Question
Abdul was the owner of a restaurant called Howzda Serenity on George Street in Town Hall since April 2016. Due to the NSWGovernment'sconstruction of the
Abdul was the owner of a restaurant calledHowzda Serenityon George Street in Town Hall since April 2016. Due to the NSWGovernment'sconstruction of the light rail along George Street, business had declined, and the restaurant had not made a profit in months.
In January 2018 he approached his friend Billu for a loan of $200,000 and they agreed to draw up a loan agreement which included the following:-
- Billu will receive a share of the profits and losses to the extent of 50% and be working in the business from 4pm to midnight on Friday, Saturday and Sunday nights.
- Billu has the right to examine the business books at will.
- Billu has a right to receive a quarterly business statement.
- Billu has the right to be consulted and contribute to any major decisions regarding the business.
- With the injection of money into the business, Abdul and Billu decided that the way to improve trade was to undertake a television and radio and print media marketing campaign. Most of the money was spent on this and the business improved and made a profit. Billu spent considerable time working at the restaurant and came to know many of the suppliers some of whom thought he was in a partnership with Abdul.
- A series of events follow:
- a)In December 2019, Abdul decided he wanted to retire and sell the business. He consulted with Billu who told Abdul he would be happy to buy out Abdul's share of thepartnership. Abdul was surprised. He had never considered Billu to be a partner although Billu obviously thought himself to be one. Billu argued that the $200,000 was the equivalent to 14 of the capital that Abdul had contributed and that he was therefore entitled to 14 of the proceeds of the sale of the assets of the business.
- b)In November 2019, Priya starts waitressing at the restaurant on the weekends. She is studying a WSU and had been up all night completing her assignment and was feeling quite tired on a busy Friday night at the restaurant. While carrying a tray of hot soup that night she bumps into a table and drops the soup on a customer's$3000 work laptop damaging it.
- c)In October 2019 Abdul was away on a well deserved break to Bonnie Doon. Billu decides to the lighting inside the restaurant upgraded for $5000 and an additional $5000 upgrade to the security lighting at the underground carpark where Billu parks the luxury cars he sells to cashed up clients (that Abdul does not know about). When Abdul returns, he finds an invoice for $10000 byFlashyLightsRustoHowzda Serenityto be paid immediately for work completed.
Using IRAC, advise Abdul on his potential rights and liabilities, and in doing so, discuss fully all relevant legal issues that arise in these circumstances. Y
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