Michel, Melanie and Melissa have been running a design firm together for the last eight years as
Question:
Michel, Melanie and Melissa have been running a design firm together for the last eight years as a general partnership. Up until recently everything went well, however they are having more and more arguments about money, responsibilities and who has the power to do what. Because everything started very quickly, they never got round to writing a partnership agreement. Melanie feels as though she should have more say as she put in 50% of the start-up capital and has lent the partnership money in the past at no interest, while Michael is now demanding a salary because he is the person that deals with both the marketing of the business and the liaising with clients in general and ends up investing more time and money in the day-to-day running of the firm. Meanwhile Melissa is the designer and says that there would not be a business if it wasn't for her, so clearly she should have a greater say, especially regarding the type of design work accepted. She is also interested in bringing in a new partner to the firm who she feels certain will help to increase sales. She plans to tell Michael and Melanie about this in their next meeting.
Given that the partners do not have a contract, advise them on their rights as partners under the Partnership Act 1890
5. Michael, Melanie and Melissa (M, M & M) resolve their differences and go on to incorporate a private limited company. Over time, they are approached by a long-time competitor to enter into a joint venture in order to maintain market share against newcomers. M, M & M will provide the designs, while the other company will carry out the production of the luxury items.
Explain to M, M & M what things they should consider (advantages and disadvantages) when deciding whether or not to enter into the joint venture.