Question

. Abraham, Badu and Copson are partners in a firm of haberdashers trading under the name Abraham’s Emporium. The firm is registered under the Incorporated Private Partnerships Act, 1962 Act 152, is faced with the following matters for which it seeks your esteemed advice:

In order to control the overall expenditure of the firm, partners have been forbidden to make an order for stock-in-trade exceeding Ghc2,000.00 in value, except with the concurrence of all partners. Abraham has been persuaded by Asamoah Gyan, a manufacturer’s representative, to place an order for kitchen furniture worth Ghc5,000.00, which is duely delivered to the firm. Asamoah Gyan has no idea of the restriction on partners, is demanding payment from the firm. What should the firm do?

Answer 1

In such a parlous situation, the firm should grant floating charges on the stock-in-trade** up to the limit of GHc 3,000 in connivance with Section 21 of the Incorporated Private Partnerships Act, 1962. Further the firm should immediately discharge the amount of GHc 2,000 which is the standard limit allowable as per the partnership terms, to Asamoah Gyan in order to rescue themselves from insolvency proceedings and maintain the firm as a going concern.

Moreover, the pliability of the floating charge will be preferable to both the firm and the creditor Asamoah Gyan. The firm will be free to trade with the assets under the floating charge without detaching any of its movables from the business. Whereas, the creditor Asamoah Gyan will benefit from the fact that the floating charge fetter to all assets in a class. The only risk remains that the value of assets may shrink over time.

**kitchen furniture is considered as stock-in-trade here.