A, B, C and D are all adult males and skilled musicians. (A plays guitar, B bass, C keyboards and D drums.) All have worked previously as professional musicians. In January 2019, A invites B, C and D to join him in forming a band. Following discussions, agreement is reached on the following plan.
 A, B, C and D will form a band to be called Reggae Groove (‘RG’). The band will play professionally (i.e. not just for fun).
 RG will play at dances, tourist resorts, weddings, concerts and other functions; in short wherever and whenever an engagement can be obtained.
 The band’s finances are to be handled by A, who will bank the proceeds of all engagements, ensure the payment of all expenses and pay the residue in equal shares to all four band members.  Each band member is to use all his music industry contacts in hunting up engagements for the band. In addition, the band will be listed with Joe’s Talent Agency on standard terms. (Joe’s Talent Agency is the trading name for a business owned by Joe as a sole trader. The business finds work for performers. Joe’s standard terms provide that Joe is to receive 5% of the fee earned on any engagement arranged by Joe.)
 Each band member is to play the instrument on which he is skilled and each member is to use his own instrument and associated electronic equipment. (B whose amplifier is underpowered is told to get a bigger and better amplifier.)
 The band is to be run in a professional manner. In particular, all members must attend scheduled rehearsals, be on time for performances and not drink too much when performing. Following the January meeting the band begins rehearsing. In February, Joe arranges a two week engagement for the band at Sheraton Resort. The band proves to be very popular and thereafter through word of mouth and the active soliciting of engagements by Joe and by band members, the band obtains a steady stream of work.
Answer the following questions
Provide reasons and where appropriate include reference to any relevant sections.
(1) A, B, C and D in their discussions never mentioned the word partnership. Notwithstanding, on the information provided, it is pretty safe to say that A, B, C and D have in fact formed a partnership. There is express agreement upon a number of important matters, for example, identity of partners, agreed partnership business, sharing of profits.
Required: Identify 3 different matters that their agreement does not expressly address, and with regard to each such matter, state what will be the partnership term (if any) as regards that matter.
(2) Suppose you are requested to draw up a balance sheet for the firm. Would you include the guitar, bass, keyboard, drums and associated electronic equipment? [Think about this carefully.]
(3) Should the name Reggae Groove be registered?

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Present Times
It is now 2022. RG is still playing music and is the premier band in Fiji. The firm is making very good money. Success has also brought about other changes. RG is no longer listed with Joe’s Talent Agency. The firm now employs Mr Manager (‘M’) to assist in running the business. M’s job is to find gigs for the band [i.e. engagements] and to generally promote and publicise the band. M’s duties also include the more mundane responsibilities of overseeing the maintenance of equipment, organising transportation and accommodation when the band is on tour and handling the band’s finances.
Accounting services for the firm and each partner individually are provided by Prasad and Associates. Prasad and Associates is an accounting services business employing three qualified accountants plus semi-professional staff. The business is owned by Ms Prasad. The band’s success means that each partner now has a large annual income. The bad news isthat each partner also now has a large annual income tax liability. The firm consults Ms Prasad as to how their affairs might be structured in a tax efficient manner. Prasad identifies that each partner has a significant number of dependants (spouse, children, elderly parents) and recommends that each partner should attempt to spread his income (currently his share of the firm’s profits for the year) among his dependants. This can be best accomplished utilising a trust. Prasad proposes that a different legal structure be adopted to carry on the live musical entertainment business. At the centre of this structure is a trading trust. A detailed account of the legal restructuring follows.
First, a company is created. The company is called Trust Co Pte Ltd (‘Tco’). Tco has 4 shareholders: A, B, C and D. Each shareholder has one share. Each share has an issue price of $1 and is fully paid up. The company’s constitution provides that the directors of the company shall be A, B, C and D for life.
Second, the Tco board of directors appoints Ms Prasad as company secretary and adopts as the company’s registered office the address of Prasad and Associates.
Third, Ms Prasad settles the sum of $10 on Tco to hold on trust. The terms of the trust are contained in a document (the trust deed) signed by Tco. By this deed Tco agrees to act as trustee of what therein is called the ‘Families Trust’. The deed grants the trustee a discretion to invest trust monies in such shares, bonds or operating business as the trustee may from time to time select. The beneficiaries of the trust are identified as ‘such persons as settle money on the trustee’. A beneficiary’s interest in the trust is determined by reference to his or her percentage contribution to the aggregate monies settled on the trustee. The trustee is required to annually distribute all income of the trust to beneficiaries in proportion to each beneficiary’s interest. Finally, the deed provides that in return for acting as trustee, Tco shall be entitled to an annual fee equal to 7.5% of the revenues of the trust.
Fourth, the board of directors of Tco approves the establishment of two accounts with Bankco. Account 1 is entitled Company Account, and Account 2 is entitled Trust Account.
Fifth, the dependents of A settle $25,000 on Tco as trustee of the Families Trust. The dependents of each of B, C, and D settle equivalent sums (aggregate sum settled $100,000).

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(Note, A himself does not settle any money on Tco. Likewise B, C and D.)
Sixth, a contract of purchase and sale is negotiated and signed between the firm and Tco. The contract provides that Tco shall purchase all tangible assets of the firm plus goodwill. (By 2022 partnership property includes such things as a large van and fancy lighting and sound systems.) The contract price is $90,000 to be paid in cash. Performance is scheduled for one week after signing of the agreement. Tco as trustee of Families Trust, plans to use the assets acquired to conduct a live musical entertainment business. The business’s principal ‘product’ will be a band to be called Reggae Groove (‘RG’).
Seventh, the partners agree to dissolve their partnership immediately after performance of the sale is completed.
Eighth, Tco enters into employment agreements with each of A, B, C, D and M. The duties of the four employees A, B, C and D is to attend and perform music as directed by their employer Tco. The employment duties of M are to market and administer the live music business conducted by Tco.
Following the events outlined above, there has been a complete legal restructuring of the live music business. However, from the vantage point of a fan of the band RG, nothing much seems to have changed. Indeed, fans of the band will generally have no knowledge of th legal restructuring that has taken place.
Answer the following questions
Provide reasons and where appropriate include reference to any relevant sections.
(4) At the start of 2019 there is only one business.
Following the restructure in 2022, is there still only a single business?
(5) Following the restructure, A [and likewise B, C and D] has 3 distinct legal roles/identities.
- Identify these 3 distinct legal roles/identities?
- Will each role provide a distinct income stream for A?
(6) Ms Prasad as company secretary is entitled to a salary. M as manager of the company’s music business is entitled to a salary.
- From which bank account (Account 1 or Account 2) is Ms Prasad’s salary paid?
- From which bank account is M’s salary paid?