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Limited Liability Partnership Doc

   

Added on  2020-03-28

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1Title of the paper:Student’s name:Institution:
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2Question 1: (a) Explain to Ariana and Elsa if they are liable to pay for both the overdueaccountsThe issue in this question is if Ariana and Elsa can be held liable to pay for the contracts createdby Bella, particularly in view of the fact that it has been expressly stated in the partnershipagreement that the object of the business will be to sell clothes that have been imported fromEurope only and the sale of any other articles, other than clothes have been prohibited. Still,Bella had ordered a shipment of clothes from Korea and she had also ordered gemstones andjewelry worth $20,000.The law of partnership provides that each partner is considered to be liable jointly and severallyalong with all the other partners, regarding all the acts of the partnership business that have beendone while such person remained a partner. Moreover, the law also provides that in this regard,the liability of all the partners is unlimited (Chiam Heng Hsien v Chiam Heng Chow, 2015). Inview of the joint and several liability of the partners, the creditor of the partnership business mayhave civil causes of action. Therefore, it is available to the creditor of the partnership business toeither sue the partners together or such creditor may also decide to sue the partners separately.On the other hand regarding the dealings between the partners themselves the partner who haspaid for more than his share of the liability, as an option under the law to claim contribution fromthe other partners in accordance with the terms of the partnership agreement (Gabriel Peter &Partners (suing as a firm) v Wee Chong Jin and othrs., 1997).
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3The law also provides that when a partner who was acting within his apparent authority and hasmis-applied the money or property of the business, either party can make the firm or any of itspartners liable if the partner has misappropriated any money or property that was received eitheras a repayment of debt or as a loan on account of the firm. The law provides that every partner(and in case of his death, his estate) is liable for the debts and obligations of the firm that willincurred while such person was a partner of the firm (Chiam Heng Luan v Chiam Heng Hsien,2007). In the same way, the partnership and all the partners can also be sued for any wrongful actthat may be committed by a partner in the course of the usual business of the firm or beingcarried out with the authority of the other partners (Hely-Hutchinson v Brayhead Ltd., 1968). In the present case, Elsa was not taking an active part in the management of the partnershipbusiness owner although she was a partner of 20%. The business was merely being carried outby Ariana and Bella, but due to her pregnancy, Ariana also went on extended maternity. Underthese circumstances, Bella was managing the shop alone. In order to boost the business of thepartnership, Bella decided to order some clothes from a Korean supplier for $10,000. Whiledoing so, she disregarded a clause present in the partnership agreed according to which, thepartnership was going to sell clothes from Europe only. At the same time, in order to bolsterrevenue further, she also started purchasing semi-precious gemstones and jewelry. Therefore, shemade an order to purchase gemstones and jewelry worth $30,000 from My Precious Jewels PteLtd. When the business failed to make these payments, the Korean supplier and My Precious JewelsPte Ltd decided to sue the other partners, Ariana and Elsa. According to the law of partnershipmentioned above, all the partners are treated by the law as being jointly and severally liable for
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