Non Corporate Business Forms Principles In Australian Law: A Discussion

By Author: Premkumar Nadarajan.
Total Articles: 26
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A Sole Trader or Sole Proprietor is a one person business where the ownership of the business is lodged totally with one (natural) person. The business has no separate entity from the owner. A Sole Trader has Unlimited Liability and is personally responsible for the liabilities of the business. A sole trader has no separate entity from the business. A Sole Trader has very few business regulations to comply with except with for example Business Names Legislation, Occupational Health, Safety and Taxation. Business Names legislation requires registration of any business name which is not the same as its operators. A business is always sued in the name of the owner, not the business name, it has no entity of its own. An Association according to the common law is anybody of 2 or more persons who form an organization, club or society, whether for the purposes of profit or not. An Association which distributes profits as Dividends to its members is a partnership. An Association which is not incorporated is called an Unincorporated Association and is subject to very unclear State common law throughout Australia. An Unincorporated Association ...
... has no particular legal entity. Carlton Cricket and Football Social Club v Joseph. The Committee of an Unincorporated Association may be personally liable for any debts, torts or liabilities incurred on behalf of the association. Bradley Egg Farm v Clifford. Peckham v Moore. Members of an Association are only bound by an associations rules if they were aware of the rules, intended to be legally bound, so that they form a legal contract. Cameron v Hogan. Incorporated Associations are Associations which have incorporated under special legislation in their state. An Incorporated Association has a separate legal entity from its members and committee. An Incorporated Association can employ people, hold bank financial reports, hold property and sue and be sued. There are a number of legal requirements such as having meetings, a constitution and a list of officers. An Incorporated Association must register with 5 or more persons and can conduct business trading, but must not distribute the profits as dividends to its members or it will be a partnership. An Incorporated Association which has less than 5 members or trades while insolvent will make the members severally and jointly liable. Unless the rules of the association provide otherwise, the first committee is the committee that existed before the incorporation process The Committee must appoint a public officer, who may hold other offices, and may be removed for a number of reasons Special resolutions may be passed if three quarters of the members vote on a matter. A member of former member of the committee of an incorporated association must not knowingly or recklessly make improper use of information acquired by virtue of his position in the incorporation, or gain directly or indirectly for himself or herself or to cause detriment to the incorporated association.
A member of the committee must not knowingly or recklessly make improper use of his or her position in the incorporated association, so as to gain, directly or indirectly, any pecuniary benefit or material advantage, or cause detriment to the incorporated association. A member of the committee of an incorporated association who has any direct or indirect pecuniary interest in a contract, or proposed contract, with the incorporated association: Must as soon as he or she becomes aware – must disclose his or her interest to the committee, and Must disclose the nature and extent of his or her interest in the contract to the members at the next annual general meeting, unless the member is gaining because they are an employee. A member of the committee of an incorporated association who has any direct or indirect interest must not take part in any decision of the committee, unless he or she is a member of the committee by virtue of the fact that they belong to a class of persons for whose benefit the association was created. Agency is the relationship of 3 parties, the Principal, the Agent and a Third Party. An Agent is authorized to act on behalf of the Principal to create a legally binding relationship with the Third Party. An Agent is not normally a party to a contract between a Principal and Third Party. An Agent may have wide discretionary powers or have limited tasks. Agents may be appointed in writing, orally or impliedly. There are different types of Agents: Del Credere Agents, Special Agents, and General Agents. If a Principal ‘Holds Out’ a person as their Agent, they will be ‘Estopped’ from denying the Agency. The Principal must then take responsibility for the Agent and the Agent must take responsibility also for their actions. An Agent has a Fiduciary relationship to the Principal, this is a duty of good faith and trust. An Agent has a contract with the Principal to carry out their duties, breach of this contract will allow the Principal to sue the Agent. An Agent can sue the Principal similarly for breach, for example for not paying commission. A Joint Venture is where separate entities conduct some combined project or venture, sharing the resulting product, not as a business in common, but as independent operators in their own right. Pursell v Newberry. Joint Venturers always retain their separate entity, they do not operate or own mutual assets in a business, but rather by association. Distinguishing a Joint Venture from a Partnership, or any other business form is a question of fact. The facts considered would be the form of agreement, mutuality and relationship of the parties. A Joint Venture may still be determined by the courts to be a Partnership, despite the intentions of the parties United Dominions Corporation Ltd v Brian Pty Ltd. The parties may refer to themselves as a Joint Venture but still be in fact a Partnership. Canny Gabriel Case.
A Syndicate is a combination of persons who have become associated for the purpose of promoting some business enterprise. Syndicate members seem to have fewer mutual or common interests than those existing between joint venturers. Beckingham v The Port Jackson & Manly Steamship Co.A Syndicate is very similar to a Joint Venture in that the members are individuals and retain their separate entities, they do not have sufficient mutuality to form a Partnership. Whether an association of persons is a Syndicate is a question of fact. There is little law to define what a Syndicate is.A Syndicate may (like a Joint Venture) be construed as Partnership for taxation purposes. Taxation law defines business entities differently to that of the common law or the Partnership Act. Sarich v FCT. Tikva Investments Pty Ltd v FCT.

lecturer at a private learning institution ( UTAR).