A partnership business entails a joint formation between two people or more with a common goal of making a profit. It accompanies with specifications of some rights and responsibilities such as every member has an equal say to control the business according to their agreements.[1]
The partners have the agency powers since they can get into a contract and develop a binding liability with the others as though they also created it. Thus, all the individuals can presume that everyone will be responsible for any promise that may arise. The partners may equally share the losses and profits or according to their agreements.[2]
In case of the death of a member, they can dissolve the partnership, and they do not have the mandate of expelling another unless they agree.
Klever Komputer Repairs is a description of both general and a limited business association where the liability of the members has restrictions according to their shares of ownership.[3]
In the case, Bob and Ali join the venture of servicing and maintaining the computers as the main parties. They both contribute equal amounts of capital with the intentions of gaining similar shares from their profits. The business partners have same skills in computing with a common goal of doing the repairs together.[4]
However, another party, Cheng their former classmate wishes to join them in the venture as a limited member with the entitlement of 8% shares of the profit. Therefore, the three individuals are business partners in the Klever Komputer Repairs business.
A general partnership arrangement requires the participants to jointly perform the operations of the organization with the unlimited liabilities. The personal assets of the members are not accountable to all obligations of the firm according to their agreements.[5] Cheng joins the business with a capital of $30,000 to boost their services in intensive advertisements and traveling to the premises of clients, and hence he qualifies as one of the general partners with their arrangements. He performs his daily repairs within the shop with an hourly payment rating, and gets involved with the monthly management meetings and making decisions. Moreover, the core business owners can entrust Cheng with all the operations of the firm. Thus, the three partners have unlimited liabilities on their assets and are accountable for all the decisions and debts are taken by the business.[6]
Personal assets of the individuals can apply in a lawsuit with the intentions of settling incurring bills or being insolvent. The partnership has the benefits in the structure and control on the outlines for divisions of both the losses and the profits. They all have the rights in participating in the management of the business. Moreover, they can resolve their disputes through the majority rule of voting or the others systems of disagreement resolutions.[7]
The partners can determine who can become their members according to their agreements. A general business can allow the transferable interest where the individuals can allocate the portion of their losses, profits, and the rights of receiving the distributions. It applies to the decision of payment in the satisfaction of a judgment against one of the members.
A general partnership business has less restriction to start, such as the requirements of much paperwork. Ali and Bob did not need to file documents with the state to create the Klever Komputer Repairs, but instead, a draft of the agreement and the common agenda of rendering the computing services helped them enter in the joint venture.[8] They only need estoppel and proof of existence as the eligibility for conducting their business activities. The partnership has some default governing features concerning their relationships with the fellow members and the other participants from the outside world. The interactions among the partners can vary through modification of the agreements, but a keen draft can assist in controlling the third party liabilities.[9]
Therefore, Ali, Bob, and Cheng are in the business partnership in the Klever Komputer Repairs since they all participate in the daily operations, monthly meetings, and making decisions.
Question Two
Businesses grow due to pooling of capital and resources together to create partnerships with a common goal. Despite the individuals enjoying the benefits of the long-term success of a firm, they are liable to share the financial losses and debts. The company incurs the challenges of creating and maintaining fruitful unions by making the appropriate decisions. It requires hindering the emergence of conflicts and confusions among the members through delegations, democratic processes, and having a consensus.[10]
Every member of the business has the opportunity of sharing their opinions by presenting both the benefits and demerits of a decision proposal. The others have the mandate of making inquiries to understand one’s arguments and they can raise the relevant concerns. Therefore, the consensus strategy provides a comprehensive way of making decisions, determining a common ground among the members, and arriving at the final agreements. The partners can live with a resolution, and support it through open and full consultations on the matter rather than making the unanimous verdict.
A democratic process may differ from the consensus since the outcome relays on the majority votes.[11] It allows for open discussions, and each member has the opportunity of asking questions while sharing their concerns with the presentation of possible alternative approaches. Moreover, the delegation process is most effective in large partnerships to facilitate quicker and appropriate decision-making. It allows various managers, committees, and employees take the responsibility of developing proposals on behalf of the firm.[12]
The approach utilizes the specific skills of the professional workers such as marketing, accounting, and the technical backgrounds. Moreover, the delegation process may be beneficial since it consumes less time than the other models of making decisions in partnership.
Every member of business acts as the agent of the others and the firm unless he knows that he lacks the authority over certain issues. The action of the partner tends to be binding except in a situation where the third party knows the inability of the individual to act on behalf of the business. A debt incurred is a joint liability, and the creditors have the undertakings of creating a single reaction against the entire organization.[13]
Moreover, a partner can request to stay on any execution until all the members participate in the implementation despite the debt being a collaborative burden. However, the business can decide liability about one individual which can exempt the other members of the entity.
In the Klever Komputer Repairs scenario “other partner” Cheng violated the rules of the firm and got a contract with the software company to acquire an irrelevant program. In the previous monthly meeting, they had an agreement of rejecting all deals worth more than $10,000.[14]
Cheng did not seek the consent of the other members for approval in deciding to purchase the new software on promotion from the sales representative, Dale. Therefore, since the three members are in a business partnership, but one of them violated their rules, he will be responsible for the arising debts.[15] The others can compel Cheng to be liable for the losses through his shares in the firm. However, he cannot cater for the debt from his personal assets since he invested all the inheritance in Klever Komputer Repairs with intentions of making better returns. The situation will force the firm to make payments to the software company and later refund the loss from the earnings of Cheng since he acted on behalf of the business.[16]
Members of a partnership are liable to the debt of the entity, and the individuals need to be careful when making binding contracts on behalf of others. It is the legal responsibility of everyone to pay for the losses that the business may incur. If a partner signs a bad contract that he cannot afford, then the decision becomes the burden to the others since it will affect the portion of ownership of the individual.[17] Therefore, it is essential to get into business with trusted individuals and drafting an agreement to clarify the liability issues and avoid confusions such as in the case of Klever Komputer Repairs.
Question Three
Independent contractors provide their services in the specific occupation engaged by a partnership business to accomplish a certain outcome. The firm is liable for their services to the third parties who portray an unclear magnitude of controlling the entity.[18] In scenarios where the working of the contractor aims at improving the engagements of the business rather than enhancing the operations to the outside world, it acts as an employee of the institution. Josie is an independent worker, and may not be accountable for the negligent acts, but the court holds the main business responsible for the committed mistakes due to the choice of their activities. Klever Komputer Repairs has an influence on operations of the contractor while making supervisions on their services.[19]
The business enterprise provides the software tools that Josie utilizes while executing their roles in the business. The contractors participate in the hourly rate of payment methods at the premises of the institution with the exemption of special occasions such as the school holidays where she has to work from her home.[20]
Josie does not have restrictions on when, how, and where to conduct their activities while associating with the Klever Komputer Repairs. However, the written procedures can be in the manuals to determine how to accomplish some specific desired results. Josie firm does not need training from the partnership institution on their roles in the business since she is a professional to indicate lack of control from the employer.
Independent firms have better operational requirements with higher incomes and flexible schedules, but they often face some challenges such as the risks of audits by the government. Contractors and employees have unique features that describe their distinctions in a business. The workers have the workplace agreements that govern them during their operations which Josie is not entitled to the compliance for service.[21] The particular nature of responsibility determines the rights and obligations of the independent contractor where she has a greater say on how she executes her roles in the business with fewer controls. However, Josie uses software supplied by the partnership and receives payment on the hourly rate as the norm for the employees determined by the firm. The company also allows her to work from their premises despite being flexible to allow her to execute her duties from her home during the holidays. The firm has the right to regulate how Josie does her job and determine the schedules of responsibilities.[22]
Mover, the business has an impact on the financial obligation in the union since the payer influences the roles of the worker. Therefore, the nature of the relationship between the firm and Josie displays several features of an employee interaction rather than the independent contractor associations. Tax compliance is a crucial issue in South Australia, and Klever Komputer Repairs needs to arrange for the payments on behalf of Josie as one of their employees.[23]
In a case where the court determines Josie as an employee, the terms of work changes in the Klever Komputer Repairs partnership. The firm will have to organize for the payment of taxes on her behalf as one of their employees.[24]
The business bares the financial risks for the loss that the entity may incur from Josie’s services. It enforces the hourly rate of work to ensure accountability as their employees to deliver their duties in the workplace. Thus, the firm will limit the flexibility of Josie to execute their roles at home during the school holidays while attending to her children. Moreover, the court and parliament tend to be wise in determining whether a firm is an employee or a contractor through the actual analysis of the nature of relationships since the institutions may be faulty to avoid responsibilities on various awards and statutes.[25] The acts forbid the business from using illegal documents to disguise the workers as either the employees or the independent contractors.
List your references here
References
Australian Company Law Case (2012) CCH.
Income Tax Assessment Act 1936 (SA).
Klever Komputer Repairs Partnership
Partnership Act 1891
(SA)
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School of Law
BUSINESS LAW (BLW 17)
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[1] Partnership Act 1891 (SA) s 1.
[2] Partnership Act 1891 (SA) s 2.
[3] Partnership Act 1891 (SA) s 65A.
[4] Klever Komputer Repairs Partnership Company
[5] Partnership Act (SA) s 7.
[6] Partnership Act 1891 (SA) s 9.
[7] Partnership Act 1891 (SA) s 65A.
[8] Klever Komputer Repairs Partnership Company
[9] Partnership Act 1891 (SA) s 11.
[10] Partnership Act 1891 (SA) s 65B.
[11] Partnership Act 1891 (SA) s 52.
[12] Partnership Act 1891 (SA) s 65A.
[13] Partnership Act 1891 (SA) s 23.
[14] Klever Komputer Repairs Partnership Company
[15] Partnership Act 1891 (SA) s 9.
[16] Ibid.
[17] Australian Company Law Case (2012) CCH s 5.
[18] Partnership Act 1891 (SA) s 16.
[19] Klever Komputer Repairs Partnership Company
[20] Ibid.
[21] Klever Komputer Repairs Partnership Company
[22] Ibid.
[23] Income Tax Assessment Act 1936 (SA) s 94.
[24] Ibid.
[25] Partnership Act 1891 (SA) s 3.
