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Case Study

Niko and Max were course mates. After graduating, they agreed to pool their resources and labour and open a caf which they called The Hangout. Each contributed a sum of RM50,000 to start the business, but they never entered into any written agreement.

Niko and Max shared duties at the cafe and always split any profits or losses "right down the middle."

During the second year of operation, Niko's father gave him RM10,000 which he used to purchase a secondhand pick-up truck which Niko registered in his name. The truck was always parked at The Hangout, and both Niko and Max used the truck to make deliveries and get supplies.

Recently, Fantasyworld, a resort in Putrajaya approached Max and after some discussions, ordered RM5,000 worth of refreshment for their company's end of the year tea party. Even though Max knew The Hangout would not be capable of delivering such a large volume on short notice, he fraudulently accepted Fantasyworld's money and agreed to the deal. On the agreed date, The Hangout failed to provide any refreshment to Fantasyworld for the event.

Max has not informed Nikoabout the deal with Fantasyworld and Niko got to know of the deal only after The Hangout failed to deliver the refreshment.

Using the I.D.E.A Processdiscussif a partnership existed between Niko and Max and consider who does the pick-up truck belong to. Will The Hangout be liable to Fantasyworld for the non-delivery of the refreshment for the event?

50 marks