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Chapter 3 – Special Customers and The Banker Companies: Separate legal entity Has the legal capacity to enter into contracts, own property or initate legal action under its own name Corporations Act 2001 (Cth), s 124 (fully legal capacity) Salomon v Salomon and Co Ltd [1987] AC 22 (separate legal entity) Lee v Lee’s Air Farming Ltd [1961] AC 12 Date of registration is significant Corporations Act 2001 (Cth), s 131. Corps Act protects a third party by allowing them to make assumptions [3.45] Banker is entitled to rely on the statutory assumptions contained in s129 like any other third party [3.55] Banker needs to sight various documents when dealing with a corporation through and agent [3.60] Partnerships: Common business structure, easy to establish. No formal documentation needed. Two or more people may enter into a business arrangement. Only requirement for valid partnership is conformity to the definition of partnership in the Partnership Act for each State of Australia. [3.65] 3 component parts: requirement that partners are actually in business, parties acting in common, aim for profit. Joint ownership and sharing of gross returns does not denote a partnership [3.75] Disadvantages: Not a separate legal entity, partners are jointly liable for the ordinary business debts of the partnership. [3.80] In Aust, partners are given the option to draw up a partnership agreement, but it s not mandatory. [3.85] Issue for banker is the extent of the agents authority and whether they are properly acting on behalf of the other partners and partnership [3.90] Partner’s actions are binding to other partners when the action is: done under either actual or ostensible authority, connected to the business and done the usual way. One partner’s signature represents all partners, s 28 Bills of Exchange Act 1909 (Cth) and Cheques Act 1986 (Cth), s 31 (2) Joint Account Holders: Account with a bank is in the names of two or more parties. Bankers need to be aware of legal rules that affect joint property ownership. Arden v Bank of New South Wales [1956] VLR 569 (forgery) Survivorship applies to joint accounts. Russell v Scott [1936] 55 CLR 440 Executors and Administrators: A person appointed by the deceased under the terms of their will to carry out the directions contained in the will. Important for banker to confirm evidence of probate. Executor gathers and accounts for all of the deceased’s assets and liabilities. Trust Accounts: When an obligation exists (based on equity law) to deal with property (in this case, money) for the benefit of other parties, a trust exists.
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Trustee is seen as having legal title to the property whilst the beneficiaries have an equitable title. Banker may be seen has having “trust like” responsibilities [3.165]
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