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Remedies of breach of contract
structure/design of organizations
Remedies of breach of contract
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The three main business organisation structures considered by Steve and Wonder are partnerships, trusts and companies. In order to understand the key differences between the three and to put forward a recommendation for the most apt structure, it is essential to grasp the basic definition of each . A partnership is an association of two or more people who typically know and trust each other and therefore come together to set up and carry on a business. The partners have an equal control over the company’s affairs and typically contribute an equal capital amount. Incomes and losses are also equally shared . A trust is an obligation given to an appointed person, the trustee, to hold the assets and property of the business on behalf of the others who are termed as beneficiaries. The trustee could be a company, sole trader, partnership of individual and has the discretion over running and managing the trust including matters such as investments, debt, and income generation. The beneficiaries are all those who receive the income or incur expenses. A limited liability company is a complex business structure whereby it is a separate legal identity, separate from the partners. The company is owned by the shareholders and managed by the directors. The recommendation for Steve and Wonder as the best-fit organizational plan for their business is to set up a limited liability company. The case for this recommendation is built through the factors discussed below. The first factor is that of risk. A company is a separate legal entity. This means that it has its own debts. In case of a membership, there is no limit to the liability of the partners and they may have to be personally responsible to pay off any outstanding debt towards the busines... ... middle of paper ... ...s committed by Wonder arises a conflict of interest and a breach of the contract made with the company. Wonder failed to meet the responsibilities when he did not inform Steve about his dealings. A director must not let his personal interests and company duties and responsibilities conflict. This is a fundamental rule of Equity (Phipps-V-Boardman (1967)2AC123). A director may not apply company property either for his personal interests or for the benefit of any other person without the authority of the company. As Wonder breached the contract and did not fulfil the duties and responsibilities as a Director of the company, Steve can succeed under the corporations Act 2001 (cth) and the case law in having the contract relating to the bank loan (mortgage) declared as invalid. Steve can take legal actions against Wonder as he was liable for the breach of conract.
Partnership – “A legal entity formed by two or more co-owners to operate a business for profit.” (Longenecker, Petty, Palich, Hoy, Pg. 202) In a partnership, the advantage for the owners is the capability to reduce the workload and the financial burden, especially if each partner has management skills that enhances the business. The disadvantages of a partnership such as personal conflicts and leadership expectations, therefore this organizational form should only be chosen once all other options have been considered.
Capital is a major factor for decision making. Since the business involves a group then the three forms of business exposes the group to a greater capital availability. The liability of members is also an important factor. The partnership offers unlimited liability to the members of the partnership while the corporation and Limited Liability Company allows the members limited liability and thus their personal assets cannot be interfered with in the event of a liability. The decision making process is for the business associations but the input of all members results to the making of good and informed decisions. Finally, the taxation practices for various forms of associations informs the decision. Corporations are often taxed twice whereas the LLC and partnership business is taxed
This paper will focus on the Limited Liability Company, commonly known as LLC. Limited Liability Companies are a comparatively new form of business structure. It came about in 1977 once Wyoming was the first state to consent to such an organization, which merged the tax advantages of a partnership with the limited liability benefits that come with corporations. It took more than ten years following that decision for the Internal Revenue Service, or IRS, to declare that an LLC would be considered a partnership when pertaining to federal taxes. During this time, none other than the state of Florida had introduced any LLC laws. This was due to the uncertainties surrounding LLCs when it concerned the tax outcomes of the entity. (Cartano, 2008)
A General Partnership is composed of two or more persons (usually not a married couple) who agree to contribute money, labor, and/or skill to a business. Each partner shares the profits, losses and management of the business and each partner is personally and equally liable for debts of the partnership. In terms of asset protection, general partnerships can be even worse than sole proprietorships.
Ans. 6 The Court can overrule the decision for terminating Paul as he was not involved in the scheme. Due to his honesty he even admitted to be aware of the scheme. Moreover, no fraud was found in his facility and he should be held responsible for the warehouse for which he is in charge. Furthermore, higher management should be held responsible for not keeping an eye on the activities of supervisors at different locations.
Currently, directors have no prima facie entitlement to be remunerated for their work (Hutton v West Cork Railway Co 1883), but Article 23 of the Companies (Model Articles) Regulations 2008 establishes that it is for directors to decide the lev...
The members have been generating client bases in their own related businesses since 1999, previously, the members enjoyed mild success in their own businesses, and have been limited only by capital and available time.
Salomon v Salomon & Co Ltd is a case focusing on a person called Salomon, who changed his business to a limited company. In order to meet the minimum requirements for a limited company, Salomon named his wife and five children as members. The company gave Salomon£10,000 in debentures, £20,000 in shares and £9,000 cash to purchase his business. However, the company declared bankruptcy within the year of formation. The debentures held solely by Salomon could not be discharged because the company 's assets were insufficient to meet the outstanding amount. Thus, the unsecured creditors received nothing from the company. The aim of part (a) is to critique the decision made by the House of Lords in this case and to examine the reasons
A partnership is a kind of unincorporated business association in which several individuals, termed as general partners, they control the company and are equally responsible for debts incurred; we also have other persons termed as limited partners, these kind of partners may invest but are not directly concerned in administration and are only accountable to the degree of the money investments in the company. Unlike in a Limited Liability business or a company, in partnership all partners allocate equal liability for the company's, debts and liabilities and its proceeds and losses. The partnership on its own does not forfeit income duty; however, each associate has to give a report on their share of business dealings on each person tax return. Approximated tax expenses are also essential for all of the associates for the year as the business continues. There two vital types of partnerships are : limited partnerships and general partnerships In this instance , we are uncertain of the type of partnership. Though, by supposition, we should take it at as a general partnership. In looking at the information given in this situation it is obvious that the matter lies on the partnership associations to a third party in carrying out its business.
General partnership. A general partnership is utilized when two or more people want to start a business. In most respects, the business is divided equally between the owners which includes, profits, debts and management of the business and any losses to the business are to be deducted from personal taxes. Mann & Roberts (1979) comments although not required, development of written agreements concerning the division of the business and how it will be managed removes doubt and ensures everyone is traveling in the same direction (p. 47). The disadvantage of this form is everyone is unlimited in the liability of the business. It does not matter if the others disagree with an issue and one party enters into an agreement of debt, all are now
According to s.1 Partnership Act 1890, a partnership is "the relation which subsists between partners carrying on a business in common with a view to profit". The creation of a Partnership can be done verbally. In most partnerships, however, partners prepare a written agreement referred to as Articles of Partnership, Partnership Deed or Partnership Agreement. The agreement concluded between partners determines the rights and obligations of each associate as well as how the partnership is going to work. In addition, the agreement can be altered through a mutual understanding of all partners at any time. Also in case of partnership there is no separate legal existence and partners are equally liable for any debts. It is, however, important to indicate that Partnerships in Scotland differ from the rest of UK and are legal entities so partners can sue and be sued in the firm’s name (HMRC, 2014). There are three types of Partnership: ‘Ordinary’ Business Partnership, Limited Partnership and Limited Liability Partnership. In the Limited Liability Partnership (LLP) the associates are not personally liable for debts of the firm whereas in the Limited Partnership the liability is unequally divided by its partners who only pay up to the amount they initially invested in the partnership (GOV.UK, 2014).
An important element of the special equity established in Yerkey v Jones is that there is no physical benefit to the wife from the transaction. In Garcia v National Australia Bank Ltd in applying the equitable principle, the trial judge found Mrs Garcia as a volunteer who, despite being the director and shareholder of her husbands company, had nothing to gain directly or even indirectly from the transaction she guaranteed. In application of the special equity Mrs Garcia gained no real financial benefit from entering into the transaction and that any benefit for Mrs Garcia to gain as a guarantor would depend on remaining on good relations...
A partnership is a for-profit legal entity created by two or more co-owners. It is similar to a sole proprietorship in that co-owners share unlimited liability. You don 't have to contribute capital to become a partner. In this case you would not be entitled to a distribution of assets upon sale of the partnership, but only receive your share of the profits. Personal compatibility with fellow partners is critical to the success of a partnership.
Partnership is the relationship that exists between persons carrying on a business in common with a view to profit. It involves an agreement between two or more parties to enter into legally binding relationship
Most organizations fall under one of three organizational designs: simple structure, bureaucracy and matrix structure. The organizational design of a company suggests who makes executive decisions and how they are enforced. The organizational design is typically decided based on the size of the company and market place.