Question 2(20 marks)

Little Nest (LN) is a firm of partners that specialises in property design and development in New Zealand. The firm is run by 3 old friends; John, James, and Jonah. John is in charge of finding and purchasing suitable land and getting all the necessary permits. James liaises with architects and developers for planning and cost estimates. Jonah is the person on the ground that works closely with the builders and oversees the progress and completion of the projects. Since business is good, the firm decided to hire an accountant, Tim, with an office in the firm's place of business.

While Jonah is on holiday with his family in Fiji, he saw an advertisement for a piece of residential land next to one of the most popular beaches. The land owner was in need of cash and willing to sell his land well below the market price. To seize what he thought was a great opportunity, Jonah signed a contract for the purchase of the land on behalf of the firm without notifying the other two partners.

Meanwhile in New Zealand, Tim attended LN's annual function where he met the owner of a plumbing business that the firm has been working with. At the function, James introduced Tim to everyone present as "one of us in LN" and as someone who "has his hand in all aspects of the business". The following week, Tim was contacted by the plumbing business for a new contract for one of LN's projects. Tim signed the contract.

With reference to thePartnership Act 1908and theLaw of Agencyanswer the following questions:

A.Is the firm bound by the contract of the purchase of the land in Fiji? Provide reasons for your answer.

B.Is the firm bound by the new plumbing contract signed by Tim? Provide reasons for your answer.