Paper Topic:

Business Law II

FROM the given set of facts , it is evident that Sue and Tom have done almost everything with regard to their business as partners , including major decisions such as acquisition of key properties which will eventually result in assets of the partnerships

However , with respect to this latest property which caught the attention of the partners , it appeared that Sue and Tom are placed at odds with one another as to purchase the property or not

On one side , there is Sue who was already decided on purchasing the property and on

the other side an indecisive Tom , who asked for a certain period from his partner to come up with his decision

Based on the case given , the period requested by Tom to come up with his decision had already prescribed with Tom failing to communicate to his partner his decision on the purchaser of the subject property

As this is a case that involves principles in partnership and agency , it would be prudent to first discuss their nature as well as the corresponding duties and rights of parties to such contracts

The nature of partnerships

A partnership has been defined as a voluntary contract between two or more competent persons to place their money , effects , labor and skill or some , or all of them , in lawful commerce or business , with the understanding that there shall be a proportional sharing of the profits and losses between them (Black , 1990

The simplest type of partnership is referred to as a general partnership and though the law would prefer that the terms of a contract of partnership be set into writing for formality and better enforceability such is not really a requisite to the validity of a partnership

Unlike a corporation which acts through a board of directors who represent the controlling interest in the company , each partner acts as an agent of the partnership which has a legal personality separate and distinct from the partners that constitute it . As agents of the partnership , each partner acts in trust of the partnership and any success or failure that the partners may encounter in their business dealings will directly and indirectly affect the partnership and its assets

This is the drawback of entering a partnership . Like that of a sole proprietorship , partners are open to probable liability exposure and a general partner , for instance , may be held responsible for even the extent of his participation be it controlling or that of a mere minority

A partnership is the easiest business entity to form . However , the relative ease of forming a partnership is a sharp contrast to the difficulty of exiting or dissolving a partnership

A partnership is also governed by the principle of delectus personae which literally translates as the choice of a person (Black , 1990 Under this principle , parties to a partnership are given the right to select their partners or members in the group and they can refuse any person who wishes to join or participate in the partnership regardless...

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