This is a case analysis of Case No. 2, which involves four university students who desired to carry out a research on a Georgian Bay. They failed to uphold the terms to the end. The study reviews the laws regarding partnership, provisions of the partnership, laws and regulations regarding obligations of every partner, and solutions towards the conflict.
Sam, Henry, Paul, and Allen, are Trent University students. In their studies, the students discovered the existence of Georgian Bay, which may be having treasure. They agree to research about it, setting 100 hours each for the research. A specific geographic area is chosen for the search. Since all of them have scuba diving skills, they proceed with the research. After renting a boat and using their personal scuba gears, they venture in the identified region. The partners are involved in the activities; all of them pay an equal amount of boat rent in addition to other charges. They uphold the requirements for the first four weeks. Sam and Henry engage in other commitments from the fifth to the eighth weekend while Allen and Paul go on with the research. Allen goes on with the research alone on the ninth week. For security purposes, a friend accompanies him. During the period, they discover the treasure, which apparently has not been claimed by the government. The treasure is estimated to be worth twenty million dollars.
The fours Trent University Students are engaged in a partnership. According to the LLB Solicitors (2015), partnership is a business relationship where the members come together with an aim of making a profit. The partnership, therefore, exists where two or more members come together in business. In this case, the members were partners as they came together with the aim of finding the treasure at the bay. They all contributed to the costs of carrying out research as they paid for the rent of the boat and other charges. They decided to set aside equal time for the research of the treasure. On this element, they were to share equally the profit accrued from the treasure hunt. Therefore, the friend to Allen fails to qualify as a partner to the research business.
Partnership laws dictate that every member must act in ‘good faith’ to the other members. These acts include being honest, having no secrets concerning the intended profits or competing business. The majority of the business decides in partnership. Partners ought to share equally the administration and investment of the business. This is contrary to other forms of partnerships where some members may be dormant but still contribute to the loss and profit of the company in other forms. In case of misunderstandings, the partners can involve the solicitors who can offer pieces of advice based on the contracts made at the beginning of the business. If that proves futile, the state court can be involved where parties are to share on the liability before accessing the profits. Therefore, contract plays a significant role in the existence of partnership. The partners are to state the provisions of the contract if in case none was present. In this case, the students came up with a timeline and objective of the research. They participated actively for the first four weekends and paid for the expenses covered during the period. In the consequent period, the other two students carried out the activities of the association in the absence of others. With the consent of others, the two friends carried on. However, Allen did not involve the parties when he was introducing his other friend on the last day. This issue concerning the rights and obligations of the partners need to be viewed in light of the British 1890 Partnership Act.
In determining the rights and obligations of the partners, a judge needs to determine the participation and the contribution of the partners. This is because some partners are mostly dormant whereas profits are expected to be shared equally. Other partners, in addition to the equal contribution given, use their names or add extra input for the benefit of the business. In this case, Allen went the extra mile in finding the bay and the treasure even when others were swerving. Allen remains the lead member in this partner, while Paul is deemed as an active partner. Sam and Henry are deemed passive partners as they contributed into the development of this research; contributed part of the initial expenses and part of their time in running the research. They however failed to show up on two occasions.
In case of the claim of the twenty million dollars, the members should receive according to their contribution to the research. Initially, they were to receive 25% of the profits each, which summed up to five million dollars. At the end, Allen should get a higher percentage but not the total amount. Allen should receive an amount higher than the rest, up to 35% of the profits. Since his friend accompanied him, the friend can be compensated approximately 2% from Allen’s benefits. This is a form of appreciation for supporting him at the end and ensuring that the safety requirements were met. Paul showed up for additional one weekend. Therefore, he can get up to 25% of the profits while Sam and Henry are to get 20% each of the profits. Allen went for additional two weekends. According to the initial plan, there were to secure 100 hours each for the research. Allen and Paul met this requirement; hence, others fail to obtain the 25% each of the profits. Additionally, Allen ensured that none of his associates faced liability for failing to keep up with the standards. He paid for the additional expenses alone. Based on this, he is to acquire a higher profit than the rest. He qualifies for a maximum of seven million dollars since he assisted Allen in paying for the expenses for the weekend they participated. Paul qualifies for five million dollars while Sam and Henry are to get four million dollars each.
The friend who participated in the discovery should not be identified as a partner. This is because he was absent in the initial commencement of the research. Furthermore, he does not qualify as a partner. He did not share in the initial expenses and knowledge required in coming up with the specific point. Other than assisting Allen in discovering the treasure, little is known about him. Furthermore, it seems that only Allen knows him. Besides this, on the last weekend, none of the partners was notified of the presence of this friend. Therefore, he was acting as a liability to the partners. According to the Act (McCahery & Vermeulen, 2004, p. 14), in case any loss could have occurred due to the actions of the friends, the partners were to be fully liable just as the business was liable.
In deciding such a legal contest between the four, the partnership Act and the partnership deed needs to be implemented. Through the partnership deed, the rights, roles, and obligations of every partner are clearly outlined. In this business, no written document is availed. Therefore, according to the partnership Act, the majority of the partners are to win in making decisions. In case no solution has been verified, I would divide the shares and the benefits according to the contribution and participation of each of the partners. In this case, all the partners were initially general partners. However due to their contributions, some of the partners are deemed silent while others are deemed active. Allen is perceived the lead the partners as he greatly contributed to the discovery. He followed the requirements stipulated and led to the discovery. The profit each should obtain is; Sam and Henry to get 20% each of the profit, Paul to get 25% while Allen to get 35% of the profits.
This analysis of Case No. 2 involved four university students who desired to carry out a research on a Georgian Bay. They however did not keep the terms to the end as only one of them managed to go on the end, thereby finding the treasure. From the study, the students had formed a partnership with the aim of making profit. According to the partnership Act, Allen’s friend is termed an agent, as he does not qualify to be a partner although he ensures the objectives of the business are realized by assisting Allen in finding the treasure. In acquiring the benefits accrued from the treasure, they are not to partake in equal amounts, as some of them were dormant.
Lawson Lewis Blakers Solicitors. Partnership Law. 2015
McCahery, J., & Vermeulen, M. L (2004). “Limited Partnership Reform in the United Kingdom: A Competitive, Venture Capital Oriented Business Form.” European Business Organization Law Review 61. 2004. Vol 5