Analysis Of Partnership Existence And Liability In Brewing Business

Partnership existence in brewing business

Does a partnership between Todd and Zac exist?

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The question whether a partnership between Todd and Zac exist depends on whether the engagement was procedurally entered.

According to the Australian partnership Act[1], a partnership exists when persons come together to do business with a purpose of getting a monetary gain[2]. The coming together can be express through formal document or implied through conduct or actions of the parties.

In the scenario presented, the two parties were friends who mutually agreed to make their own beer. Todd and Zac contributed differently towards supporting their common activity. They engaged in different tasks that each was best at to make sure the brewing activity was successful[3]. The two parties decided to enter into a contest together. It is also indicated that both of them were interested in making money from the common activity. When Todd decided to lease a warehouse so as to give their business a professional look, Zac was very happy to enter into the warehouse and started to do his experiment from the warehouse.

When Todd organized for a marketing venture in a Christmas party, Zac is seen to accompany him to the party[4]. All these reactions by Zac indicates that he fully supported Todd’s decision and and was therefore in full support of the business venture. It can be seen that despite lack of written agreement, both parties agreed to work together and did their activities in the interest of the venture hence showing that they were determined to work together as partners.

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On the other hand, several reasons may render the partnership nonexistent. The driving factor for partnership formation is making profit. The concerned parties agree on how they are going to share profit and how they are going to share responsibility.

In the case of Todd and Zac, it can be clearly observed that the main intention of coming together was to make a brew for personal consumption. The idea of making money was conceived along the way and the modality of sharing profit was not discussed[5]. Todd and Zac did not discuss the scope of the work of each party. They did not agree whether individual decision on behalf of the firm was to be taken as the firm’s decision despite the results of the decision made. Joint ownership of property does not create a partnership. Despite each party giving a contribution, this is not enough to make partnership binding. The parties also did not discuss on how each party was to give his contribution.

Factors affecting partnership existence

Conclusion

In conclusion, it can be said that the behaviors of the two parties all the way clearly indicates that a partnership exists between them.

1.Is Zac entitled to the money from the beer he has been selling?

In order to decide whether Zac is entitled to the money, several factors will be considered.

In partnership, all the gains obtained by a partner when acting on behalf of the partnership belong to the partnership and is to be shared by all the partners proportionately.

In the case of Todd and Zak, it is observed that both parties agreed to work together in brewing wine. Each party worked where he was best at. It can also be observed that .Todd was best at marketing while Zac was best at experimenting. When there was a local contest, both parties agreed to attend. It can be presumed that if the contest had any monetary gain, then both of them would have shared the benefits. Each party was supposed to work in the interest of the partnership.

Conclusion

From the activities of Todd, it can be seen that all that he did was at the interest of the partnership. Zac’s activity of selling beer is a business activity which is supposed to benefit both of them. This means that Zac is not entitled to the money of the beer he sold.

2.Who is liable to pay the outstanding rent?

Issue

Before a decision can be made concerning the person who is supposed to cater for the rent, several issues will be taken into consideration.

Partnership is all about partnering in business to make profit. Expenses of the business should be paid by the partners.

In the present case, it can be observed that one of the reasons that prompted Todd to lease a warehouse was to create more room for production[6]. The reasons provided by Todd for leasing the building were for the benefit of both of them. It should also be noted that Zac would get more space that could help him do his experiments efficiently. It is also indicated that Zak was impressed with the new building that was leased. In his words, Zac said that he wanted to quit the “business.” This means that he was aware that he had a business relation with Todd.

Conclusion

If a business relationship existed, then expenses ought to be paid by all the parties involved in the business and just some.

Liability issues in brewing business

3.If Denton successfully sues Zac and Todd, who is liable to pay the compensation?

If Denton is to be compensated, then the person to do the compensation will be determined by ascertaining how the compensation issue came into place.

Compensation cost in partnership is incurred by the parties if it resulted from an act intended to benefit the firm.

Todd gave out the beer used in the charismas party as way to market the beer of their business. Zac presence in the party may be interpreted to mean that he equally had consented to giving out beer without charging any cost. It is worthwhile noting that Zac was involved in direct experimentation of different recipes and production of beer. This fact does make him liable individually to the quality of the beer produced because he acted on behalf of the business. From the above facts it can be observed that both Zac and Todd acted on behalf of the business and are therefore liable.

Conclusion

They should both of them share the cost of compensating Denton.

4.Can Zac leave the partnership the way he did?

To determine whether Zac can leave the way he did, the nature of the partnership formation and procedures for leaving have to be examined.

Partnership Act state very clearly that leaving or disjoining from the partnership can only happen incase of misconducts like fraud misappropriation of funds.

It can be observed that Zac seeks to leave the partnership when problems start arising. It is like Zac is seeing Todd as the main cause of the problem and should therefore shoulder the burden alone. However, from the information given, it can be observed, at no point is Todd seen to act on personal interest but for the interest of the partnership[7]. Leaving in such a manner can only be allowed in case there are incidences of fraud or misappropriation of funds. From the information given, it is clear that the parties agreed to work together to make beer. It is also evident that the partnership has debts which have not been cleared. The partnership also has a pending court case which is affecting both parties. Before dissolution can be effected, all parties to the partnership must mutually agree[8].

Conclusion

They should agree on how profit or loss is going to be shared proportionately. They should also clear debts and wait for the court outcome.

5.Is the brewing equipment, Zac’s laptop, and recipe and formula partnership property?

Determining partnership property ownership

In the question whether the brewing equipment, Todd’s laptop, recipe and formula is a partnership property, what is entailed in partnership property will be looked at closely.

According to the Partnership Act (1891) partnership property entails all property contributed by individual parties or bought using partnership money. These properties should be exclusively be used in transacting the interest of the business.

It should also be noted that before a partnership is dissolved and property shared accordingly, the property should be used to clear any outstanding debts the partnership has to other people. In the case of Todd and Zak, each party contributed differently to the partnership[9]. The property that each person gave was used to further the course of the business and thus it qualified to be called partnership properties.

Conclusion

 It is therefore worth while noting that neither Todd nor Zak is entitled to take the whole of his initial contribution away and terming it as his own[10]. All business debts must be cleared before sharing of remaining properties can be done accordingly.

Journal Article/Books/Reports

Gold, D. L, “ Introduction. In Law & Economics: Toward Social Justice (pp. xi-xviii)”(2009), Emerald Group Publishing Limited.

Hatzimihail, N. E, “The many lives-and faces-of lex mercatoria: history as genealogy in international business law”(2008) 12 Law and contemporary problems, 71(3), 169-190.

Mann, R. A., & Roberts, B. S, “Smith and Roberson’s business law” (2011),45 Cengage Learning 234.

Nichols, P. M,  “The business case for complying with bribery laws”, (2012), American Business Law Journal, 49(2), 325-368.

Schaffer, R., Agusti, F., Dhooge, L. J., & Earle, B. “International business law and its environment, (2011), Cengage Learning.

Case Law

Morrison v. National Australia Bank Ltd., 547 F.3d 167 (2d Cir. 2008).

Bilski v. Kappos, 130 S. Ct. 3218, 561 U.S. 593, 177 L. Ed. 2d 792 (2010).

Stoneridge Inv. Partners v. Scientific-Atl., 552 U.S. 148, 128 S. Ct. 761, 169 L. Ed. 2d 627 (2008).

Nat. Fedn. of Indep. Business v. Sebelius, 132 S. Ct. 2566, 567 U.S. 519, 183 L. Ed. 2d 450 (2012).

Legislation

Australian partnership Act (1891),

[1] Australian partnership Act (1891),

[2] Morrison v. National Australia Bank Ltd., 547 F.3d 167 (2d Cir. 2008).

[3] Gold, D. L, “ Introduction. In Law & Economics: Toward Social Justice (pp. xi-xviii)”(2009), Emerald Group Publishing Limited.

[4] Hatzimihail, N. E, “The many lives-and faces-of lex mercatoria: history as genealogy in international business law”(2008) 12 Law and contemporary problems, 71(3), 169-190.

[5] Mann, R. A., & Roberts, B. S, “Smith and Roberson’s business law” (2011),45 Cengage Learning 234.

[6] Nichols, P. M,  “The business case for complying with bribery laws”, (2012), American Business Law Journal, 49(2), 325-368.

[7] Schaffer, R., Agusti, F., Dhooge, L. J., & Earle, B. “International business law and its environment, (2011), Cengage Learning.

[8] Bilski v. Kappos, 130 S. Ct. 3218, 561 U.S. 593, 177 L. Ed. 2d 792 (2010).

[9] Stoneridge Inv. Partners v. Scientific-Atl., 552 U.S. 148, 128 S. Ct. 761, 169 L. Ed. 2d 627 (2008).

[10] Nat. Fedn. of Indep. Business v. Sebelius, 132 S. Ct. 2566, 567 U.S. 519, 183 L. Ed. 2d 450 (2012).

According to the Australian partnership Act[1], a partnership exists when persons come together to do business with a purpose of getting a monetary gain[2]. The coming together can be express through formal document or implied through conduct or actions of the parties.

 In the scenario presented, the two parties were friends who mutually agreed to make their own beer. Todd and Zac contributed differently towards supporting their common activity. They engaged in different tasks that each was best at to make sure the brewing activity was successful[3]. The two parties decided to enter into a contest together. It is also indicated that both of them were interested in making money from the common activity. When Todd decided to lease a warehouse so as to give their business a professional look, Zac was very happy to enter into the warehouse and started to do his experiment from the warehouse.

When Todd organized for a marketing venture in a Christmas party, Zac is seen to accompany him to the party[4]. All these reactions by Zac indicates that he fully supported Todd’s decision and and was therefore in full support of the business venture. It can be seen that despite lack of written agreement, both parties agreed to work together and did their activities in the interest of the venture hence showing that they were determined to work together as partners.

On the other hand, several reasons may render the partnership nonexistent. The driving factor for partnership formation is making profit. The concerned parties agree on how they are going to share profit and how they are going to share responsibility.

In the case of Todd and Zac, it can be clearly observed that the main intention of coming together was to make a brew for personal consumption. The idea of making money was conceived along the way and the modality of sharing profit was not discussed[5]. Todd and Zac did not discuss the scope of the work of each party. They did not agree whether individual decision on behalf of the firm was to be taken as the firm’s decision despite the results of the decision made. Joint ownership of property does not create a partnership. Despite each party giving a contribution, this is not enough to make partnership binding. The parties also did not discuss on how each party was to give his contribution.

Conclusion

In conclusion, it can be said that the behaviors of the two parties all the way clearly indicates that a partnership exists between them.

1.Is Zac entitled to the money from the beer he has been selling?

In order to decide whether Zac is entitled to the money, several factors will be considered.

In partnership, all the gains obtained by a partner when acting on behalf of the partnership belong to the partnership and is to be shared by all the partners proportionately.

In the case of Todd and Zak, it is observed that both parties agreed to work together in brewing wine. Each party worked where he was best at. It can also be observed that .Todd was best at marketing while Zac was best at experimenting. When there was a local contest, both parties agreed to attend. It can be presumed that if the contest had any monetary gain, then both of them would have shared the benefits. Each party was supposed to work in the interest of the partnership.

Conclusion

From the activities of Todd, it can be seen that all that he did was at the interest of the partnership. Zac’s activity of selling beer is a business activity which is supposed to benefit both of them. This means that Zac is not entitled to the money of the beer he sold.

2.Who is liable to pay the outstanding rent?

Issue

Before a decision can be made concerning the person who is supposed to cater for the rent, several issues will be taken into consideration.

Partnership is all about partnering in business to make profit. Expenses of the business should be paid by the partners.

In the present case, it can be observed that one of the reasons that prompted Todd to lease a warehouse was to create more room for production[6]. The reasons provided by Todd for leasing the building were for the benefit of both of them. It should also be noted that Zac would get more space that could help him do his experiments efficiently. It is also indicated that Zak was impressed with the new building that was leased. In his words, Zac said that he wanted to quit the “business.” This means that he was aware that he had a business relation with Todd.

Conclusion

If a business relationship existed, then expenses ought to be paid by all the parties involved in the business and just some.

3.If Denton successfully sues Zac and Todd, who is liable to pay the compensation?

If Denton is to be compensated, then the person to do the compensation will be determined by ascertaining how the compensation issue came into place.

Compensation cost in partnership is incurred by the parties if it resulted from an act intended to benefit the firm.

Todd gave out the beer used in the charismas party as way to market the beer of their business. Zac presence in the party may be interpreted to mean that he equally had consented to giving out beer without charging any cost. It is worthwhile noting that Zac was involved in direct experimentation of different recipes and production of beer. This fact does make him liable individually to the quality of the beer produced because he acted on behalf of the business. From the above facts it can be observed that both Zac and Todd acted on behalf of the business and are therefore liable.

Conclusion

They should both of them share the cost of compensating Denton.

4.Can Zac leave the partnership the way he did?

To determine whether Zac can leave the way he did, the nature of the partnership formation and procedures for leaving have to be examined.

Partnership Act state very clearly that leaving or disjoining from the partnership can only happen incase of misconducts like fraud misappropriation of funds.

It can be observed that Zac seeks to leave the partnership when problems start arising. It is like Zac is seeing Todd as the main cause of the problem and should therefore shoulder the burden alone. However, from the information given, it can be observed, at no point is Todd seen to act on personal interest but for the interest of the partnership[7]. Leaving in such a manner can only be allowed in case there are incidences of fraud or misappropriation of funds. From the information given, it is clear that the parties agreed to work together to make beer. It is also evident that the partnership has debts which have not been cleared. The partnership also has a pending court case which is affecting both parties. Before dissolution can be effected, all parties to the partnership must mutually agree[8].

Conclusion

They should agree on how profit or loss is going to be shared proportionately. They should also clear debts and wait for the court outcome.

5.Is the brewing equipment, Zac’s laptop, and recipe and formula partnership property?

In the question whether the brewing equipment, Todd’s laptop, recipe and formula is a partnership property, what is entailed in partnership property will be looked at closely.

According to the Partnership Act (1891) partnership property entails all property contributed by individual parties or bought using partnership money. These properties should be exclusively be used in transacting the interest of the business.

It should also be noted that before a partnership is dissolved and property shared accordingly, the property should be used to clear any outstanding debts the partnership has to other people. In the case of Todd and Zak, each party contributed differently to the partnership[9]. The property that each person gave was used to further the course of the business and thus it qualified to be called partnership properties.

Conclusion

 It is therefore worth while noting that neither Todd nor Zak is entitled to take the whole of his initial contribution away and terming it as his own[10]. All business debts must be cleared before sharing of remaining properties can be done accordingly.

Journal Article/Books/Reports

Gold, D. L, “ Introduction. In Law & Economics: Toward Social Justice (pp. xi-xviii)”(2009), Emerald Group Publishing Limited.

Hatzimihail, N. E, “The many lives-and faces-of lex mercatoria: history as genealogy in international business law”(2008) 12 Law and contemporary problems, 71(3), 169-190.

Mann, R. A., & Roberts, B. S, “Smith and Roberson’s business law” (2011),45 Cengage Learning 234.

Nichols, P. M,  “The business case for complying with bribery laws”, (2012), American Business Law Journal, 49(2), 325-368.

Schaffer, R., Agusti, F., Dhooge, L. J., & Earle, B. “International business law and its environment, (2011), Cengage Learning.

Case Law

Morrison v. National Australia Bank Ltd., 547 F.3d 167 (2d Cir. 2008).

Bilski v. Kappos, 130 S. Ct. 3218, 561 U.S. 593, 177 L. Ed. 2d 792 (2010).

Stoneridge Inv. Partners v. Scientific-Atl., 552 U.S. 148, 128 S. Ct. 761, 169 L. Ed. 2d 627 (2008).

Nat. Fedn. of Indep. Business v. Sebelius, 132 S. Ct. 2566, 567 U.S. 519, 183 L. Ed. 2d 450 (2012).

Legislation

Australian partnership Act (1891),

[1] Australian partnership Act (1891),

[2] Morrison v. National Australia Bank Ltd., 547 F.3d 167 (2d Cir. 2008).

[3] Gold, D. L, “ Introduction. In Law & Economics: Toward Social Justice (pp. xi-xviii)”(2009), Emerald Group Publishing Limited.

[4] Hatzimihail, N. E, “The many lives-and faces-of lex mercatoria: history as genealogy in international business law”(2008) 12 Law and contemporary problems, 71(3), 169-190.

[5] Mann, R. A., & Roberts, B. S, “Smith and Roberson’s business law” (2011),45 Cengage Learning 234.

[6] Nichols, P. M,  “The business case for complying with bribery laws”, (2012), American Business Law Journal, 49(2), 325-368.

[7] Schaffer, R., Agusti, F., Dhooge, L. J., & Earle, B. “International business law and its environment, (2011), Cengage Learning.

[8] Bilski v. Kappos, 130 S. Ct. 3218, 561 U.S. 593, 177 L. Ed. 2d 792 (2010).

[9] Stoneridge Inv. Partners v. Scientific-Atl., 552 U.S. 148, 128 S. Ct. 761, 169 L. Ed. 2d 627 (2008).

[10] Nat. Fedn. of Indep. Business v. Sebelius, 132 S. Ct. 2566, 567 U.S. 519, 183 L. Ed. 2d 450 (2012).