for weddings. So far Isla Videos haven’t been filming
weddings as it would increase their insurance costs, however, Tim and Tiarna
have previously discussed the lucrative nature of breaking into the wedding
industry.
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The legal case featured in the scenario above is that of Tim establishing a separate
business video filming for weddings without informing Tiarna yet they are joint partners
(Yockey, 2014). By Tim starting up a separate business which was a competitor to the initial
one, then he engages in a conflict of interest. According to the contact law governing joint
partnership, then the involved parties in joint partnership should act in the interest of the other
partner. However, Tim did not observe the legal provisions of the mentioned contract law
governing joint partnership enterprise. Tiarna is liable to a loss resulting from scarce demand
for the video filming for wedding due to the competition posed the business of Tim.
Moreover, by Tim starting a business of video filming of the wedding events without
notifying Tiarna, then she breaches the contact of partnership. Tim makes their initial
business to lose a lot of business due to the misconduct of his misconduct. Under the joint
enterprise law, business partners are not legally bound to engage in competitive businesses
without their mutual agreement (Gleeson, 2016). This is due to the rationale that joint
partnership is bound to be run mutually by the two involved parties. Thus, Tiarna is legally
permitted to launch a law suit against Tim for his unethical business behavior of failing to
pursue the interests which are mutually binding the two involved partners. Tim demonstrates
sense of selfishness in the joint business partnership. Thus, Tim is supposed to compensate
the business losses which have been incurred by their joint enterprise of video filming
business.
The legal and ethical considerations that arise from Tim’s actions are the creation of a
separate wedding video firm without consulting Tiarna. From the case analysis of Isla Videos,
Tim and Tiarna are partners in a business and as such they have certain legal responsibilities
such as the duty to provide information and not compete directly without permission.
In this case, Tim denied Tiarna her right to important information affecting their
business, as he carried out the wedding video side business in secret. While it may not have
been with a sinister motive, this failure eroded trust between the partners and any semblance
of good faith. Moreover, there are many aspects where Tim acted against their common
interests without Tiarna’s consent, for example he established a similar company to the one
they both invested in. This places him in a contractual and ethical violation in his business
relationship with her, as her business partner. Wedding videos represent an opportunity, but
going all out for this could impact their primary business negatively whether through loss of
clientele or having to insure against high costs. Tim was wrong in failing his duties to
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disclose and avoid unlawful competition. His actions are unlawful as they violate their
business contract, and as a partner who was entrusted with managing Tiarna’s business, he
failed in his duties. Albeit non-maliciously, he did not meet minimum disclosures and
preservation of the current shared business opportunities. By making this assessment, I can
infer that Tim is most probably legally responsible for any losses that may arise from his
concealed competitive business. The legally recommended outcome is reaching an agreement
on how to deal with the wedding videos that would be acceptable and fair to both of them in a
business that is still operational as a partnership.
Question Two
The agreement contract procedure is based on three important pillars which include the
consent of both parties, the legality of the contract, and the intentions to create a legal
relationship (Poole, 2016). In the case of Bronwyn vs Lano Limo Service, based on the three
factors, the agreement contract was reached the moment Lano accepted the offer for the job.
After negotiations, they both agreed that Bronwyn would pay a total of $1500, and that, a half
amount was to be paid immediately while the other a half would be paid during the day of the
concert. According to the law of contract, the agreement could be both verbal and written or
either of the two (Gleeson, 2016), which in this case, it is legally recognized that Bronwyn
and Lano Limo Service had entered into a verbal contract and thus breaching it, would attract
a legal penalty.
Based on this scenario, therefore, there is a serious breach of contract which has caused
recognizable damage to Bronwyn. First, Bronwyn lost $600 paid for the concert ticket, and
secondly, lost the ‘Door Prize’ whose value is $10,000. However, the $1,500 was also part of
the agreement since Lamo was to be paid that amount of dollars for the fare to Sidney and
back to her home. Apparently, Lino will have to pay a total of $10,600 under the
compensatory damage procedure, which according to the law of contract, puts Bronwyn in a
position that she would have been if the contract had not been breached (Golden, 2016). In
addition, Lino will also pay $ 1,500 as liquidated damage which, according to the law of
contract, are the actual damages previously identified by the two parties in the contract in
case a breach occurs (Golden, 2016).
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Question Three
The first scenario; James Vs Jade
In the case between James and Jade, James does not reply to the last condition given by
Jade of making the price to $475, and therefore the contract is not made. Even though James
accepts that 15th August was a great idea, there is no evidence that James heeded to the last
set price for the selling of granite stone. According to McKendrick (2014), simple contracts
of these nature, require that all parties reach a common consensus upon which consideration
for enforceability is created, and for such contracts to be valid, there must be a consent of the
parties involved. Failing to reply therefore, it can be implied that James never accepted the
last condition and thus, there was no deal made.
Some of the important factors in a lawfully binding agreement, are a firm promise and
communication of the offer. If for instance, either of the two (James and Jade) sues another
in the court of law, the court will make considerations subject to these two factors, a firm
promise communicated through either verbal or written. It is about who gave an offer and
with what conditions and whether the other party accepted the conditions given before a
contract. In this case, the court will automatically find no contract made because the
contract was not complete, the two parties were still under negotiations.
It was noted that the discussions and negotiations made between James and Jade
with regard to the sale of granite stones failed to constitute a contract. In order to have a
legal binding to a contract, there are three aspects that are supposed to be present in each
contract that includes: an offer, acceptance of the offer and consideration in equal measure
according to McKendrick (2014). In this case, there is an agreement which was made by
James with a view to supplying granite stones at $500 which was accepted by jade but jade
altered the term and condition of the contract and wanted the price to be set at $475. Here
in the end there was no indication of James taking this counteroffer from him.
In contract law, any deviation from the offer for example the price can be held as a
counter offer and hence the rejection of the initial tender made (McKendrick, 2014). So as
such when Jade relocated to the price of $475, she was offering James something different
though it was an offer to buy the car. If a contract would have been formed at that point
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and it was possible for James to agree to pay for the prize at $475. For this reason, since
James never agreed to Jade’s counter offer of new terms of the agreement he did not
accept it. Thus, the consent of the parties was lacking or in other words, they were not in
consent with each other.
The common rules concerning offer and acceptance and then consideration to
support it in order for it to be legally binding since there is sufficient evidence that both
parties have agreed on the terms of the contract as stated by McKendrick,(2014). Although
James was the first to offer the agreed price and Jade was the first to accept we had the
impression that there was consent of both parties. But in reply to Jade’s suggestion to
change the terms, it proved that there were not such mutual agreement. James failed to
reply to the emails hence he did not agree to the new terms in any manner. With no
acceptance there was no consensus between the parties to the contact at the end of the
matter.
The key factors creating an enforceable agreement are: Ways through which a
contract can be established include 1) Offer; the contract must contain terms which have
been expressed and agreed upon by the parties that are entering into the contract, 2)
Acceptance; for a contract to be valid there must be a clear acceptance of offer by the other
party, thereby displaying mutual consent of the involved parties, 3) Consideration; both
parties must provide something of value for the contract to be valid In the bargaining
process which James engaged with Jade, there was no unconditional acceptance that
resulted to agreement after Jade made a counter offer of $ 475 price. This meant that there
was no enforceable contract developed between the parties since one of the essentials for
formation of a contract was lacking.
If either James or Jade tried to get the other to a court to enforce this ‘agreement,’
the court would be surprised that there was no contract to speak of. James’s inability to
indicate that he has accepted Jade’s counteroffer to the parties, negotiations will show that
there was never a mutual agreement after a certain point. The talks went from looking more
like consensus back to simple bargain when Jade counter proposed. Hence, to the court, no
legal and enforceable legal relations came into existence between James and Jade. While
bargaining for sometime, the involved parties never got to consent on the material terms
that would form the basis of a contractual agreement.
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Therefore, although James was in promising negotiations and made promises for
each other, they did not addressed a legally binding contract as they did not meet the
requirements of communication of an acceptance. Such a case, the court would never find a
contract because the other party never gave an unconditional acceptance during
negotiations once new terms come in. In common law again, the basic essential of an
enforceable contract is that the parties intended to be bound to equal degrees of certainty
as to all the operative details of the bargain without any need for further negotiations.
The second scenario; Moose vs Jade
In this second case, a deal is made. The first conditions made by Jade on the advert
included a date (20th August) and the price ($850). Moose makes a call that is interested in
buying the granite stone, which also essentially means that he fully agreed to the date and
pricing conditions. After inspecting the stone, he conclusively said “I’II take it”. According
to McKendrick (2014), a simple contract has a sense of Intention to create legal relations and
it can simply through verbal or written sentiments. If Moose accepted the offer by first,
showing interest and then accepting to inspect the property and later conclusively saying that
he would take it, then it was no longer necessary for Jade to make any commend since his
offer had been fully accepted and the deal was made.
Saying that he would take it, shows that Moose had the capacity of making a contract
and that he had intentions of creating a legal relationship (Means & Yockey, 2018). If by any
chance, he fails to fulfill the promise, then he would be liable for the breach of the contract
and may attract legal penalties depending on the magnitude of the breach and the
considerations of the court. On the other hand, if Jade sells the stone to another buyer, he will
be liable to the breach of contract and may also attract a legal penalty which includes paying
an equivalent amount to Moose.
The third scenario; Willow vs Jade
According to commercial agreements procedure, withdrawal of the contract before
acceptance is legally putative (Fried, 2015). In the case of Willow and Jade, willow makes
the right and legally accepted procedure of writing to Jade about the withdrawal of the
contract and thus, will not be liable to the breach of the contract. Even though Jade does not
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see the email and ends up replying that ‘it is a deal’, in case of a court determines if there was
a breach of contract, the court may not be convinced since there would be a piece of evidence
that Jade did accept to the Willow’s withdrawal and he did reply. If there must be a
withdrawal, then the withdrawal must be brought to notice by offeror or offeree, which
Willows did. Therefore, in this scenario, there is no enforceable contract made. It will be
assumed that Jade did receive the Willow’s text of the withdrawal and replied to it indicating
that he had accepted the withdrawal and thus, was entitled to settle for another buyer. This
may also be termed as the rejection of the offer which is recognized under contract law but
must be done before the time elapses. Willows may, therefore, be said that he rejected the
contract and Jade accepted the rejection by replying to his text.
The fourth scenario; Scarlett vs Jade
What is essential in the contract agreement is the consensus that the involved parties
reach after consideration of the conditions offered (Adriaanse, 2016). The conditions are clear
as provided in the advert which includes the price of the stone and the date of removal. The
other information on whether the seller must be there in person or not is not within the
provisions of those conditions. The fact that Scarlett makes a call is a clear indication that he
has accepted the offer and that he would go as the provided conditions in the offer. She leaves
a message to Jade that he was willing to pay $850 for the stone and proceeds to remove it. In
this scenario, therefore, the contract is made. If Jade, by any chance, terminates the contract,
then he will be liable for the breach of the contract. According to the agreement’s procedures,
acceptance of the offer can be made through verbal or written sentiments, which, in this case,
Scarlett writes to Jade about his acceptance.
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