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Law for Business Esther Stern
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Read the following facts. Using only principles, concepts and law discussed in BUSN1019 (including the Partnership Act 1891 (SA)), answer each question:
Barak Obama and Tania Plebiscik are musicians who formed a rock band called the ‘Adelaide Jammers’ after graduating from the Elder Conservatorium of Music at the University of Adelaide. Barak is a lead guitarist while Tania plays the drums. As part of her contribution to the band Tania offered to donate her drum kit (worth $1000).
Barak, on the hand, who had been given a priceless Stradivari guitar as a 21st birthday present by his great uncle Mayhem, agreed to lend it to the band and only on condition that he would be the only one allowed to play it. This was written down in an agreement they both signed. The agreement further provided that Barak would ‘do the management and that all profits and losses would be split 50-50 and that neither could spend more than $1000 on behalf of the band without the permission of the other’. Since both had undertaken post graduate studies at the university, the Conservatorium allowed them to use its premises as their postal address as well as a musical concert hall where they could rehearse after hours.
Their debut, at the Adelaide fringe festival, was a raging success. They made $3000 from their performance and both agreed to spend half of it on amplification equipment at Harry Houdini’s musical store, with the rest to go into their joint bank account. As it turned out Tania who did the shopping decided to order the more expensive amplification equipment (worth $5000) because it was better quality and because she would receive a free electric drum kit worth $800 as a bonus (on a minimum spend of $5000). That meant that they owed Harry $2000 (on which he charged an interest rate of 20% per annum). Two weeks later when the amplification equipment arrived at the Conservatorium Barak was extremely annoyed and chastised her for overspending, but agreed to pay the $3000 deposit towards the amplification equipment as per the terms of the contract.
As their popularity grew over the next six months they decided to expand their band by bringing in Barak’s younger brother Hussein as rhythm guitarist and Tania’s sister Kate as bass guitarist/key board player. Whereas Hussein would be paid out of the profits of the band (if any) Kate, who was still studying at the Elder Conservatorium, would be paid a fixed fee per performance. Tania who also played the piano decided the band needed one and took her sister shopping at Harry’s musical store. Tania selected a wood crafted mahogany Italian piano worth $10,000 and again was given a free gift (a saxophone worth $1500). This time Tania directed Harry to deliver both instruments and the bill to her sister’s home address. When Harry received no payment for the piano he sent the bill to the Conservatorium business address, threatening to sue unless he received immediate payment. Barak
knew nothing about the piano until he received that letter from Harry. He was angrier still when he found out about the saxophone and the electric drum kit. Harry had sent the bill C/- the Adelaide Jammers accompanied by a note at the bottom of the account which read: ‘enjoy the sax’ and ‘I hope you are enjoying your electric drum kit’. This time Barak wrote back (on the same day) telling Harry that the bill for the piano would not be paid by the band under any circumstances.
Barak received Harry’s bill on the same day as their scheduled performance at the local hotel. And as usual Barak was the driver. As he drove to the venue in his mini- van, he shouted at Tania that ‘enough was enough’ and that this would be his ‘last performance with the band’. As he shouted at Tania he drove through a red light and crashed into some French tourists in a rental car, leaving two of them badly injured and their rental car a write off. Following the accident Barak quit the band and notified all his clients that he had resigned by placing an advertisement in the local paper.
1. How would you describe the relationship between Barak, Tania, Hussein and Kate? (In your answer you should discuss whether or not the Adelaide Jammers is a partnership and, if so, who are the partners?)
2. Advise Harry regarding his right to recover $2000 (plus interest) still owing on the amplification equipment and the $10,000 owing on the piano. Which (if any) of the four members of the band (i.e. Barak, Tania, Hussein and Kate) would be liable?
3. Advise the band members as to their liability to the French tourists who were not insured in Australia for the injuries they sustained (Which if any of the four members of the band would be liable for the injuries sustained in the accident?)
4. Advise all the band members of their rights and liabilities upon dissolution of the band, in regard to their equipment (including the saxophone and the electronic drum kit).
