Business Law:
Steve and Garry carry on business as motor mechanics in partnership. Steve, without Garry’s knowledge and contrary to the terms of their written partnership agreement, entered into the following transactions on behalf of the partnership:
(i) Steve contracted to purchase from Charles 100,000 shares in Thereisnomoneyinthis, a speculative mining exploration company.
(ii) Steve engaged Dave to repair the firm’s car hoist.
(iii) Steve purchased various very expensive car accessories from Eddy.
(iv) Steve entered into a 20 year lease agreement with Fred for garage premises for the partnership’s mechanical business in a neighbouring industrial estate. The annual rent payable pursuant to the Lease Agreement was twice as much as the market rental for that area.
(iv) Steve borrowed $10,000 from Bill for the purpose of going on a business trip for the firm, but Steve spent the money on personal luxury items.
(v) Discuss the rights of the third parties to enforce these agreements against the firm. What difference would it make to your answer if the third parties had known that Steve was acting contrary to the terms of the written partnership agreement? Use case authority and sections from the Partnership Act where relevant.
Partnership law (overlaps with Agency Law).