Question B.2
Leyton and Dustin run a service station in a country town, the
service station sells petrol and a number of other goods, which are
displayed near the cash register and outside the office. Leyton and
Dustin are partners in the business, though they have an old
written agreement that states that neither will order goods or
services over the value of $3,000 unless the contract contains
signatures from both partners.
Leyton has been approached by a supplier of magazines who
offers the business the delivery of 100 copies of a particular
publication each month. Leyton convinced that the magazine is
popular and will make some money, signs a contract with a promise
to pay $5,000 in instalments for the delivery of the
magazines.
The magazines arrive and Dustin is very upset, first because
the magazine is quite unsuitable for display in the business and
may result in a loss of customers if they see this publication, but
he is also upset that Leyton has made an agreement without
consulting him. There is an argument between the partners and
Leyton takes sick leave and stays at home to recover from the
stress of the argument. In the meantime, Dustin communicates with
the supplier of the magazines and declares that the agreement to
supply the publication is invalid due to a breach of the
partnership agreement, and that the magazines will be returned and
no payments will be forthcoming from the business.
Explain, with reference to partnership law:
a. Whether Dustin can cancel the contract with supplier of the
magazines?
b. Whether Dustin can be liable for the actions of Leyton?