Question

Use ILAC Format to answer please.

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Susan and Henry began carrying on a restaurant business in partnership in June 2016. In July 2016 they employed Isabella to manage the restaurant during the day. Susan and Henry work together in the evenings. Isabella made a great success of her part in the business and, as from September 2016, Susan and Henry decided she should be a salaried partner.

Susan and Henry went for a week’s holiday in the quiet time during January 2017 and during that time Isabella purchased an additional coffee machine for $7,000. Upon questioning, Isabella told Susan and Henry that she had ordered the coffee machine from Donald, one of their authorised suppliers, in order to keep up with customer demand when she was managing the restaurant. Susan and Henry then reminded Isabella that her authority to purchase items on behalf of the firm is limited to $1,000. Susan and Henry informed Donald that they are not responsible for the account. Donald is still disputing this, maintaining that Isabella informed him when placing the order that she was a partner in the firm and that she was purchasing the machine on behalf of the firm.

Susan resigned from the partnership in March 2018 when she discovered Henry was spending a lot of time with Isabella. Since her resignation, Susan has received a claim for payment for $12,532 from Frank. Frank is a long-term supplier of fruit and vegetables to the firm. His claim for payment relates to supplies made during the period 30 May 2018 to 31 July 2018.

YOU ARE REQUIRED to advise Susan of her legal position with respect to the issues arising from the above situation

Answer 1

In the first scenario there are two partners Susan and Henry. Isbella is appointed as partner afterwards. If the question is relating to the coffee machine all the partners are liable and isbella who acted beyond her power is personally liable. In case if isbella is unable to pay the amount of coffee machine then partnership firm i.e. both the partners are also liable. As the concept of company and partnership firm is different. If it is case of company then only isbella is liable and also personally liable as it is ultravirus act i.e. act beyond the power.

In Second scenario Susan had resigned on March 2018. She had received the claim for payment for the supplies made in the month of May and July, 2018. As both the incident or event is happened after the resignation of Susan she is not liable of any of this event. If any claim is received before her resignation date then she is liable and in any other case she is not liable at all.