Question

Liam and Clare each own an Irish pub in Kansas City. To cash in on the microbrew craze, Liam and Clare whish to go together to establish a small microbrewery that will supply two or three locally brewed beers to each pub. The brewery will be located offsite, in the industrial section of Kansas City. The premises will be leased. If Liam and Clare do nothing more than jointly sign the lease, hire the Brewmeister and purchase supplies and equipment, their new enterprise will be:

		A partnership
		A joint venture
		A limited liability company.
		Both A and B.

Answer 1

The correct answer is both A and B

--> One of the characteristics of partnership is that it can be oral. Orally agreed partnership is also a valid form of business. Here,Liam and Clare are doing nothing more than jointly sign the lease, hire the Brewmeister and purchase supplies and equipment, they are not signing in any legal contract. They are not registering their firm.

--> Also, for a partnership firm their should be a business motive. Two or more people join together to earn profits. Here, both Liam and Clare wish to go together to establish a small microbrewery and to do business together.

Hence it is a partnership form of business.

For a limited liability company, registration is compulsory. They are not registering their business hence it cant be a limited liability company.

In joint venture, the members of a joint venture join together for a particular purpose or project or for taking advantage of any business activity. Here, they want to take advantage and to cash in on the microbrew craze and hence they are joining together.Hence it can be a joint venture.

Hope it clarifies!