Net profits of the jv were to be divided at the end

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- Net profits of the JV were to be divided at the end of the contract, however any losses were not to be shared on the same basis as the profits. - Additional equitable charge (type of security) was granted to Canny Gabriel (third party) for providing additional finance being advanced by that party. - Decision: It was a partnership despite the JV label provided by the parties. Court held it as a partnership on the basis that profits were shared equally between the parties and the management and the conduct of the arrangement was dictated by their joint agreement. Despite the parties did not provide expressly for the sharing of losses, the court thinks that it did so impliedly. NSW v.Commonwealth (1990) 169 CLR 482: - Lecture 2: Incorporation and its Consequences
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General Principle Corporate Law in Australia: Characterised by the search for a single legislation to be applied uniformly throughout the country. Uniformity in corporate law is desirable for the following reasons: Provides for business certainty Promotes investor and business confidence Reduce business costs through avoidance of duplication; and Allows for greater business efficiencies. Companies registered under the Corporations Act 2001 (Cth) are either proprietary companies or public companies. Section 113 of the Act states that proprietary companies are essentially smaller and private. Separate Legal Personality Salomon v Salomon & Co Ltd (1897) AC 22 is the authority for the legal principle that an incorporated company is a separate legal entity from its founder, shareholders and directors. Macaura v Norther Assurance Co Ltd (1925) AC 619 : - Macaura owner of timber planation sold his business to a company he had formed where he was the main controlling shareholder. Prior to the sale, Macaura insured his timber but did not transfer the policy to the company. The timber was later on destroyed by fire and the insurance company refuse to pay Macaura because he had no ‘insurable interest’ in the timber, as it was a company asset. - Decision by The House of Lords : They upheld the argument of the insurance company. The company is a separate legal entity, which is now owned the timber, did not have an insurance policy. Lee v Lee’s Air Farming Ltd (1961) AC 12: - Lee was a major shareholder of a company he formed for the purposes of conducting a crop dusting business, he was also the governing director. Lee was contracted with the company to work as a chief pilot and the company took out a workers’ compensation insurance policy for its employees. During employment, Lee was killed in an air crash. Mrs Lee, claimed compensation under his policy, insurance company denied the claimed – arguing Mr Lee was not an employee. - Decision by the Privy Council : They upheld the widow’s claim on the basis that the company, as a separate legal entity, could enter into an employment contract with Mr Lee.
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