Question 1

Will and Ben run a small plant nursery called Flowerpot Men. Will does not take an active role in the day to day management of the nursery and so Will and Ben have agreed that Will should only receive 25% of the profits whilst Ben will receive 75%. They have also agreed that Will should only be liable for 25% of the costs of the business. No one but Will and Ben is aware of this arrangement.

 

After being successful for quite a while the business collapsed and closed down. Ben has taken all the cash out of the bank and disappeared. Before leaving, Ben borrowed $10,000 from a finance company, Rip-Off Ltd, at very high interest rates. Ben told Rip-Off that he was authorised by Flowerpot Men to borrow the money for the purpose of expanding the business. This was not true. The money disappeared along with Ben. Rip-Off wants Will to repay the $10,000. Will claims that he is not responsible as the money was used for Ben's own purposes. Alternatively, Will claims that, if he is liable, his liability is limited to $2,500 (i.e. 25%).

In addition, Will was contacted a week later by a person who said he paid Ben $1,000 for a new sapling which had not been delivered and that Will should reimburse him. This was one of many complaints received by Will indicating that Ben was still taking orders from even though the business was closed.

 

a) Does a partnership exist between Will and Ben?

b) Advice Will about his liability to Rip-Off under the Partnership Act and what he should do to prevent any further liabilities from the business.

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Status NEW Posted 26 May 2017 07:05 AM My Price 5.00

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