Question 3: Mark and John Case Study
To begin with, an advice to John should be based on whether there is partnership existing and whether there was an exercise of implied authority. Mark and John have performed together for several years. Secondly, they have a mutually binding agreement to share the proceeds from their performances and keep some for repairs on their instruments. Within the confines of section 1 of the Partnership Act, Mark and John are bound together by a contract to perform either during a limited time or during pleasure, and essentially made of two people originally going into this contract with each other. This definition is supported by Otevrel (2016) taking different case studies1 to indicate that partnership exist when there two or more people entering into a legally binding relationship which is contractual in nature.
As a result of the existence of such partnership, Otevrel (2016) noted that partners, in this case John and Mark, each is regarded as a general agent of each other (John is and agent of mark and vice versa) when it comes to matters pertaining to partnership. Secondly, the partnership between John and Mark is bound by John as one of the member in the course of their business operations. Therefore the decision to get new clothes and the ordering of a special and very expensive custom made suit John and Mark as an act of agency where John acted as agent.2 As the agent, John has acted within the confines of his apparent or actual authority and cannot be liable to the expenses incurred to the third party (Carter 2011).
This is further a case of implied authority as enjoyed by John. It can be implied that John has the authority to undertake all the decisions that would have otherwise been done by Mark or one which is for mutual benefit and without the consent of Mark. However, as it was the case with Armagas Ltd v Mundogas SA3 the extent of John’s authority may be based upon the specific concept of settled or well understood trade. John is therefore having an implied authority that should include but not limited to selling and buying different items including the suit, purchasing materials and item that the firm may deem fit and as far as ‘implied authority’ is concerned, John did not have to seek clarification or consent from Mark before ordering “a special, and very expensive custom made suit for each of them.”4
In summary, John should be advised that the contract between them exhibits all the indicia of what it takes to have a partnership except that the band did not describe Mark and John as partners and did not provide expressly for the sharing of damages resulting in the purchase of suit. However, it is possible to venture to think that John has implied authority and as such Mark is obligated to pay his share of the pooled funds.
Carter, J. W. (2011). Carter’s breach of contract. Chatswood, N.S.W: LexisNexis Butterworths.
Otevrel, A. (2016). Introduction to Business Law in Australia. Canberra, Australia: Lawbook.
1 See case of Tindal CJ in Green v Beesley (1835) 2 Bing N C 108 at 112
Royal Globe Life Assurance Co Ltd v Kovacevic In Royal Globe Life
Armagas Ltd v Mundogas SA  1 AC 717
4 Tooth & co v law (1988) 9RL (NSW)154