,CLA2601 Assignment 1 Semester 1 2025 (Unique Number:
770912) - DUE 7 April 2025 ;100 %. TRUSTED Complete,
trusted solutions and explanations….WE WISH YOU A
GOOD LUCK
Question 1 Zane, Bongi, Muthu and Sophy are friends who
decide to form a partnership to purchase and sell new and
secondhand mobile phones. Sophy and Bongi will provide the
capital to purchase the initial stock for the partnership. Zane will
be responsible for the repair of mobile phones and Muthu will
be responsible for the day-to-day activities regarding the sales,
administration and marketing of the mobile phone business. The
parties agree that the profit derived from the partnership will be
divided equally between Bongi, Sophy and Zane, and that
Muthu will receive a monthly salary for his services. Discuss
and explain whether the above terms constitute a valid
partnership agreement. Refer to relevant case law in your
answer. 10 marks
Partnership Agreement: Legal Considerations and Analysis
A partnership is a legal relationship between two or more
individuals who agree to carry on a business for profit.
Partnerships can be formed through explicit agreements between
the parties or by conduct, such as joint business activities. The
essential features of a partnership include an agreement between
the parties to share the profits, and sometimes the losses, of a
business. In this case, Zane, Bongi, Muthu, and Sophy intend to
form a partnership to buy and sell mobile phones, with each
, party contributing different services and resources. The terms of
their partnership, as set out in the question, will be examined
against the principles of partnership law to determine whether
they constitute a valid partnership.
1. Definition and Essential Elements of a Partnership
In order for a partnership to exist legally, certain essential
requirements must be met. These include the formation of a
partnership agreement, shared profits and losses, and the
intent to carry on business together. Let's explore these in the
context of Zane, Bongi, Muthu, and Sophy’s agreement.
Intention to Carry on a Business for Profit: The parties’
intent to purchase and sell new and secondhand mobile
phones clearly indicates a desire to carry on a business for
profit. This is a fundamental requirement for a partnership.
The business is intended to be run for profit, which means
this requirement is satisfied.
Agreement: The parties have explicitly agreed to
contribute capital (Sophy and Bongi), perform services
(Zane and Muthu), and share in the profits (Sophy, Bongi,
and Zane) or receive compensation (Muthu's salary).
Although the parties have expressed their intentions clearly,
the agreement lacks written documentation detailing the
specific terms of the partnership (e.g., the partnership
deed). It is important to note that partnerships can be
formed verbally or by conduct, but for legal security, a
written agreement is recommended.
Shared Profits and Losses: A valid partnership generally
involves an agreement to share profits and losses. In this
case, the parties have agreed that the profits will be shared
770912) - DUE 7 April 2025 ;100 %. TRUSTED Complete,
trusted solutions and explanations….WE WISH YOU A
GOOD LUCK
Question 1 Zane, Bongi, Muthu and Sophy are friends who
decide to form a partnership to purchase and sell new and
secondhand mobile phones. Sophy and Bongi will provide the
capital to purchase the initial stock for the partnership. Zane will
be responsible for the repair of mobile phones and Muthu will
be responsible for the day-to-day activities regarding the sales,
administration and marketing of the mobile phone business. The
parties agree that the profit derived from the partnership will be
divided equally between Bongi, Sophy and Zane, and that
Muthu will receive a monthly salary for his services. Discuss
and explain whether the above terms constitute a valid
partnership agreement. Refer to relevant case law in your
answer. 10 marks
Partnership Agreement: Legal Considerations and Analysis
A partnership is a legal relationship between two or more
individuals who agree to carry on a business for profit.
Partnerships can be formed through explicit agreements between
the parties or by conduct, such as joint business activities. The
essential features of a partnership include an agreement between
the parties to share the profits, and sometimes the losses, of a
business. In this case, Zane, Bongi, Muthu, and Sophy intend to
form a partnership to buy and sell mobile phones, with each
, party contributing different services and resources. The terms of
their partnership, as set out in the question, will be examined
against the principles of partnership law to determine whether
they constitute a valid partnership.
1. Definition and Essential Elements of a Partnership
In order for a partnership to exist legally, certain essential
requirements must be met. These include the formation of a
partnership agreement, shared profits and losses, and the
intent to carry on business together. Let's explore these in the
context of Zane, Bongi, Muthu, and Sophy’s agreement.
Intention to Carry on a Business for Profit: The parties’
intent to purchase and sell new and secondhand mobile
phones clearly indicates a desire to carry on a business for
profit. This is a fundamental requirement for a partnership.
The business is intended to be run for profit, which means
this requirement is satisfied.
Agreement: The parties have explicitly agreed to
contribute capital (Sophy and Bongi), perform services
(Zane and Muthu), and share in the profits (Sophy, Bongi,
and Zane) or receive compensation (Muthu's salary).
Although the parties have expressed their intentions clearly,
the agreement lacks written documentation detailing the
specific terms of the partnership (e.g., the partnership
deed). It is important to note that partnerships can be
formed verbally or by conduct, but for legal security, a
written agreement is recommended.
Shared Profits and Losses: A valid partnership generally
involves an agreement to share profits and losses. In this
case, the parties have agreed that the profits will be shared
