Law of Business Entities: Business Partnership Assignment Analysis

This assignment analyzes a business partnership scenario involving three partners: Bob, Me, and Zac. The assignment details the development of a business plan for an online product reselling business, including financial contributions, roles, and responsibilities. It outlines the legal structure of a limited partnership, emphasizing the need for a legally binding agreement. The solution addresses regulatory controls, including profit sharing, compliance measures, and partner entry/exit rules. It also explores risk assessment, including debt, personal liability, and mitigation strategies such as insurance and credit mitigation. The assignment examines how various sections of the law, such as liability for actions in the ordinary course of business and the responsibilities of partners, apply to the business. The solution highlights potential liabilities, such as those related to health and safety, and provides recommendations for mitigating risks through insurance, training, and adherence to legal requirements. The student analyzes the implications of business decisions on personal and business finances, providing a comprehensive overview of the legal and practical considerations in a business partnership.

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ASSIGNMENT COVER SHEET
Assignment on Business partnership.
(Name)
Course
Professor’s Name
Institution
Location of the Institution
Date

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Step 1: Business plan and regulatory controls
The business of online nature in the domain of Internet Business Reselling products over the vast resource pool of a huge number of potential
customers were planned and chalked out (Alhabeeb, 2014). . It was agreed among the partners that Bob, Me and Zac will form an agreement of
Partnership for the concerned business. It was also agreed that Bob will allow for an initial investment of $2,00,000.00 for the initiation of the
concerned business. It was also mentioned in the business that the Me and Zac will be allowed for a remuneration of about $10,000 per month
but not as employees but as consultants for the concerned business.
The development of the Business Plan ;
The development of the business plan will involve the development as well as the attainment of the strategic business level in different types of
units :
Choice of a Business :Internet Business Reselling products.
Area or Location or Occurance : NZ.
Nature of Business : Partnership.
Legal Bindings : Formation of a Limited Partnership agreement according to the Limited partnership act, 1908.
Modes of Operation : To be decided by the Partners and then to be incorporated in the legally binding Agreement for the development of a job
responsibility of the partners and the remuneration or the share of profits that may be included or derived from the concerned business.
Different Steps of the Business Plan :
The different steps of the business plan involves the inclusion of the different types of discussion regarding the domain of business and its area
of operation in the concerned business.
1. The development of a modus operandi for the concerned business.
2. The choice of the target market and the target consumers.
2.1 Identification of the potential market.
2.2 Identification of the target segment for the concerned business.
3. The job role description and division regarding to the suitability of the partners.
3.1 The development of a legally binding job responsibility of the partners.
3.2 The development of a proper type of remunerative system as per the laws of the land for the concerned business.
4. The development of a cost budget for the concerned project.
4.1 Development of different cost centers for the concerned business
4.2 The development of different types of pricing and budgeting components for the concerned business
4.3 The development of an effective monitoring system for the income and expenditure system of the concerned business.
5. The development of a ER diagram and a cost sheet to monitor the flow of income and expenditure of the concerned business in the
concerned domain.
6. Development of funds: There should be a written effect of the contribution of the different types of the partners regarding the
development and the contribution of the funding for the commencement as well as the smooth running of the concerned business (Allen
& Kraakman. 2016).
Fig. : Funding.

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7. The development and a successful implementation of an effective control measure and a feedback mechanism for the entire business
process for the concerned business (Beatty et al., 2018). The development of a weekly based MIS report for the concerned activities in
business will also serve as a good control measure.
7.1 The development of a flawless MIS report generation.
7.2 The development of interlinked Information system in relation to the different segments involved in the concerned business.
8. The development of the different types of the activities that may lead to the development of a speeded business network, i.e, the
development of a perfect marketing strategy for the concerned business for the better return of investment and accumulated profits
(Bernstein, 2015).
9. The other types of the development of the business plan strategies will involve :
9.1 Development of Recruitment and staffing facilities for the concerned business.
9.2 The development and the implementation of the advertisement facilities for the concerned business.
9.3 The development of internal audit control features for the better control and understandibility of the concerned business.
9.4 The development of a sustainable pricing facility for the concerned business facility.
AIM: To understand the liability that arises outside or, an irrespective of, the structure uses.
The regulatory controls that applies to the concerned business may include the following :
1) The first type of the regulatory control will involve the clear indication of an agreement for the partnership between the three people that
are involved in this concerned business namely, Me, Bob and Zac. The share of profit and the job responsibilities should be shared with a
clear listing for the concerned business in the agreement for the Partnership.
2) The other regulatory control will involve the different types of the compliance remedial measures that may be involved for the smooth
running of the concerned business in accordance with the legal enforcement of the concerned business (Blake, 2016).
3) The rules for the entry and exit of the partners should be clearly mentioned in the agreement for the partnership and in a legally binding
format (Law, 2016).
Step 2
The agreement for the Partnership that will be formed should have a legal binding format with a continuity of the general agreement as well as
the different types of facts of the nature and duty of the Partners, their role and their active involvement in the concerned business (Burns, 2016).
The partnership Agreement will be made between the three partners, Me, Bob and Zac in a legally binding manner. It was agreed among the
partners that Bob, Me and Zac will form an agreement of Partnership for the concerned business. It was also agreed that Bob will allow for an
initial investment of $2,00,000.00 for the initiation of the concerned business. Zac will provide for the instruments and the office space provided
for the concerned business. It was also mentioned in the business that the Me and Zac will be allowed for a remuneration of about $10,000 per
month but not as employees but as consultants for the concerned business.
Worksheet is being attached.
Objectives
 Develop sustainable
Business
 To provide quality
service to the
customers.
 To keep strict
adherence with the
legal use of Internet
Business reselling
productsaccording to
the laws of NZ.
- The aims of the
business is to develop
more and more
business network and
to satisfy all my
clients with quality
work.
Outline the law that applies
and any issues
- The implications for
the Internet Business
reselling productsdeals
with a perfect type of
work agreement and to
move in accordance to
the laws of the land
governing such an
attribute.
Outline any personal issues
that arise
- The most important
aspect of such a
business to maintain
and safeguard the
different types of
agreements and
promises that are made
in the agreement for
partnership between the
partners of the
concerned business.
How will you deal with this issue:
- Suitable changes should be
maintained to default rules.
- If there are instances of some rules
that cannot be changed then some
modifications of the same has to be
made.
RISK
- The main type of the
risk involves the risk
of debts.
- The other types of
risks involves the risk
Will you accept risk?
There should be a risk
management plan and a
definite amount of plug in for
the concerned risk.
The main type of the
implication for the concerned
type of the business should
be explained.

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related to partners.
-
Personal risk?
This involves the amount of
risk a person takes in for the
concerned business.
To abide by the Internet
Business reselling
productsrules in NZ and also in
accordance to the legal business
partnership agreement.
One of the most important
aspects of Internet Business
reselling productsis Risk
mitigation procedures and
policies to be undertaken.
The contract with the business
partners should be the same
with Credit mitigation facilities.
It should clearly be stated how
the credit mitigation will be
ensured.
Personal risk : I will accept
some risk from this for the
agreed expenses for the
cameras, lease, and premises
plus expenses
How much personal Risk can I
sustain ;
- The gear – a portion
of it.
- The amount of
investment made
and in case of
defaulters who will
be liable to pay for
it.
- The bank, also a
portion of it.
To limit the risk of further
liability I will use limits in the
partnership agreement.
Explanation of the said
business :
Here it can be said that the
usual kind of business is
commercial Internet
Business Reselling
products and the purchase
of equipment or contracting
that relates to this kind of
business.
Personal Risk ;
I will be jointly liable unless
the third party knows of any
limits. We have a limit but
we cannot tell all the
suppliers this. That’s not
commercially realistic. The
limit silver lining cannot be
made public.
Purchases in the usual way of
business?
- Enter loss making
contracts
- Employ people?
How would this affect my
business? It would make a lot
of expenses we need to pay
and we are very much
depending on house sales
and listings of the expensive
ones, the council keeping up
the contracts, and walk in.
Not the most secure
business.
Here I could face a lot of
competition or the
government might ban on
some commodities that may
be considered as essential for
my business use like this.
Regular maintenance of an
income and expenditure
statement to mitigate risks.
Personal risk.
The joint liability mitigating
procedure should be utilized
for a fruitful and a better way
of business maintainance.
What could this result in for
me?
- The cost of an extra
machinery.
- The financial
feasibility of my
partners in the said
business.
- The amount of
personal money to
be at risk if the
partners do not
contribute.
This rules cannot be changed. It is compulsory
so there is no way to avoid it.
I can limit with the rule, but this is of no effect
on third parties without knowledge.
I can sue my partners for breach but that’s
only useful if they can pay me.
s.13 – liability for actions in the
ordinary course of business
causing loss to others.
S.15 partners are also
responsible for other activity of
The risks relating to this
business.
eg
Dropping the gear on
We have a lot of potential
risk here flying over people,
over roads, and the vehicles.
I can make up an example
here of the damage that
Explain what s.15 does, the
kind of liability that may be
associated with this kind of
business.
I cannot avoid this.
Can I limit with rules, yes, eg with procedures
on use and ensuring training and licensed use
of the Internet Business Reselling products,

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the other co partners. someone – large potential
liability for operator and
partners under health and
safety.
Fines and compensation.
Should be imposed.
Recommendation :
Damage to property
Will I accept – NO so I can
take insurance but this may
not work if we do something
that the insurance prohibits
like doing illegal business.
might occur.
How does this affect the
business
- It is an expense of
the business and
take the cash flow
or even mean the
business cannot
survive
- Use your example
here
etc.
Others
- Find examples for
other sections
s.23 – loss of contribution
s.19 on leaving, also s.39
death of partners,s.27
Commercial Objectives
- The aims of the
business is to develop
more and more
business network and
to satisfy all my
clients with quality
work.
Outline the law that applies
and any issues
- The Partnership laws in
NZ
Outline any personal issues
that arise
I will be jointly liable unless
the third party knows of any
limits. We have a limit but we
cannot tell all the suppliers
this. That’s not commercially
realistic. The limit silver lining
cannot be made public.
-
How will you deal with this issue:
To make all the activities and its probable
clauses in the agreement of Partnership.
- Return on investment
the nature, time and
the amount.
- Loan : If required how
to persue it and who
will be liable for the
payment in case of
defaulters.
What’s my aim?
The Aim :
- To Get profit
- To Sell the business
once its built
- Should I loan or
contribute
- Is there a percentage
return I want
Payment for hourly work
done.
This is identifying the rules in
s.27
The aims ;
To sell the business after 3
years , then I don’t want to
take profit and I will reinvest
so there will be growth
capital
Minimising profit for
sustainable business growth.
To develop ways to find out a
guaranteed return on the
loans.
Synopsis ;
This affects principals
(partners) by either making
money available for personal
use or for growth. They may
need to lend or contribute
more.
Money will be used for
salary/hourly rate which may
exhaust the income.
To develop the business so that it can be run
sustainably without the extra edge of the
credit level.
- Profit
- To determine the
amount of profit in the
concerned domain of
business.
This relates to inputs and the
expected returns.
- Control
o To develop
effective
control

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measures
o Ethical
business
control
measures
- Growth
o does the
structure allow
for growth
o To develop
progressive
growth
regulated
structures.
Capital regeneration from
Partners.
What do new partners bring
in and get in terms of a share
of profit, management rights,
etc.
You have default rules here.
o What should
be done by a
Partner before
he wants to
exit.
o Exit
Procedures
 how to
end the
busines
s
 how to
exit but
not end
the
busines
s
return of capital on exit–How
can we get return on Capital.
Implications – what happens
when someone leaves for the
business.
When a partner leaves then a
new Partner may be
introduced to take his place
and the accounts have to be
reconciled with the previous
Partner before he exists.
Personal issues;
 Depends on what
you choose for your
exist rule.
 Can I leave when I
want?
 Can I therefore get a
share of the assets at
any time or do I
have to wait.
Rules for exit :
 There is no fixed time for the
Partnership to be carried or to be
adhered to, if a partner wishes to
leave he or she may do so by
serving a notice..
 In case of a legally binding
Partnership deed the issues of a
notice in writing and subsequently
signed by the concerned partner
may serve the purpose.
Step 3
Company Structure :
The Company Structure will be organised in the following manner :
The Company structure will follow a format in which the Manager of the specific business unit and the industry will be confined to the sole
responsibility of coordination of the different types of the activities and the execution of the different types of the functions of the concerned
industry (Coffee et al., 2015).
Galbraith (2014) stated that the Supervisors will be responsible to the manager for the execution of the deliverables and the manager will intern
be responsible to the management (The Common consent of the partners in this partnership type of Business).
Worksheet is added with answers to the concerned questions.
Objectives
 Develop sustainable
Business
 To provide quality
service to the
customers.
- The aims of the
business is to develop
more and more
business network and
to satisfy all my
clients with quality
work.
Outline the law that applies
and any issues
The implications for the
Internet Business Reselling
products deals with a perfect
type of work agreement and
- -

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 To keep strict
adherence with the
legal use of Internet
Business reselling
products and its
applicability according
to the laws of NZ.
to move in accordance to the
laws of the land governing
such an attribute.
Issues and implications will
depend on the business
- Leaving in 5 years is
a continuity issue.
- Share sales brings in
new people and
options as well as
capital.
- Does my business
need capital to
grow? This is an
important question
and the answer is
Yes.
-
Commercial Objectives
- Return on investment
- The answer to this
question is basically
an integrated approach
that will deal with the
different types of the
reality measures that
may be made
applicable for it.
This should be the same as
partnership – you can then
easily compare the two
structures to decide which
achieves your aims.
What’s my aim?
- Grow the business
and sell in 5 years.
- Get profit in my
pocket.
- I do not want to put
money in, I want to
use other peoples
money (banks and
credit)
Getting paid. This is not the
same issue here. My options
- Directors fees
- Salary
- Consulting to the
company
Once you have your objectives
then line up the sections
beside them.
I
Dividend policy but subject to
solvency test. s. 52 & 56
Using other peoples money.
This will be an issue in
directors liability.
The Duty of the Directors will
be to ensure that the
Directors are loyal to the
concerned company and that
the share holders are provided
with the accurate type of
information in regards to the
I want 3 classes of shares.
s.39 cannot stop transfer but
may allow transfer after
3years at market value.
Set out which of these need a change to the
constitution, how you do that and refer to the
sections on constitution changes.
Inclusion of the share holders agreement in the
concerned business agreement.
Write clause. I want independent valuation of
shares at 5 years, pre-emptive rights for all of us.
NO transfer prior.
This is a liability issue.
Simple clause
An interests register. For record keeping
purposes, is a must for the company as well as a
register for the logistics should also be
maintained by the concerned Company.

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concerned business.
- Profit My options are based on my
shares or by agreement with
the other shareholders
- preferential rights.
- the dividend policy
.
s.36 share classes and rights.
I want preferential shares.
Realistic Approach : If I have put nothing more in
than the others. On my facts I must be the
‘partner’ putting in contracts. If this is higher
value, as I am giving up income, then I can
negotiate my position
- Control :
- To develop effective
control by the use of
technology audit
- To provide for internal
audit features.
- To provide for human
resource monitoring.
.
I want control as
- a director
- management
Lot of overlap here
Sections on
- share rights
- classes
- issue of new shares
- transfer of shares
Explain the sections
What are my options.
- Using classes for
control rights
- Preventing new
shares?
- Preventing transfer
of shares?
- A shareholders
agreement?
There are different forms of
problems that may creep into
such a business so in order to
maintain them we should
have a definite type of
regulatory measure that may
be applied for the
rectification and modification
of the errors as and when it
occurs in the concerned
Company.
Same as above
Growth of the Concerned
Business :
I want to grow the business
This means capital, new deals,
So far I have totally restricted
new shareholders, transfers
and want to take money as we
go.
This structure is very
restrictive on growh.
My control’needs’ are a
problem too.
- Capital
- Borrowing ( I might
have a limit on
borrowing in the
constitution as a risk
prevention.)
My company, Drenzil Ltd, is
an entity that can last
continuously.
My exit aim is 5 years
HOW
- redeemable shares.
S.68
- sale as 5 years as
above.
- Liquidation of the
company
(compulsory in
constitution to
achieve my aim)
Explain options individually
One example
Redeemable by the
shareholder
- Only pay if can pay
or apply for
exemption.
- Will take money
- Change of
shareholder and loss
of expertise and
contacts
Sections
- There is a time and
value
- S.114 on for
exemptions.
There may be certain times when we would
require a modification of the existing provisions
of the agreements and that should be done
following a legally formatted procedure.

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- Return of capital –
do we have
preferential rights
for all classes or just
some to get paid first
on liquidation?
- Do we need to pay
out shareholders?
What can they do if
we don’t pay them
out when they want
to leave and they
don’t have any
specific rights?
The effect on the business of
each is clear. Ending versus
continuing and changes in
shareholders and directors.
Consider these for your
business.
- Shareholders is a
creditor.
RISK
RISK
- The risk to you
personally from the
business for debts
- The risk related to
actions of your other
directors
- See list above and the
issues related to
personal liability of
directors and
shareholders.
- Consider the risk as a
director and a
shareholder.
Try to quantify the risks. This
is largely a guess but should
have some reason for the
amount give. Estimate what
this means in value given the
size of your business.
Category of the evaluated
risks :
- Risk to the business
- Risk to you as a
shareholder
- Risk to you as a
director.
List the risks (risks include areas
such as failure to pay creditors,
insolvency, contracts entered
into, breach of duties.
Failing to pay.
- Refer to your facts
on the amounts.
- Contracts formed by
directors s. 180 –
binding (notice of
constitution limits? –
s.18-20 – like
partnership issue)
- Negligence – by
company and by
directors.
-
- There are different types of agreements and Capital investment sharing decisions between the
partners of the concerned Company.
- Bob is ready to make an investment for about $2,00,000.00 for the initiation of the concerned
business.
- Zac is ready to provide for the instruments cost and the office space that may be required for the
expansion of the concerned business.
- The Partners of the concerned business is ready and has invested the said amount in the concerned
business and also the same has been mentioned in the Partnership deed.
MEETINGS
Heading Purposr ;
The purpose of the meetings
Value of the Meetings to the company or the Share Holders :
It will help to keep the shareholders updated in case of the different types of

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should be clearly stated. activities taking place in the concerned organization.
Share holders meetings
Annual meetings
Special meetings
The importance and the
necessity of the different
types of meetings and its time
of occurrence should be
mentioned in the legally
documented Partnership
agreement.
Electronic meetings :
Sometimes they are.

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Step 4
Ans. : The Clear statement of the preferred structure of the business will include the different
types of aspects of revenue sharing among the partners (Hillary, 2017). The different types of the
job responsibilities that will be assigned to the partners and the different types of the
remuneration that may be set for the various types of activities that will be done in the following
case (Kaufmann, 2017). It should be noted that the different items of revenue sharing and also of
the different types of the aspects of the remuneration should be made in respect to the partnership
agreement according to the laws governing in the concerned land (Kubasek et al., 2015).
Topic Partnership Form of Business Company form of Business
Ownership It cant be transferred. Can be transferred to spouce
or others as may be decided
by the Share holders
Tax Benefit It enjoys less tax benefits. It enjoys more tax benefits.
Business
Responsibility
It is borne by the Partners involved
in the Business as per the
Partnership Deed of Agreement.
It is borne by the duties and
the responsibilities of the
Share Holders (Mann &
Roberts, 2015).
Nature of Liability Unlimited Liability Limited Liability
Formation Easy to form Requires certain business
rules and regulations to be
formed (Sornarajah, 2017).
Personal liability
protection
Is not applicable. Is applicable.
Cost of Business In case of Partnership type of
Business the cost of running such a
In case of a Company it is
relatively high.

Partnership Form of Business Page 12
business is relatively low.
Step 5: Research question
Ans. ; The statistical references do indicate the fact that the SME has a great or substantial
impact in the NZ economy. It has been observed that the SME are the backbone of the country’s
economy (McQueen, 2016). It also reveals the fact that the 97% of the industries in NZ Economy
are small business enterprises involving less than 20 employees and it also indicates the fact that
about 28% of the country’s GDP is obtained from such industries (Miller, 2015).
The sector of the economy that the business is a part of is the Internet Business reselling
products. This is a prospective segment in terms of business growth and profit. Though there are
a few large names and firms that are present in the existing business still the amount of prospect
in the concerned business is relatively high (Scarborough, 2016).
The major causes of failure in this type of business is competitive pricing and the lack of having
a spread out network for the concerned business. The other causes involve the use of innovative
technology and machinery for such an event. In case of the lack of such an event the business
can be seriously affected (Schell, 2017). The availability of a spread out network and the
different types of the pricing that should be made should be competitive in this regard.
The business moves on with debit and credit. The principles of Debtors and Creditors do form a
successful business (Twomey et al., 2016). But if the business goes down then there occurs a
serious liability of concern for the Creditors which the business has to then cope up with. Here
we can see the strength of solvency of the concerned business in respect to the different types of
the Creditors associated with the concerned business (Light, 2015).
The role and the liability of the Directors are very important in order to have a sufficient
determinant to the growth and progress of the concerned company (Welch et al., 2016). It has
been observed that the Directors are just the person who are considered to be the back bone of
the concerned industry. As depending on their decision and verdict a company is seen to run
smoothly and flawlessly (Sowell, 2015). It has also been observed that they are also responsible
for act of the Duty of the Care and Diligence of the concerned company. There are also certain