George and Malcolm have been operating a Plumbing business under the name GM Plumbing (“GMP”) as partners without a written partnership agreement but sharing profits and losses equally.

Last December one of GMP’s customers, Stewart, asked Malcolm if he knew anyone who could construct a new home on vacant land. Without consulting George, Malcolm responded to Stewart that GMP would be willing to take on the job by sub-contracting out the work. In early January this year, Malcolm on behalf of GMP and Stewart signed a contract to construct a new home at the price of $350,000, payable in instalments. However, by mid-February Malcolm realised that due to increases in the cost of materials and labour, GMP will make a loss on the job of at least $50,000. George only learnt about the building contract in late March and told Malcolm that he is not a party to the contract with Stewart and that Malcolm will have to bear all the losses on the building contract.

REQUIRED:

Using the four-step process and with reference to legal principles and case law, discuss whether Malcolm had the authority to sign the building contract with Stewart that would also make George liable for any loss on that contract.

 

the question requires you to use the 4-step process, the 4 steps are:

• Step 1: Introduce the area of the law.
• Step 2: Discuss the applicable law to solve and quote relevant cases and the sections of the Corporations Act 2001 (Cth) where applicable.
• Step3: Apply the law to the facts to resolve the problem.