QUESTION 1

ISSUES
Li-You, Lawrence and Benedict want to start book-keeping services to
accounting firms.
They want to start small and hope to grow in the future to provide contract
book-keeping services to both large and small accounting firms.
Li-You parents are prepared to invest most of money.
Lawrence has developed a book-keeping computer software program.
Benedict was discovered in the previous business that he had borrowed some
of a clients money to buy himself a car.
Li-You, Lawrence and Benedict are needed to be advised with the appropriate
business structure for their start-up business: sole trader, partnership or registered
company.
RULES
In this case, they can form their business in the structure of partnership according to
Victoria Partnership Act 1958. These factors below must be considered:
Nature of Partnership
Partnership Act 1958 Sec. 5 defined the partnership as: Partnership is the relation
which subsists between persons:
carrying on a business. Smith v Anderson (1880)
in common: in order to constitute a partnership, the business must be carried by,
or on behalf of all the partners. Re Ruddock (1879).
with a view of profit. Wise v Perpetual Trustee Co Ltd (1903).
Governing Law
Partnership is governed in Victoria by Partnership Act 1958 and in similar acts in
the rest of Australia.

Establishment
A partnership is a type of contract which does not have to be in written form: it can
be oral or even implied through conduct.
Continuity of existence
The partnership firm can be operated until the partners want to terminate or there
is courts order.
Limitation of liability
According to Sec 16 (Victoria, 1999), every partner is liable jointly with his co-
partners and also severally for everything for which the firm while he is a partner.
Control
All the partners have the right to join in the management of the firm (sec 28 (5)) and
all the partners may have access to and inspect and copy any of partnership books (sec 28
(9)) (Victoria, 1999).
Raising Capital
It is easy to raise the capital because Li-Yous parents are prepared to invest most of
the money.
APPLICATIONS
Forming the partnership structure is a type of contract; hence, it is easy for them to
fit and develop the business: Li-You can contribute the necessary capital while Lawrence
can supply the book-keeping software and Benedict has the experience and network from
his previous business.
It is also easy for them to manage the partnership business structure since they can
be co-ownership of the business and share the profit and loss (sec 6(3) in Partnership Act
1958). It would be less expensive than company because they do not have to pay dividend
tax for shareholders (Adams, 2008).


However, according to sec 16 in Partnership Act 1958, when going for partnership
structure, they must be liable for the other partners tort as well. Since Benedict had the
history for wrong usage of finance, Li-You and Lawrence must be careful when going for
partnership agreement.
CONCLUSION
Despite the fact that Benedict had the financial tort in the past, partnership is still a
reasonably suitable business structure for the three new graduates. Since all the partners
have the right to inspect and copy any of partnership books (sec 28 (9)), it would be
possible for them to continuously investigate and audit the books to find for any potential
torts.
QUESTION 2
ISSUES
Li-You, Lawrence and Benedict established the company LLB Book-keeping Pty
Ltd. They are appointed as directors.
Lawrences error in software design heats the older client computers and bursts
the flame that kills an accountant who had been working late and fell asleep.
An assumption is that the crime of criminally negligent killing could be made, the
question raises whether the company could be made criminally responsible for loss of life.
RULES
According to Sec 124 Corporations Act 2001 (Australian Government, 2013), a
company has the legal capacity and powers of an individual both in and outside this
jurisdiction. A company also has all the powers of a body corporate, including the power
mentioned in the section. As a separate legal entity, the company is potentially legally liable
for wrong as a separate person to its directors or shareholders as well as to anyone else.
The company can be liable for criminal wrongs in two ways (Adams, 2008):
Primary liability: the company committed the wrong itself.
Vicarious liability: the torts or crime have been committed by a natural person
such as agent, or employee.
In order to identify whether the company can be liable with the primary liability, it
can be referred to Sec 769B Corporations Act: Subject to subsections (7) and (8), conduct
engaged in on behalf of a body corporate: (a) by a director, employee or agent of the body,
within the scope of the person's actual or apparent authority;
Additionally, it can be identified whether a directing mind and will commits the
act organic theory (Adams, 2008). According to Lord Haldane in the case Lennard's
Carrying Co Ltd v Asiatic Petroleum Co Ltd (1915), if somebody was the directing mind of
the company, then his action must, unless a corporation is not to be liable at all, have been
an action which was the action of the company itself
APPLICATION
In this case, an assumption was made that crime of criminally negligent killing could
be made, Lawrence was one of three directors who had established the business. According
to Sec 769B, Lawrences action had appropriate authority on behalf of a body coporate.
Moreover, the main business of the company is providing book-keeping services for the
clients; the book-keeping software, hence, was the mind of the company because the
company could only provide the service with the software. Lawrence developed the book-
keeping software. Consequently, Lawrence was the main factor for directing mind and
will fo the company according to organic theory (S & Y Investments (No 2) Pty Ltd v
Commercial Union Assurance Co of Australia Ltd (1986)) . Hence, the company would be
primarily liable for the crime of criminally negligent killing.
CONCLUSION
The company is liable with the crime of criminally negligent killing with Lawrence.
The company; hence, can be fined for the loss.
BIBLIOGRAPHY
1. Adams, A. (2008). Law for Business Students (5th ed.). Pearson.
2. Australian Government. (2013, June 26). Corporations Act 2001. Retrieved from
Australian Government ComLaw:
http://www.comlaw.gov.au/Details/C2013C00003
3. Victoria. (1999). Partnership Act 1958. Melbourne: Anstat.