Reference no: EM133579038

Case: Four friends - Peter, Paul, Ringo and Des - who met at university graduate as architects in the same year. Because they all get on so well and trust each other's judgement, they decide to form a partnership of architects in Bathurst, which they call Parthenon Designs. They sign a partnership agreement in terms of which they are all equal partners. The agreement also states that each partner will have authority to enter into contracts of up to $ 10 000, but that contracts in excess of that amount require the agreement of all the partners.

Peter and Paul go overseas one year, leaving Ringo and Des to run the business. When they return, they discover that the following has happened:

Just before he went away, Peter had noticed that the practice had almost run out of paper for the printers, so he left a note for Ringo, asking him to order a new supply. When Peter and Paul returned, they found that Ringo had paid $ 2 000 to buy printer papers from a business run by his girlfriend, whereas the usual supplier would have charged $ 1 200 for the same amount of paper. They are also displeased to find two invoices, addressed to Parthenon Designs, awaiting payment: One is from Bathurst Technology for $ 20 000 for an architectural design software programme ordered by Ringo. The other is for $ 2 000 from a ride-share company, Ride-Out Pty Ltd for a driver training course ordered by Des, who had previously argued that the four architects should run a local ride-share service on days when the practice was not busy.

Advise Peter and Paul as to what liabilities arise from the above facts, citing relevant legal authority.