question archive Geetha, Joe and Augustine entered a business arrangement to run a large bakery
Geetha, Joe and Augustine entered a business arrangement to run a large bakery
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Geetha, Joe and Augustine entered a business arrangement to run a large bakery. Geetha and Augustine left their employment to work full time in the new business. Joe retained his job but agreed to help lent RM70,000 to the new business venture. It was agreed that Geetha and Augustine would each be paid a salary of RM5,500 a month and Joe would be paid 4% interest on her loan. The business arrangement was done in writing. It also stated that each of them had invested RM30,000 as capital and that after salaries and interest were paid they would share equally in any profits.
Describe if the arrangement between Geetha, Joe and Augustine fulfil the requirements of a partnership.
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Answer:
REQUIREMENTS OF A PARTNERSHIP:
- Existence of an Agreement: Written or oral among members also known as a Partnership Deed
- Existence of Business
- Object of Profit
- Sharing of Profits
- Agency Relationship among partners
Since in the given case, all the above requirements are present, thus arrangement between Geetha, Joe and Augustine fulfil the requirements of a partnership.
