Law of business association Understanding company law

This means that this partnership agreement will be in line with the partnership act of businesses operating in Australia. Further, they inform the solicitor that they are equal partners Partnership Act 1963 (ACT, section 6(1). John and Jenny are in partnership as the formation of a partnership requires a written or verbal agreement. This two people have a written agreement of partnership prepared by their solicitor. They open a joint account in which they use for the business transaction. This is not a requirement of a partnership. However, for the success of the business it is necessary to have a business account. A partnership is not a legal entity thus a business account will have to be a joint account of the members (Bentley v Craven (1853) 18 Beav 75. 52 ER 29). After a partnership formation, there are legal consequences. The liability of the partner is unlimited. This means that, in the case of Jenny and John they are responsible for the business debts. The recovery of business debts wills extend to the personal properties of the two partners. This will happen in the event that shares in the business are inadequate to cover business liabilities. This partnership between Jenny and John, it is jenny who involves in the day to day running of the business. Therefore, Jenny works as a general partner while John operates as a dormant partner. The two partners meet regularly to discuss the progress of the business. This means that John is aware of how the business if fairing on though he is not an active participant in its operation. John as a partner in this business is liable for the decisions that Jenny makes on a daily basis. If the business, incurs loses or profits the two partners will share them equally. The two partners have been sharing the proceeds of the business from time to time on an equal basis. They share the profits equally though Jenny works full time in the business and does not receive a salary while John works irregularly on weekends. This business is failing in its operation. In addition, the relationships between the two partners deteriorate. They decide to dissolve the business, and ask their solicitor to terminate the partnership. However, the two partners continue to operate the business much the same way as before dissolution. In effect, this implies that the partnership has not been dissolved. This is because, for a partnership to be dissolve the partners withdraw their shares and the business operation ceases (Lipton et al., 2012). Alternatively, the partners sell their shares and the business continues to operate, but as a new partnership. John had ordered for fixture and fitting for use in the business, in his own name but did not make payment for them. This he did in anticipation of the start of the business. The fixture and fitting have been in use, in this partnership business. John wants Jenny to participate in payment of this debt. Jenny declines, saying she has been working for the partnership without payment and that John should settle the debt (Lipton et al., 2012). Legally John and Jenny are in a partnership though they assume that they have dissolved. Accordingly then, they are both liable to make payment for this debt though its acquisition is in the name of John. This is because the fittings and furniture acquisition was for business purpose. The partnership act stipulates that debts incurred by a partner even without the knowledge of the other partner are the responsibility of all partners. Therefore, Jenny as a partner in business with John can be sued individually for this debt Partnership Act