Mountain Dew Partnership (MDP) was setup 8 years ago. It was formed by 2 brothers Tawanda and Tendai and their best friend Brian. Tawanda and Tendai are originally from Zimbabwe but are now British citizens.

All 3 of them run a lucrative fresh fruit business. They pride themselves on the fact that their fruit is picked directly from organic farms where no pesticides are used. Further, they proudly use non automated equipment to pick the fruit thus reducing their carbon footprint.

Their customer portfolio has been growing steadily. At first, they only targeted customers in Leicester where they are based but as their reputation for fresh organically picked fruit spread, they now have a strong customer base throughout the East Midlands and all around the West Midlands.

In terms of the partnership agreement subsisting between the 3 of them, it provides that:

1. Profits and losses are shared equally.
2. No partners shall incur debts on behalf of MDP exceeding the sum of 2,500 without the consent of the other partners.
3. In the event of any partner leaving, the partnership will continue.

With the steady growth of the business, the partners now wish to expand the Partnership by admitting Paresh Kumar to the Partnership.Theyfeel that Paresh will be a good fit for MDP as he has several years of experience in marketing a range of products including fruit and vegetables. Paresh also advised them that with his contacts, he would be able to secure large orders of their fruit from the big retail supermarkets.

Paresh advised Tawanda, Tendai and Brian that the earliest he could join MDP was at the beginning of February 2024. However, the other partners are eager for Paresh to join them and with his expertise and networks further expand the business. They have already added Paresh's name onto all their stationery as well as onto their website. Paresh is a bit unclear as to how a partnership operates and the legal implications.

Last week, an invoice for the amount of 3,500 made out to MDP was received at their head office in Leicester. The invoice was in respect of "Fruit picking equipment" purchased from Wholesale Fruit Equipment Ltd. To their surprise, Tawanda and Tendai found out that this order had been placed by Brian. Wholesale Fruit Equipment is a company MDP had not previously conducted business with before.

Advise Paresh Kumar:

a) Who will be liable to pay the invoice for the "fruit picking equipment" in the sum of 3,500.

b) Whether he (Paresh) could incur liability for any debts of the Partnership incurred either before he joins, or after he leaves the Partnership.

c) How he could avoid liability for such potential debts of the Partnership.

NB: You are required to set out your answer fully citing relevant authority where appropriate.

Answer rating: 100% (QA)

a Liability for the Invoice According to the partnership agreement no partner shall incur debts on behalf of MDP exceeding the sum of 2500 without the ... View the full answer