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Solution for Business Law 3rd Edition Chapter 10, Problem 1

by Nickolas James
128 Solutions 13 Chapters 13478 Studied ISBN: 9780730305743 Business Law 5 (1)

Chapter 10, Problem 1 : 1.Johnny and Ash have not yet incorporated their...

1.Johnny and Ash have not yet incorporated their new company. However, each has already invested $50000 into the business by depositing the money into Johnny’s business account. Johnny is negotiating the purchase of a small factory in his own name, and is purchasing the equipment and materials he will need to start manufacturing Organicola. Ash has also started spending 2 or 3 hours every evening writing a business plan and a marketing plan. (a) Have Johnny and Ash formed a partnership? (b) If so, what are the legal consequences?

 

Step-By-Step Solution

See Business Law pp504-513.

 

Issue

Does a partnership exist between Johnny and Ash?

 

Law

According to the Partnership Act(in each state and territory) a partnership is ‘the relation which subsists between persons carrying on a business in common with a view of profit’.

A business organisation will be a partnership if all of the following requirements are satisfied.

  • There are two or more persons involved.
  • Those persons are carrying on a business.
  • They are carrying on the business in common.
  • They are carrying on the business with a view of profit.

 

Application

Johnny and Ash (are/are not) carrying on a business because …

Johnny and Ash (are/are not) acting ‘in common’ because …

Johnny and Ash (do/do not) have a ‘view of profit’ because …

 

Conclusion

A partnership (does/does not) exist between Johnny and Ash.

 

 

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