Problem Questions Analysis: Contract Law

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Question :


Simon, George, Sara and Mary were all employed by different IT companies. However, they felt that they could do better if they went into business themselves. They pooled their available cash and drew up a partnership agreement, which stated that each partner had authority to enter into transactions on behalf of their IT firm, which they called Computer Solutions. The firm operates in Sydney and provides a service of storing data for customers. The agreement states that partners have authority to enter into contracts of up to $ 10 000, but that any contract for more than that must be approved unanimously by all partners.

George, Sara and Mary approach you for legal advice in relation to two transactions entered into by Simon, who had acted without referring back to the partners. On was for a 500TB storage drive, bought by Simon on behalf of Computer Solutions, from Sunstar Computer Hardware Ltd, costing $ 12 000.

The other was for a second-hand ute, costing $ 9 000, which Simon ordered for the firm from You Beaut Ute Ltd, on the basis that the partnership should branch into the freight business.

George, Sara and Mary have refused to accept delivery of both the storage drive and the ute and the partnership has been sued by both Sunstar Computer Hardware Ltd and You Beaut Ute Ltd. Give George, Sara and Mary legal advice, referring to relevant statutory and case law authority.

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Answer :



Simon among the four partners George, Sara, and Mary have purchased two things, one is the 500TB storage drive on behalf of Computer Solutions from Sunstar Computer Hardware Ltd that costs around $ 12000. The other thing that was purchased was second-hand ute that costs $ 9 000, ordered for the firm from You Beaut Ute Ltd. However, George, Mary and Sara disagreed as Simon did not consult and have refused to accept delivery of both the storage drive and the ute and the partnership has been sued by both Sunstar Computer Hardware Ltd and You Beaut Ute Ltd. Therefore, in relation to the disagreement occurred amongst the four partners need legal advice under relevant statutory law authority. The three partners need legal advice in resolving the dispute and manage the partnership under the targeted business set up. 


Statutory law or statute law refers to the written law that are formulated by a group of members or organizations or by the legislature or by a singular legislator with the certainty of absolute monarchy. There statutory law has been opposed to oral or customary law or regulatory law that is propounded by the executive or common law of the judiciary. Case law refers to the existing rulings and regulation that help in interpreting and understanding of law and can be cited as precedents (Skaik, Coggins & Mills, 2016). In some countries like Australia and United States, Case Law is implemented on the judicial decisions of selected individuals of courts and other bodies who have been discharging judicial operations and functions. However, the interpretations of law differ from statutory law that determines statutes and codes governed and authorized by legislative bodies (Yip & Goh, 2017)

With the help of case law, statutory law and the partnership act the partners under the business entity will be help in gaining possible outcomes and solutions. Besides it is important for the individuals to know and understand the law of agency that states commercial law dealing within the set of contractual, quasi-contractual and non-contractual bond created by an individual or a group of induvial authorized to act on behalf of another resulting in the emergence of legal relations with a third party (Strine, 2016). Under the law of agency every individual need to share equal relationship between a principal and an agent. In such case, the principal or the individual need to authorize the agent to work under his or her control. Therefore, it is important in the part of the agent to negotiate on behalf of the principal. But when under such law mutual consent is important in carrying on the contract. And in order to foster and enhance the contract that is agreed under the rules and regulations of business, all the four partners need to have clear idea about the law of contract where the four partners Simon, Mary, George and Sara undergo voluntary arrangement that is under the governance of law binding legal agreement and governs and concerns the rights and duties that arise from agreements. 


The law of contract need to first govern the set of right and responsibilities that have been formulated by the individuals within the agreement. On the other hand, Statutory law enable the decision and authority of every individual within the group of individuals that are set according to the agreement and guidelines of every individual. Statutes usually operate within national, state legislatures or local municipalities and individuals. Under the statutory law there is a codified agreement or law stated as "private law" that generally affects only one person or a small group of individuals tied within an agreement that has been formulated and organized by them (Skaik, Coggins & Mills, 2016). This codified private law under the statutory law justifies the scenario of the George, Sara, Mary and Simon.  The law determines the private bills that are used by Simon in creating corporations and grant monopolies that will provide the individuals the power in creating a business of their own however need to be considered by the parliament and legal system. 

There has been the partnership dispute among the four members of the causing a breach in their contract and shared agreement. Within the partnership agreement the individuals need to specify and formulate their rights and responsibilities of business partners and are given the power of the force of law. If your business partner breaches your partnership agreement like Simon did by buying the two things worth $12000, and $ 9000 without mutual consent has caused virtual disagreement forcing Mary Sara and George in taking legal step as it was stated under the rules of agreement that the individuals hold authority to move into contracts of up to $ 10 000 but if any contract has deal of above $10000 needs mutual consent of all the partners involved under the agreement. Therefore, it is important for the other three individuals to find the source of information regarding the contract established and probe into provisions for remedying the breach. 

Under the Partnership Act that was undertaken by the government in the year 1969 adheres to the governance of the formal rights, responsibilities and duties of people or any corporate entities who attempts to set up business in partnership similar. The three partners involved in the partnership agreement need to comply with the partnership Act that will help them in giving accurate information regarding their role and responsivities (Legg, Day & Emmerig, 2017). Besides determining the Statutory Law, it is important for the partners to understand the case law and its authority. Under the case law the court will be rendering the decisions made by the partners and examine the different roles in civil and common law traditions that has given way to differences and disagreement. The application of statutory law and case law will explain in detail the legal rationale behind the decisions made and the acts of disagreement and interpretations of the breach of contract studied under wider legal principles.


With the help of appropriate legal advice and application of the statutory law and law of contract will help in determining the arguments and cater to resolve the issue under the jurisdiction and interpretation of partnership agreement and case law. This will help in extensive negotiation between the individuals involved within the private business through written communication and reporting of formal documents. Furthermore, it is important to determine and examine the classical statements, terms of partnership and contract during the negotiation and on what terms Simon has violated the terms and conditions and provide legal remedies depending on the representation of the contract.