1. Problem 10 : Alice has been carrying on a sporting goods business in

Ottawa as a sole proprietorship under the name A-Sport

since 1999. By the spring of 2016, she was unable to

cover the costs associated with the business. By September

2016, she had sold many of her personal assets, including

her house, to pay the expenses of the business. Alice is

very worried that she will lose the business and not be

able to support her daughter. She is a single mother and

has no other source of income.

In September 2016, Alice met Mario at a trade show.

Mario carries on a successful business as a sole proprietor.

The key to his success has been a combination of innovative

inventory management techniques and the use of

aggressive television advertising. Mario is married with

three children.

Alice and Mario decide to carry on the A-Sport

business in Ottawa together. Mario has $100 000 available

to invest in Alices business and has substantial other

assets, including three store premises and a warehouse in

Toronto. They agree on the following.

Alice will contribute all of her interest in the A-Sport

business.

Mario will contribute $100 000 in cash.

Alice will manage the A-Sport stores on a day-to-day

basis, while Mario will be responsible for marketing

and inventory management. Mario will continue to

spend most of his time in Toronto looking after his

business there.

All major decisions for the business will require the

agreement of both Mario and Alice.

What issues should Alice and Mario address before

going into business as a partnership?

1. Based on the facts in Problem 10, how would these issues

be addressed differently if Alice and Mario were to set

up a corporation to accomplish their business objectives?