Question

Chapter 9, Page 171, Case 4

Linda and John, aged 17 and 18, respectively, entered into a partnership agreement to carry on business as a local parcel-delivery service. The business was to be operated under the name “L & J Parcel Delivery.” In order to conduct the business, the two partners purchased a small truck on credit from a local truck dealer. The purchase agreement for the truck was signed “L & J Parcel Delivery” by John, who negotiated the purchase. Linda purchased a motorcycle on credit from a local dealer for the twofold purpose of (1) delivering parcels, and (2) transportation to and from her home to the place of business of L & J Parcel Delivery, a distance of some eight kilometres. She had informed the seller that the motorcycle would be used by L & J Parcel Delivery and for personal transportation, but signed the purchase agreement in her own name only. A few days before Linda’s 18th birthday, John and Linda decided to cease their business operations. A substantial part of the purchase price remained owing to the sellers of both the truck and the motorcycle, and, with the intention of avoiding liability on the two purchase agreements, Linda repudiated the contracts and the partnership agreement. Over the next few months, John and Linda retained possession of the truck and motorcycle, while they argued between themselves and with the two sellers as to responsibility for the payment of the balance of the purchase price on each vehicle. Finally, after three months of fruitless discussion and argument, the sellers each brought an action against John and Linda for payment of the debts. Discuss the rights of the parties and the issues that might be raised in the case. Render a decision.

Answer 1

Here the question is important because of the involvement of a minor. For owning a vehicle and starting a company the age criteria could be different. So let's break it down.

1) As per the law, Linda being a minor can sign a business partnership agreement only if the other party is an adult, i.e. is John. Anyway only John is legally authorized to represent 'L & J Parcel Delivery'. So it is a valid contract.

2) John is an adult who bought a truck on credit under the company’s name and It is legally valid.

3) Linda bought a Motorcycle on credit under her name. Since she has no authority to legally represent her company, and she bought it in her name indicates that she is in the age category of a citizen who can own a vehicle in their name as per the 'law of the land'. It is a valid contract.

4) Before her 18th birthday Linda repudiated the contract with John. The procedure is valid.

In here Linda has no legal liability over the truck John bought under their companies name. But she can't do the same for the motorcycle since she bought it in her name and retained possession of it.

John is fully liable to pay for the truck since he was the only one who is having the right to legally represent the company because the other party was a minor as per business partnership rules. Moreover John retained possession of the truck. But he is not liable to pay for the motorcycle because it is owned by Linda.

Both the vehicle dealers in here are supposed to get the rest of the payment. Denial of payment can lead to legal consequences for John and Linda.