Business Relationship Corporations Act 2001

Question: Describe about the Business Relationship for Corporations Act 2001. Answer: Issue The issue is to determine the type of business relationship that exists between Alfred, Beatrice and Coco. Rule The general rule is that a partnership is a relationship that exists between two or more parties who carry on a common business together with the aim of making profit.[1] The number of these partners should not exceed to more than 115. [2] The term carry on implies that there must be a series of events that amount to a business.[3] In partnership the parties must have the intention and goal of making profit out of the venture.[4] Registration of a business company will imply that the company will have a separate legal personality from the company which is capable of suing and being sued.[5] The liability of the company becomes limited to the value of the shares that have been contributed by each partner. Application Alfred, Beatrice and Coco are operating the business together and therefore they can be said to have satisfied the meaning of carrying on business together according to the Partnership Act 1958.A partnership must have an agreement whether oral or written and in this case there is an agreement between the parties that Coco will be consulted in all major decisions of the business. However their relationship defeats the essence of making profit from the business because Coco is repaid through the sales which may hinder the profit making ability of the business. When Cocos money is re-paid through the profit the relationship of the parties becomes that of a company because the liability of the business becomes limited to the extent of the contribution by each individual. This implies that the business is a separate legal personality and the liability will not extend to the personal property of the members. Conclusion It is plausible conclusion and recommendation to Alfred, Beatrice and Coco that they should incorporate their business venture as opposed to a partnership business where liability will extend to their personal property. The company will have a perpetual succession unlike the a partnership where the business will end if the parties cease operation. Reference Corporations Act 2001 Cribb v Korn - [1911] HCA 9 - 12 CLR 205 Partnership Act 1958 Salomon v Salomon Co Ltd [1897] Smith v Anderson (1880) 15 Ch D 247