AYN456 -PROBLEM SOLVING

1 Found helpful • 4 Pages • Essays / Projects • Year: Pre-2021

The purpose of this assessment item is to enable you to demonstrate your understanding of partnerships and the law of agency. To achieve this purpose, the assignment comprises two compulsory parts – Part A and Part B. Part A (approx 300- 400 words) 10 marks (including legal referencing) Consider the following statement. Scholars assert that ‘agency is an extremely common and vital commercial relationship’. In particular the law of agency often arises in partnership relationships. Task: Define and explain the relationship between the law of agency and its relationship to partnerships. Your discussion should be framed around the following three (3) questions. In your answer you should refer to any relevant case law and legislation that supports your analysis. 1. Define and explain the legal concept of agency; 2. How does agency law arise in partnerships? Provide at least two (2) examples and refer to any case law to support these examples. 3. What are the advantages and disadvantages of an agency relationship in respect to a partnership? Provide two practical examples and refer to any case law that supports these examples. Use the above points to structure your answer. Part B (approx 500-600 words) 10 Marks Consider the following scenario: Andy and Emily have owned and operated a profitable coffee shop and bookstore for a number of years. Emily has always been responsible for ordering all of the perishable items needed for the day to day operation of the coffee part of the business. Andy has always been responsible for managing the financial operations of the business. He usually takes care of most of the purchases with discretion to purchase up to $30,000 of stock per month. For any purchases that exceed that amount, Andy must obtain Emily’s consent. In April this year the bookstore’s usual supplier had a special discount for any large orders placed. It was such a good deal that Andy placed an order of $60,000 worth of books, which is outside the normal orders placed. The invoice arrived at the bookstore and Emily furious with Andy refused to pay the supplier. Recently Andy has noticed that the coffee shop part of the business has not been performing very well financially. Andy has some new and innovative ideas for improving that part of the business but he does not want to bother Emily with all of the details. Without telling Emily, Andy begins to order large amounts of exotic raw ingredients for the coffee shop, as he hopes to significantly change the menu. Some of the items he takes home to sample, but the others he leaves in the kitchen of the business. Andy develops a brand new menu and wants to start offering it to customers from next week. Emily says that she is very upset and disappointed by the behaviour of Andy, particularly because she says that he has been doing this in secret. Emily says that she will not pay for any of the exotic raw ingredients purchased by Andy and that she will also not be responsible for any losses that the business suffers as a result of ‘experimenting’ with Andy’s new menu. TASK Advise Andy and Emily of any rights or responsibilities they may have under the law of partnerships and agency. With respect to the purchase of the books, who is liable for the $60,000 invoice? Use the ILAC method to structure your answer:

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