Bruner and Santos Have Entered into a Joint Venture for the Purpose

Question

Examlex · Accepted Answer

The Answer is There are several alternative bases upon which Santos could be found liable to ISP Inc.
Actual Authority: On the basis of the provisions of the joint venture agreement, it could be argued that Santos had given Bruner actual authority to contract for services such as those of ISP, so long as the services are for the purpose of building the housing development.The difficulty with this argument is that the website hosting services are not directly related to building the development as opposed to selling the houses built.The contractual commitment regarding expenses only extends to expenses for the purpose of "building." If it possible to establish that actual authority existed on the basis of the joint venture agreement provisions, it does not matter that ISP was not aware of the existence of Santos until after the contract was concluded.

Authority as a Partner: If ISP can successfully argue that the joint venture was a partnership between Bruner and Santos, then Bruner would be an agent of the partnership and any obligation he incurred in carrying out the business of the partnership in the usual way would be binding on Santos.The test for partnership will be discussed in Chapter 21: two or more persons carrying on business in common with a view to a profit.Here, an argument can be made that building the houses and selling them is a business.The fact that Santos and Bruner are jointly responsible for expenses and sharing profits is strong evidence of partnership.Assuming that Brantwood Housing is a partnership, the contract with the ISP would be an obligation incurred for the purpose of carrying on the business of the partnership in the usual way and Santos would be liable.

Apparent Authority: There was no direct communication between Santos and ISP, so the only possible basis for arguing that Bruner had apparent authority to act on behalf of Santos is that Santos acquiesced in Bruner incurring obligations for the joint venture.There is no specific evidence of this in the question.

Bruner and Santos Have Entered into a Joint Venture for the Purpose

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