Question

Q1: Yap and Viji opened a new car wash centre. It was agreed that Yap would manage the operations of the centre and receive a fixed salary each month and Viji would receive a fixed salary and any profits or losses remaining after deduction of expenses and taxes.

Required:

State, with reasons, whether a partnership exists in the above situation.

P/S : PLEASE FULFILL THE REQUIREMENT .

Answer 1

Partnership exists if the parties carry on a business in common with a view to profit. Therefore, even if the parties intend to form a partnership and address themselves as partners or use the word “partnership,” a partnership will not exist unless they intend to share profits. If profit is to be generated, but is not to be common to the partnership but individual to the participants, then the necessary common profit element will not be found to exist.

In our case Yap is managing operations and receiving salary where as Viji would receive fixed salary and any profits or losses remaining after deduction of expenses and taxes. Hence here profit is not shares by both the parties and hence it is not a partnership

The factors that must be present to find that a partnership exists have been generally agreed upon by the court. The most common factors that the court considers are:

1. The formal registration of a partnership,

2. The contribution by the parties of money, property, knowledge, skills or other assets used in the business,

3. A joint property interest in the property of the business,

4. A mutual right of control or management of the enterprise,

5. The expectation of profit, and

6. The right of each party to participate in the profits.