Harry, Liam and Zayn have formed a business partnership. They own and manage a winery in the Adelaide Hills called One Direction. Zayn makes the wine. Harry and Liam are responsible for running the business and the cellar door. They hold a meeting, and all decide to spend some money refurbishing the cellar door with new tables, chairs and lighting. When they started the winery, they dealt with Niall who gave them a great deal on the original furniture at his business Best Restaurant Buys (BRB) and since then purchased additional lighting from him.
Both Harry and Zayn visit the shop, having all agreed on a maximum dollar amount to be spent on the refurbishments. They choose a particular set of tables and chairs and order the required number. Following this purchase, Harry leaves town for his annual, month long holiday.
Meanwhile when Zayn calls into Best Restaurant Buys the following day, he notices some chairs were upholstered in leather instead of the vinyl which he and Harry had chosen. Even though they cost more than five times the chosen chairs, taking the cost well over the agreed amount, Zayn changes the order and purchases these for the cellar door, as he thinks they would give the cellar a much more ‘up-market’ look. He does not inform Liam and thinks he should not bother Harry on his holiday.
When Harry returns and he and Liam see the amount owing for the new furniture, they are furious with Zayn and claim that Zayn had no authority to change the order and will have to pay the extra amount himself. Liam adds that as he had nothing to do with the choice of chairs, he is not liable. With business being a bit slow, and with the other refurbishment costs, the partnership funds are too low to pay the extra amount.
Zayn argues the furniture is for the partnership and, in any case, he now has no money. Zayn and his wife Gigi were in the process of separating and Zayn reveals that Gigi has taken all their money from their bank accounts. Best Restaurant Buys has threatened to sue all three if payment is not made immediately.
Using the Partnership Act 1891 (SA) and relevant cases, discuss the legal issues relevant to the partnership explaining who is liable for the debt.


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