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Law of Business Association

Question 1

Gregg was a partner until when he retired from the firm. According to the Partnership Act 1958, Section 21 subsection 3, it states that a partner can be discharged through an agreement among or between the members of the firm1. The agreement can be either inferred or express meaning that any presentation or communication can suffice. Section 41, states that notification, through the Government Gazette or a newspaper, is important so that creditors and other stakeholders are aware of the change in partnership. The retirement of an individual from a partnership means that any obligation or contract entered does not affect the partner who had retired. Gregg had ensured that his name was removed from the firm’s letterhead. However, Gregg or any partner did not inform the public through the available channels. From the perspective of the law, Gregg is not personally liable for Gretton & Co’s debt owed to David. The letterhead that is usually used to create contracts did not have Gregg name and also Gregg was not presented throughout the engagement.

According to Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd court case, the judges concluded that there was a partnership because the entities owned joined assets, shared costs, shared profits and also made decisions together2. Section 13 of the Partnership Act 1958 states that every individual is liable to a partnership for all obligations and debts incurred during the presence of the individual in the partnership. Based on these two scenarios, it is evident that Gregg did not participate in partnership function, and decisions made after his retirement does not make Gregg liable. If Gregg had made a decision that may include his name appearing on the letterhead of the partnership, Gregg should be liable for any action or obligation of the partnership.

In conclusion, Gregg was not a partner during incurring of the debt and David has no right to attach the personal assets of Gregg. The contract and agreements were made after Gregg had retired and directly communicated with the partners meaning that David has to seek out with the current partners. However, if Gregg was still a member, Gregg is supposed to pay the creditor. David has a right to attach Gregg personal assets to recover the amounts. The problem that can be debated is the requirement of posting the information on the Government Gazette and also placing the information on a newspaper that targets the location of the existence of the partnership.

Question 2

Corporation is non-human, but the law gives it a legal mandate to operate like humans/creatures. The corporate then allows people to operate through guiding the corporation to achieve its mission and vision requirements. It requires human resource and in most instances, directors and top management are allowed to authorize activities and determine the effectiveness of these activities. Lawrence was authorized to develop the program and sell to the customers. Lawrence or the management of the corporation did not know that an error existed in the program, which resulted in the death. In such circumstances, imposing criminal responsibility on Lawrence is not appropriate, but the responsibility should be on the corporation. Lawrence can be disciplined internally because of omission, but the death of one of the employees should not be pointed to Lawrence. The entire directors of the corporation played an important role in developing and marketing the program. Hence, the entire corporation should be liable.

In imposing corporate criminal liability, the chain of reactions or actions should be viewed. For example, Lawrence had the right to develop and market the program because he was authorized. However, some people may develop the program or represent the corporation in an inappropriate manner. United States v. Hilton Hotels Corp is an example in which an agent associated with Hilton acted on his own and caused harm to the company3. Therefore, it is inappropriate to impose criminal liability upon Hilton, but the human agent should face the liability. The role and responsibility and authorization chain play an important role in determining whether a corporation is liable or not liable. Lack of direct or implied authorisation means that the personal liability is more appropriate than a corporate criminal liability.

However, personal liability can be based on the secondary principle of legal participation whereby the individual or corporation can accommodate the imposition of criminal liability4. The effective of secondary principle is through the derivative criminal liability perspective. The basic component of criminal liability such as the death of the employee may be associated with the omission or ignorance of Lawrence. It raises the component of derivative criminal responsibility because the problem or criminal activity can be traced. In such circumstances, Lawrence can be sued as an individual or the corporation can be sued, and Lawrence incorporated to the problem.

Another technique is the development of the program and the intended use of the program. In developing the program, the programmers should have incorporated and analyzed whether technical complications may arise. LLB Book-keeping Pty Ltd should have alerted the users of the program within the limits of the program. For example, LLB Book-keeping Pty Ltd should have stated that the program does not operate on older machines. Since, LLB Book-keeping Pty Ltd did not provide such guidelines, the corporation is criminally liable. Moreover, the programs usually have warranties and advice of the use of the program, if the corporation accepts that it is within its warranty, and then the corporation is directly criminally liable for the death. Therefore, LLB Book-Keeping Pty Ltd is imposed with the crime of criminally negligent killing of the account and other associated costs.


Duncan WB, Joint Ventures Law in Australia (3rd Ed, Federation Press, 2002)

Frank Pearce, Laureen Snider, Corporate Crime: Contemporary Debates (University of Toronto Press, 1995)

Gabriel Hallevy, The Matrix of Derivative Criminal Liability (Springer Science & Business Media, 2012)

Partnership Act 1958

1Partnership Act 1958

2Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd discussed in Duncan WB, Joint Ventures Law in Australia (3rd Ed, Federation Press, 2002) p. 163

3United States v. Hilton Hotels Corp discussed in Frank Pearce, Laureen Snider, Corporate Crime: Contemporary Debates (University of Toronto Press, 1995) p. 73

4 Gabriel Hallevy, The Matrix of Derivative Criminal Liability (Springer Science & Business Media, 2012) p. 22