Mr. Harith, an Accountant in profession and Mr. Jorum, a lawyer, he has his own Law office, both are very close friends decided to run a partnership business. Harith has invested $100,000 and Jorum has invested $50,000. As they are good friends, they decided not to have partnership agreement between them. Harith had no other side-businesses and he was fully concentrating on partnership business. But Jorum continuing his Law profession along with Partnership business and many times he could not visit partnership business because he had to visit court to represent his clients. Harith has withdrawn cash $2,000 per month from the partnership business for his personal purposes. But Jorum used to withdraw $3,000 per month. During the year, partnership business wanted to borrow money from Bank. As it is new business bank refused to give loan saying that business had no track record. But Harith had given $20,000 loan to the firm.

After completing the 1^st year of work together, partnership made a profit of 30,000. But interest on Harith loan is not provided. When sharing the profit Jorum is arrogant and he bargained to get 50% of the profit. But Harith is of the view that he should get double of Jorum because he has invested double amount of Jorum. Also, Harith thought that he will get salary from the partnership because of his full-time work for the partnership business.

You are required to:

Assess and discuss the Partnership law applicable to the above scenario.

Also, demonstrate clearly how partnership business is different than that of sole trader. You can connect the answer to the given scenario wherever possible.

Answer rating: 100% (QA)

Answer Partnership Law in General A contractual relationship A partnership depends upon an existing relationship which results from a contract The contract is as Jessel MR explained in Pooley v Driver ... View the full answer