Business partnership

by | Nov 17, 2021 | Assignment

Felix, Prue and Yuii have formed a business partnership. They own and manage a restaurant called Gourmet Table. They hold a meeting and all decide to spend some money refurbishing the restaurant with new tables and chairs. Over the years, when they needed replacement furniture, they have dealt with a business called Best Restaurant Buys (BRB). Both Felix and Prue visit the shop, having all agreed on a maximum dollar amount to be spent on refurbishments. They choose a particular set of tables and chairs and order the required number. Following this purchase, Felix leaves town for his annual, month long holiday.Meanwhile when Prue calls into Best Restaurant Buys the following day, she notices some chairs were upholstered in leather instead of the vinyl which she and Felix had chosen. Even though they cost more than five times the chosen chairs, taking the cost well over the agreed amount, Prue changes the order and purchases these for the restaurant, as she thinks they would give the restaurant a much more ‘up-market’ look. She does not inform Yuii and thinks she should not bother Felix on his holiday.When Felix returns and he and Yuii see the amount owing for the new furniture, they are furious with Prue and claim that Prue had no authority to change the order and will have to pay the extra amount herself. Yuii adds that as he had nothing to do with the choice of chairs, he is not liable. With business being a bit slow, and with the other refurbishment costs, the partnership funds are too low to pay the extra amount.

Prue argues the furniture is for the partnership and, in any case, she now has no money. Prue and her husband Pete were in the process of separating and Prue reveals that Pete has taken all their money from their bank accounts. Best Restaurant Buys has threatened to sue all three if payment is not made immediately.

Using the Partnership Act 1891 (SA) and relevant cases, discuss the legal issues relevant to the partnership explaining who is liable for the debt.

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