Business and Commercial Law (Contracts, Partnerships, LLP)
What is tested
Business and commercial law tests contract formation and remedies, partnership liability, and the limited liability partnership. The Contracts Act 1950, Partnership Act 1961 and Limited Liability Partnerships Act 2012 are the key statutes.
Core rules
- A contract needs offer, acceptance, consideration, intention to create legal relations, capacity, free consent and lawful object. Consideration may be past, present or future but must move from the promisee.
- Remedies include damages (remoteness follows the Hadley v Baxendale tests), specific performance, injunction and rescission. Exclusion clauses are construed strictly.
- A partnership is not a separate legal entity; partners are jointly and severally liable for firm debts and owe fiduciary duties. Registration is under the Registration of Businesses Act 1956.
- An LLP is a separate legal entity with limited liability, at least two partners and a compliance officer. Its name ends with 'PLT'. It must lodge an annual declaration within 90 days of its financial year end.
Worked example
A partner signs a contract for office renovation without consulting the others. The firm is bound if the contract is in the ordinary course of its business; the partner and firm may be liable. If the business were an LLP, the LLP would be bound and the partner's personal assets would generally be protected, except for the partner's own wrongful acts.
Traps
Assuming a partnership is a separate entity; forgetting LLP annual declarations; confusing an LLP with a private company (no share capital); ignoring the requirement of consideration; and treating an exclusion clause as automatically effective.