HYPOTHETICAL Essay Example | Topics and Well Written Essays - 500 words

HYPOTHETICAL - Essay Example The partnership act of 1891, section five, defines partnership as a business organization formed by two or more people for the purposes of making a profit. According to the act, there must be involved, for the purposes of conducting the business as a joint venture. There must be obligations between the partners and sharing of profits among them determines partnership. In the case of Canny Gabriel Castle Jackson Advertising (pty) ltd vs. Volume Sales Finance (pty), (1974) 131 CLR 321, the high court ruled that for there to be a partnership, sharing of profits and loses must occur, and an organized structure of operation must be proved (Higgins and Victoria, 1970). In the above scenario, there is partnership between Henry and Angus. This is because the two agreed to form the business as a joint venture and they share profits together. This satisfies the requirements of the partnership act, section 6(c) and section 5 (1). In section 6, sub section c, it states that a partner is considered in a partnership if he has a stake in the earnings and section 5 subsection 1, identifies a partnership as a relationship between two consenting parties aimed at making profits. Under the law, Lorenzo cannot be considered a partner of the business entity. This is outlined in the partnership act, section 6 subsection c (v1). The law states that a person receiving annuity from the business by selling the persons goodwill is not by reason a partner in the business. This section disqualifies Lorenzo from being a partner of the firm since he does not share in the profits of the business. Even though his name is on the business, it acts as goodwill and it does not necessarily make him a partner. From the above analysis, the partners of the business are Henry and Angus, and FRSPL should look at various legal mechanisms of recovering their debts from the