Question

Ezy and Frezy decided to put their passion for baking to good use and they eventually formed “Exim Bakery and Café” to serve pastries and cakes. They were short of cash so they asked their college mate Crezy, who is wealthy, to lend them RM50,000 for the business venture. Crezy agreed on condition that she gets paid RM5,000 per year from the gross returns of the shop and be informed on the progress of the business. She also wants to inspect the accounts. Last week, Ezy was showing her skills in making chocolate muffins in the kitchen and accidentally used diluted dish washing detergent in a bottle which she thought was vanilla essence. Tracy, a customer, bought and ate 5 muffins when it was still warm and fresh from the oven. She suffered severe stomach pain and had to be hospitalised. Recently, a company requested for Exim Bakery and Café to cater for a tea reception. Without consulting Ezy, Frezy convinced the company that Exim Bakery and Café is not able to take on the catering job and that she would highly recommend another café who will cater to the request just as well. In actual fact, the recommended café is a business that Frezy has just started with her boyfriend. They made a profit of RM50,000 for the catering job. Ezy was furious when she found out.

Does a partnership exist between Ezy, Frezy and Crezy? Discuss and support your answer with relevant principles of law.

Answer 1

=> Situation under the law

Definition and nature of organization

Organization is the connection which stays alive between at least 2 people carrying on business in the same manner as a perspective on benefit.

An organization need not need to be made by a proper deed or composed understanding. An organization might be made orally or recorded as a hard copy.

According to case law of "Ratna Ammal and Anor. v Tan Chow Soo [1964] 30 M.L.J 399." Although the word 'organization' doesn't show up in the understanding, an association may in any case exist if the connection between the people has the business character of an organization inside the extent of the Act.

Further in an organization very accomplice is a specialist of the firm and his different accomplices with the end goal of the matter of the association; and the demonstrations of each accomplice who does any represent carrying on in the typical manner business of the sort carried on by the firm of which he is a part tie the firm and his accomplices, except if the accomplice so acting has in certainty no power to represent the firm in the specific issue, and the individual with whom he is managing either realizes that he has no position or doesn't have a clue or trust him to be an accomplice. Accomplices limited by follows up in the interest of firm.

=> The given realities of the case

Ezy, Frezy and Crezy had joined to carry on a Common Business of heating and selling baked goods and cakes under the name " Exim Bakery and Cafe" with a thought process to acquire benefits. In this course of action Crezy has contributed the assets and Ezy and Frezy will play out the activity of running the bistro.

Crezy will be paid a yearly measure of RM 5000, furthermore he need to be the piece of the development of the endeavor.

During the running of the business Ezy had accidentaly blended cleanser in the baked goods making genuine medical issues the client. Additionally crezy has occupied a providing food agreement to his own different foundation without the assent of Ezy and Crezy.

=> Analysis of realities and end.

The foundation under the name " Exim Bakery and Cafe" will be treated as an association firm because of the accompanying reasons :

1. All the three people are conveying a typical business with a benefit rationale which is the substance of an association.

2. In spite of the fact that Crezy had been paid a fixed yearly sum for his speculation still his venture won't be treated as an obligation on the grounds that notwithstanding fixed thought Crezy likewise partake in the development of the business.

3. Ezy and Frezy will be considered as the working accomplices of the firm.

4. The demonstrations done by Ezy and Frezy will be considered as the demonstration of the firm and henceforth all the accomplices will stay official from such acts.

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