Partnership Law

Partnership Law

Name:

Institution:

Partnership Law

Question One

            A partnership being a legal business that is jointly owned by two or more people is classified into different forms. However, the most common forms of partnerships include limited and general partnerships. General partnerships define businesses that have more than a single owner who has not filed legal papers that represent the operations of the organization. Each partner in a general partnership can be sued for the entire amount in case of a debt. Partnerships can be formed through written contracts, oral agreement or through partner conduct. For membership, partnerships require a minimum of two partners and no limited maximum. The case of Nicaboka Café defines a limited liability partnership situation where one partner is not liable for the misconduct and negligence by the other partner. The limited liability partnership business is different from the traditional forms of partnership such as limited liability where the misconducts of a single partner affected the business as a whole.

            According to the partnership act of 1908, partnership businesses are required to follow stipulated guidelines in case of dissolution or retirement. Business partnerships may dissolve because of any reasons. Technical dissolution takes place when there I a change in management and composition of a firm. For instance, once a partner leaves and their position in the business operations is taken over by a different person. Similarly, when a person joins a position in a business, this is known as technical dissolution. Here, the partnership does not break apart but the operations, assets and liabilities are taken from the old. A general dissolution involves the breakage of a partnership that ends the business operations including a halt in the contracts signed with clients. In the case of Nicaboka Café, Jack retires from partnership, which can be identified as technical dissolution. Jack’s position is taken by Amy therefore not warranting any halt in the operations.

            However, as Jack retires from being a partner, there are various requirements that should be met according to the law. As much a notice was published severally on the relevant platforms, Jack failed in personally informing the relevant clients associated with Nicaboka Café. Notifying third parties allows time for issues that arose previously to be solved before any affiliations are terminated and the liability options are unquestionable. According to the law, the Gazette is the official publication of the New Zealand Government containing a variety of matters of which the public must be given formal notice. Once the partner gazettes the retirement notice, they are required to notify tax agencies to determine the amount deficit or to settle by filling in tax forms. They are then required to cancel their business licenses with the relevant licensing agencies to cancel permits therefore eliminating their name from being used fraudulently. In this case, Amy cannot be liable for any anomalies that were made before entering into a partnership with Tim. Jack would be responsible.

            Creditor relationships prove to be important to any business since they are a form of assurance in business continuity. CPR Ltd, a longstanding supplier of coffee beans to Nicaboka Café issued a credit supply without determining that Jack their previous business dealings. According to the law, failure to inform partners and clients concerning their retirement move makes the partner liable for any debts and obligations after their retirement. Furthermore, once Jack retired and published the information on their website and local magazine, he failed to ascertain that the clients and public read it. In this case, Jack will be liable if Nicaboka Café defaults in payment of the debt.

Question Two

            Often, businesses get into deals with new clients based on different reasons. Sometimes clients fail to do a good background check on businesses that may reveal unknown information such as related clients and other issues. Before entering into a business deal with partnership business, it is important to enquire for a partnership record that displays the role of each partner as well as the employees. As much as Jack’s retirement was issued on their website and the local magazine, he failed to gazette it as an official publication considering it was his duty to inform the public. However, Mrs Dairy’s association with Jack was not based on agreements stipulated in a contract. Once Mrs Dairy enters into a deal with Nicaboka Café, they will need to determine the parties liable for the credit payment in case of any defaults. Business partnership agreement in such cases proves to be effective since it clarifies the business structure such as the responsibilities and business authority.

            According to the law, a partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement. In the case of Mrs. Dairy, and Nicaboka Café, liability for the credit debt will fall on the new partners considering the deal they made was after the retirement of Jack. Tim and Amy also failed in their roles as partners to create a solid business understanding between Nicaboka Café on the retirement of Jack by referring Mrs. Dairy to the relevant postings. Therefore, once the partners fail to meet the requirements of the credit debt on time, they will incur the liability as equal partners. Similarly, even if the partners provide proof that the client read the retirement notice, the liability to reimburse Mrs. Dairy cannot fall on Jack.

            For instance, such a case  was similar to that of Pont v Wilkins (1992)4 NZBLC 102,894, where Wilkins, a partner in a firm of accountants, retired from the firm without formally notifying clients or advertising in the Gazette (Williams, 2011). Despite his retirement, Wilkins was held liable for a later breach of duty by the firm, by virtue of section 39. In this case, people who had no prior dealings with the partnership before temporary dissolution and change in ownership need to refer to the Gazette to ensure they are immune from the liability acquired in their future transactions. The court referred to the law that applies to ordinary partnerships where people with previous dealings with the partner before retirement are entitled to treat the liability of their credit debt to the partner up until they are aware of retirement.

A similar case is seen in the law action pertaining Elders Pastoral Limited v Rutherfurd (1990) 3 NZBLC 99-201, where the partnership pertaining to Rutherfurd was indebted to Elders Pastoral Limited (Latimer, 2011). The partner failed to issue notice of his retirement from the partnership and did not issue it in the Gazette. The partners had been issued with horticultural products on credit basis therefore were in debt. Considering Rutherfurd made a retirement move without informing the clients, liability to compensate Elders Pastoral Limited was on him. The case of Mrs. Dairy and jack would however be different considering the client entered the dealing after the retirement of Jack.

References

Top of Form

Top of Form

Latimer, P. S. (2011). Australian business law 2012. North Ryde, N.S.W: CCH Australia.

Williams, G. (2011). Corporations and partnerships in New Zealand. Alphen aan den Rijn, The Netherlands: Kluwer Law International. Bottom of Form

Bottom of Form

Name:

Institution:

Partnership Law

Question One

            A partnership being a legal business that is jointly owned by two or more people is classified into different forms. However, the most common forms of partnerships include limited and general partnerships. General partnerships define businesses that have more than a single owner who has not filed legal papers that represent the operations of the organization. Each partner in a general partnership can be sued for the entire amount in case of a debt. Partnerships can be formed through written contracts, oral agreement or through partner conduct. For membership, partnerships require a minimum of two partners and no limited maximum. The case of Nicaboka Café defines a limited liability partnership situation where one partner is not liable for the misconduct and negligence by the other partner. The limited liability partnership business is different from the traditional forms of partnership such as limited liability where the misconducts of a single partner affected the business as a whole.

            According to the partnership act of 1908, partnership businesses are required to follow stipulated guidelines in case of dissolution or retirement. Business partnerships may dissolve because of any reasons. Technical dissolution takes place when there I a change in management and composition of a firm. For instance, once a partner leaves and their position in the business operations is taken over by a different person. Similarly, when a person joins a position in a business, this is known as technical dissolution. Here, the partnership does not break apart but the operations, assets and liabilities are taken from the old. A general dissolution involves the breakage of a partnership that ends the business operations including a halt in the contracts signed with clients. In the case of Nicaboka Café, Jack retires from partnership, which can be identified as technical dissolution. Jack’s position is taken by Amy therefore not warranting any halt in the operations.

            However, as Jack retires from being a partner, there are various requirements that should be met according to the law. As much a notice was published severally on the relevant platforms, Jack failed in personally informing the relevant clients associated with Nicaboka Café. Notifying third parties allows time for issues that arose previously to be solved before any affiliations are terminated and the liability options are unquestionable. According to the law, the Gazette is the official publication of the New Zealand Government containing a variety of matters of which the public must be given formal notice. Once the partner gazettes the retirement notice, they are required to notify tax agencies to determine the amount deficit or to settle by filling in tax forms. They are then required to cancel their business licenses with the relevant licensing agencies to cancel permits therefore eliminating their name from being used fraudulently. In this case, Amy cannot be liable for any anomalies that were made before entering into a partnership with Tim. Jack would be responsible.

            Creditor relationships prove to be important to any business since they are a form of assurance in business continuity. CPR Ltd, a longstanding supplier of coffee beans to Nicaboka Café issued a credit supply without determining that Jack their previous business dealings. According to the law, failure to inform partners and clients concerning their retirement move makes the partner liable for any debts and obligations after their retirement. Furthermore, once Jack retired and published the information on their website and local magazine, he failed to ascertain that the clients and public read it. In this case, Jack will be liable if Nicaboka Café defaults in payment of the debt.

Question Two

            Often, businesses get into deals with new clients based on different reasons. Sometimes clients fail to do a good background check on businesses that may reveal unknown information such as related clients and other issues. Before entering into a business deal with partnership business, it is important to enquire for a partnership record that displays the role of each partner as well as the employees. As much as Jack’s retirement was issued on their website and the local magazine, he failed to gazette it as an official publication considering it was his duty to inform the public. However, Mrs Dairy’s association with Jack was not based on agreements stipulated in a contract. Once Mrs Dairy enters into a deal with Nicaboka Café, they will need to determine the parties liable for the credit payment in case of any defaults. Business partnership agreement in such cases proves to be effective since it clarifies the business structure such as the responsibilities and business authority.

            According to the law, a partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement. In the case of Mrs. Dairy, and Nicaboka Café, liability for the credit debt will fall on the new partners considering the deal they made was after the retirement of Jack. Tim and Amy also failed in their roles as partners to create a solid business understanding between Nicaboka Café on the retirement of Jack by referring Mrs. Dairy to the relevant postings. Therefore, once the partners fail to meet the requirements of the credit debt on time, they will incur the liability as equal partners. Similarly, even if the partners provide proof that the client read the retirement notice, the liability to reimburse Mrs. Dairy cannot fall on Jack.

            For instance, such a case  was similar to that of Pont v Wilkins (1992)4 NZBLC 102,894, where Wilkins, a partner in a firm of accountants, retired from the firm without formally notifying clients or advertising in the Gazette (Williams, 2011). Despite his retirement, Wilkins was held liable for a later breach of duty by the firm, by virtue of section 39. In this case, people who had no prior dealings with the partnership before temporary dissolution and change in ownership need to refer to the Gazette to ensure they are immune from the liability acquired in their future transactions. The court referred to the law that applies to ordinary partnerships where people with previous dealings with the partner before retirement are entitled to treat the liability of their credit debt to the partner up until they are aware of retirement.

A similar case is seen in the law action pertaining Elders Pastoral Limited v Rutherfurd (1990) 3 NZBLC 99-201, where the partnership pertaining to Rutherfurd was indebted to Elders Pastoral Limited (Latimer, 2011). The partner failed to issue notice of his retirement from the partnership and did not issue it in the Gazette. The partners had been issued with horticultural products on credit basis therefore were in debt. Considering Rutherfurd made a retirement move without informing the clients, liability to compensate Elders Pastoral Limited was on him. The case of Mrs. Dairy and jack would however be different considering the client entered the dealing after the retirement of Jack.

References

Top of Form

Top of Form

Latimer, P. S. (2011). Australian business law 2012. North Ryde, N.S.W: CCH Australia.

Williams, G. (2011). Corporations and partnerships in New Zealand. Alphen aan den Rijn, The Netherlands: Kluwer Law International. Bottom of Form

Bottom of Form