Question

Malaysian Business law

Mariam, Devi and Ah Moi formed a consultancy business in March 2020 providing financial advice in view of Covid-19. They have agreed to share their profits and losses on a ratio of 30:30:40 respectively. However, Ah Moi said that since she has no knowledge on financial advice, she will not be involved in the day to day running of the consultancy business. Hence, most of the financial advisory work was done by Mariam and Devi. Recently, Mariam contracted to buy a financial advice software from Beta Software Suppliers. The software is for the consultancy business and it amounted to RM3000. However, it has now transpired that their consultancy business is unable to pay Beta Software Suppliers. Ah Moi claimed that since she is not involved in the day to day running of the consultancy business, she is not liable to pay the amount at all. Last week, Ah Moi has contracted to buy a special projector for the consultancy business from Carrera Suppliers. Mariam, Devi claim that Ah Moi is not authorized to purchase any equipment as she is not involved in the day to day running of the business. Carrera Suppliers argued that they have no knowledge that Ah Moi is not authorized to purchase any equipment. A few days ago, Devi bought ten leather hand-bags on behalf of their consultancy business from Delta Sdn Bhd. Mariam and Ah Moi claim that the hand-bags are not for the use of the consultancy business and thus the consultancy business will not be liable to pay. Lastly, as per their agreement, the ceiling of purchases by Mariam is RM2500. Devi and Ah Moi informed Beta Software Suppliers that their consultancy business is not bound by the purchase as it has exceeded the ceiling price. Advise Mariam, Devi and Ah Moi.

Answer 1

Answer:

Mariam, Devi and Ah Moi should first of all make an agreement and a contract between them that would include all the considerations for running the business in partnership. They should include the considerations in the contract for the purchasing limit of and purchasing authority of each of the buyer. They should also state the liability conditions in the contract.

Before contracting the software, Mariam should have consulted other partners for their inputs for making the purchase. Since, the software is for the benefit of the business, the partnership business of Mariam, Devi and Ah Moi should make the payment of RM 2500 which is the ceiling limit of Mariam and the remaining amount will be the liability of Mariam as per the contract act.

Business should make the full payment to Carrera Suppliers for the purchases being made by Ah Moi since she is a partner in the business and Mariam, Devi and Ah Moi haven’t made any contract stating that Ah Moi is not authorised for making any kind of purchases on behalf of the business neither they have informed their key suppliers and other stakeholders regarding the same.

Purchase being made by Devi is for her personal benefit and not for the benefit of the business. Hence, she will be only liable for the payment of the bags.