Advise Violet and Sonny regarding their liability to Friendly Bank in relation to the Busy Bee Florist Shop. Your answer must make reference to relevant provisions of the Partnership Act and precedents.
Introduction
In order to advise Violet and Sonny regarding their liability to Friendly Bank in relation to the Busy Bee Florist Shop, firstly it is necessary to examine whether a partnership relationship exists between (a) Violet and Busy Bee Florist Shop; and (b) Sonny and Busy Bee Florist Shop.
Does a partnership exist?
Sonny
Sonny is an employee and a lender instead of a partner of Rose & Mary/Busy Bee Florist Shop.
The Partnership Act in each jurisdiction (e.g. NSW section 1)…show more content… If Violet dies without paying back the debt, the creditor may be able to bring an action against Violet’s estate.
Question 2
Advise Peter as to his potential liability and exposure to paying more than 40% of the debts.
Does a partnership exist?
Peter is actually a partner of Max although the contract expressively states that the parties are to be joint ventures rather than partners for the following reasons-
(a) Max and Peter carry on the business in common with a view to profit as Max has entered into an agreement with Peter to help him with running the business. And an agency relation exists between Max and Peter who are both principals of the business.
(b)The agreement clearly shows that partnership right exists as Peter has a right to share profits of 40%. Partners share profits whereas joint ventures receive a share of product.
(c) The agreement expressively indicates each party’s sharing of losses incurred in the process of running the business.
(d) The agreement expressively indicates each party is liable for the debts of the business and this is a liability in partnership.
This case is similar to Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 in which the court held that a partnership existed between Fourth Media and Volume Sales although the parties claimed themselves as joint ventures.
Peter’s Liability
As Peter is a partner of Max, Peter has a liability to paying more than 40% of the debt
