TUTORIAL 3 – RELATIONSHIP BETWEEN PARTNERS & THIRD PARTIES
ANSWER ALL PROBLEMATIC QUESTIONS BELOW
- Jane, June and
Jinny are partners in a firm called “The New You” which specializes in
beauty treatment.
Jinny, without Jane’s and June’s knowledge, borrowed RM50,000 from Sure Finance to
pay off some debts of the firm and to buy a new treatment machine. Sure
Finance demanded repayment of the loan from Jane and June when Jinny defaulted
a few monthly installments.
Discuss whether Sure Finance is likely to
succeed in its action.
- Prima and De Hul
are partners in a firm manufacturing CD players. While testing some CD
players last month, Prima forgot to install some safety devices.
Thorens bought a CD player from the
partnership and suffered hearing problems after using it. Thorens sued the firm
of Prima and De Hul. De Hul denied his tortious
liability on the ground that the negligence act was committed by Prima
alone.
Would Thorens’ action against the firm liable?
- Majid and Shiraz
are carrying on business as theatre proprietors. The partnership deed
provided that no partner shall borrow money except with the consent of the
other partner or in the usual course of business. Majid borrowed RM5,000
from Dol Chetty and used the money
to go for a holiday abroad. Dol Chetty is suing the firm for the debt.
Discuss whether the firm is liable for the
debt.
- Adam, Benjy and
Cindy are partners in a firm that provides office furniture known as “My
Office Enterprise”.
Adam received RM30,000 from Suriram Sdn Bhd, a client of the firm for several computer tables and filling
cabinets. Without the knowledge of his co-partners, Adam misapplied the money.
Discuss the liability of the partners for the
misapplication of the firm’s money.
- A firm of Bunga Cantik Enterprise received money from a client, Citra in the ordinary course of
its business. The money was kept in the firm’s custody. Lestari, a partner
of Bunga Cantik Enterprise secretly drawn the money and misapplied it. Citra
sued the firm the make good the loss.
Are all partners of Bunga Cantik Enterprise
liable to make good the loss?
ANSWER ALL MULTIPLE CHOICE
QUESTIONS BELOW
1. What is the liability of a new partner
for partnership’s debts and obligations ?
A. He
will liable to the old creditors
B. He
will be liable to partnership’s debts when he is not in the partnership
C. He will be liable to partnership’s debts
while he was a partner
D. He will be liable to continue contracts after his admission
2.
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What
is the legal implication as regards to the above situations?
A. The firm was not liable as the sale of
the car to Syarikat Credit Corp.
was
not an act for carrying on in the usual way of business of the kind carried on
by the firm
B. Syarikat
Credit Corp. was liable as the sale of the car was not the act for carrying on
in the usual way of business
C. The firm was liable as the sale of the car to Syarikat Credit
Corp.
was
an act for carrying on in the usual way of business of the kind carried on by
the firm
D. Syarikat
Credit Corp. was not liable as the sale of the car was an act for carrying on
in their usual way of business.
3. When a
partner committed a wrongful act under the law of tort, the firm is liable if
__________.
A.
the wrongful act is committed without the
consent of the other partners
B.
the wrongful act is committed in the
ordinary course of the firm’s business
C.
the wrongful act is committed outside the
scope of the partner’s usual authority
D.
the wrongful act is not ratified by the
other partners
4. What is the effect of holding out in
partnership?
A.
The person
who had been held out is not liable as a partner
B.
The doctrine
of estoppel will be applied
C.
The person
who had been held out may deny his liability in the partnership
D.
The third
party cannot take legal action against the firm for the act done by the person
who had been held out
5. The meaning of holding out can best be
described as…
A. a
person who is a partner makes it known either by his word or conduct to the
third party that he is not the partner.
B. a
person who is not a partner makes it known either by his word or conduct to the
third party that he is the partner.
C. a
person who is a partner makes it known to the third party that he is not liable
for any debts and obligations in the firm.
D. a
person is not a partner makes it known by express agreement to the third party
that he would not be liable for the firm’s debts.
Please
prepare a possible solution to
the following problem based on the legal principles and authorities you had
learned before.
Labu, Labi and Laba are partners in a firm
known as Gorgeous Enterprise. The firm manages a Shell petrol station in
Putrajaya. The petrol station’s profit intake per day is very lucrative. This
situation acts as an inducement for the partners to expand their business to
include maintenance of cars.
Discuss the legal position of the partners
in each of the following situations:
- In a meeting attended by Sarip,
Labu told Dato’ Bakhil that Sarip is also a partner in his firm. Sarip did
not say anything to Dato’ Bakhil. Dato’ Bakhil later made a loan of RM
50,000 to the firm. The money was then used by the firm in the maintenance
of the business. Dato’ Bakhil then sued sarip when the firm delayed
payment of the loan.
- Labi, in his personal capacity,
was appointed as trustee for Maneesa. Labu withdrew RM 100,000 from the
trust fund and used it to purchase machinery for the firm. Maneesa now
sues the firm and also intends to sue Labi and Laba.
