BBA 103 SEPT/0CT 2016

CORPORATE LAW
EXERCISE 1 (GROUP EXERCISE)

TITLE: EXERCISE 1

Lecturer Name : Raja Nur Alaini Raja Omar

Group Member : Leong Hoi Lam (151014200)

Hui Mei San (162017187)
Boey Siew Min (152014965)
Chop Pui Li (152015034)

Submission Date : 6.12.2016

a) Advise Bakar as to his liability for the transaction if he know nothing about the use of
the said letterhead.
 Issue: In this case is whether Bakar has responsibility on the liability for the transaction
which carried on under the name of AB Nice by Ahmad in 2016.

Under section 3(1) of Partnership Act 1961 has defined that partnership is the relation
which subsists between persons carrying on business in common with the view of profit.
Section 7 stated that every partner is an agent of the partnership firm, any act or omission
committed by one partner binds the rest of the partners if it is carried out with the
ordinary scope of the firms business, unless the partner has in fact no authority to act for
the firm or third party who deal with the firm knows he has no authority or does not
believe him as a partner.

Therefore the Ordinary Torts under Section 12 of the Partnership Act 1961: Liability of
firm for wrongs. Where by any wrongful act or omission of any partner acting in the ordinary
course of business of the firm or with authority of his co-partners, loss or injury is caused to
any person not being a partner in the firm, or any penalty is incurred ,the firm is liable
therefore, to the same extent as the partner so acting or omitting to act. However, Bakar does
not carried on the business with an intention to earn a profit together with Ahmad. Hence,
there is no partnership exist.

This is also can support by Partnership Acts section 4(a) which stated that Joint tenancy and
tenancy in common refer to ownership of the property by two or more persons; common or
joint ownership does not imply the existence of a partnership unless there are other
circumstances which exist which are evidence of a partnership; and section 4(c) which stated
that the general rule is that if a person receives a share of the profit, he is prima facie deemed
to be a partner of the firm. This is because Bakar did not put in any capital and run the
business with a view of profit, and did not received any share of profit from that transaction
even his name is stated in the letterhead without his acknowledgement. Furthermore, a
partnership is deemed to be died when it is dissolved under any one of the section 34 to 37
of Partnership Act. This can be a support on there is no partnership exist in the case.

(b) Explain if your answer would be different if Bakar has knowledge on the use of that
letterhead.

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Issue:

Whether Bakar is liable to the transaction with Tall Cabinet Co. if he knows about the use of
the letterhead.

Law and application:

The issue reflects Section 12 of the Partnership Act 1961, which is the liability of firm for
wrongs. It shows that the firm is liable if the wrongful act of a partner has caused loss or
injury to any person who is not being a partner in the firm.

From the case of RATNA AMMAL & ANOR V TAN CHOW SOO, the contract was made
between the parties for the purpose of selling milk. The respondent had obtained the
registration of trademark in respect of the milk and other dairy product. Now, the issue is
whether the trademark obtain by the respondent will be vested in into the partnership. The
court held that partnership exist between them but from the agreement, the trademark will
remain with the respondent. It goes to the same situation between Ahmad and Bakar. The
partnership of Abu and Bakar is already dissolved, but Ahmad remain the business under the
name of company AB Nice and Bakar has knowledge that his name is on the letterhead
although he has quit the company. So, we can know that the authority of running the business
is Ahmad but Bakar is still liable to the company since the partnership exists.

Besides, the case of SOUTHERN EMPIRE DEVELOPMENT SDN BHD V TETUAN

SHAHINUDDIN & RANJIT & ORS shows that the plaintiff purchased property of
RM680,000 for the Sales and Purchase Agreement but the defendants failed to provide the
agreement. The plaintiff is seeking demand of deposited money from the firm. Liability of the
firm is not affected by partner ceasing the firm. The court held that although partner has left
the partnership, liability of firm is still continuing as the ex-partner made the wrongdoings
before he quits. Same goes to Ahmad and Bakar, Bakar knows that his name is on the
letterhead, but he never make correction before he quits AB Nice. It is a wrongdoing act of
Bakar. Therefore, he should take the responsibility to be liable to the firm.

Nevertheless, in the case of RADEN CORPORATION SDN BHD v RAVI BELTRAN &
CO., the plaintiffs claim is for the sum of RM 545,000.00 being proceeds for the sale of
machineries belonging to the plaintiff but the firm (RAVI BELTRAN & CO.) is no longer
exist. So, the plaintiff claims on the defendant who is the partner of the firm. The defendant
argued that she is not a partner, but just an employee under the firm. However, the plaintiff

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has shown evidence that the fact of the defendant has a partnership with the firm. Therefore,
the court held that the defendant is liable to the transaction as there is an evidence that proved
her as a partner in the firm. For Ahmad and Bakar, although Bakar said that he is no longer a
partner of AB Nice, yet his name still appear on the letterhead. The letterhead is an evidence
of the written document is come from the company only. Anything written on it will reflect
the involvement of the company and the people who works there. So, he has no excuse of
saying that he has no relationship with the firm, so he should take the liability of it.

Conclusion:

In conclusion, Bakar is liable to the transaction as his name is on the letterhead. It means that
he is one of the partner of the firm. He should pay for the furniture supply to Tall Cabinet Co.

CASE 1 : GULAZAM v NOORZAMAN AND SOBATH [1957] 23 MLJ 45

Issue:

Whether the partnership do exist between the plaintiff and defendants.

Fact:

Partnership Act 1961 define Section 3(1) Partnership Act 1961 as partnership is the relation
which subsist between persons carrying on business in common with a view of profit.
Partnership must be registered under the Registration Business Act 1956. However, Failure to
register does not mean the partners cannot enforce their rights for each other.

The plaintiff, who was an ex-police constable and a watchman on a rubber estate, claimed
that both defendants who were cattle dealers met him and made arrangements to form a
partnership among the three of them to purchase, keep and sell cattle. The conditions were
that the plaintiff was to provide RM 200 as capital to purchase, and defendants to look after it
and sell it and the profits to be divided among them in equal shares. The plaintiff provided the
capital. He received some shares of the profit. There was no account rendered. The plaintiff
brought the action for an account to be taken and payment of any sum of money due on him.
The defense of both defendants was a denial of the existence of partnership.

Final Judgment:

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The Court held there was a Partnership. The plaintiff could claim because the relationship
between the individuals had the business character of a partnership within the scope.

CASE 2 : HAMLYN V JOHN HOUSTON [1903]1 KB 81

Issue:

Whether the firm is liable or not even though the act was done by 1 of the partner because it
was made for the purpose of the business

Fact:

One aspect of the business of the defendant firm of grain merchants was to obtain, by lawful
means, information about its competitors' activities. Houston, a partner in the firm, obtained
confidential information on the plaintiff Hamlyn's business by bribing one of Hamlyn's
employees. The Court of Appeal held the firm was liable for the loss suffered by Hamlyn.
Collins MR said that if it was within the scope of Houston's authority to obtain the
information by legitimate means, then for the purpose of vicarious liability it was within the
scope of his authority to obtain it by illegitimate means and the firm was liable accordingly.
Collins MR rested his decision on the broad 'risk' principle: the principal having selected the
agent, and being the person who will have the benefit of his efforts if successful, it is not
unjust he should bear the risk of the agent 'exceeding his authority in matters incidental to the
doing of the acts the performance of which has been delegated to him'.

Final Judgment:

Obtaining of such information was a legitimate activity, in the ordinary course of the
defendants business, so that the firm must be liable for the partners action in obtaining such
information in a wrongful manner. Even where an authorized transaction is not, in itself,
wrongful, the partners will be liable if it is carried out in an unlawful or tortious manner.

CASE 3 :Tower Cabinet Co Ltd v Ingram

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ISSUE:

Whether Ingram can be made liable to pay the debts made by Christmas.

FACT:

There is a partnership of 2 person. Christmas and Ingram and the name of the partnership is
Merry's. The partnership was dissolve in April 1947, but Christmas still carried on the
business under the same name. In 1948, the plaintiff (P) had supplied the partnership with
furniture but there was no payment made by Christmas. Before the supplier sent the goods to
the partnership, they relied on the old headed note paper bearing the partnership's name. The
order was made without any authority from Ingram. Ingram, on the other hand did not
destroyed all of the paper containing the letterhead of the firms.

HELD:

The court held that Ingram was not liable because he had not knowingly suffered himself to
be represented as a partner because he did not know that the old partner still carrying the
business under the same partnership's name.