Business Law Questions (Based on Canada)

You and a friend, George, form a partnership for the purpose of operating a web site design business. The two of you execute a Partnership Agreement that states each of you contributed equal sums of operating capital and that your liability and prots will be shared on a 5050 basis. The partnership has a contractual arrangement with Computers R Us, to purchase software programs. The terms of the agreement are that payment is due within 30 days of deiiyery of goods or interest will accrue. When your business experienced a cash flow problem, George approached Computers R Us to negotiate an extension of the payment time and a delay of interest charges from 30 days to 90 days. Computers R Us agreed but at the end of th year it presented your business with an invoice for interest due on payments made after the 30 day period. As George has an accounting background, he is responsible for the nancial affairs of the partnership, and until Computers R Us presented you with the invoice for interest, you were unaware of Georgea s arrangement for credit extension and interest charges. After the rst year in business, the partnership does not have enough money to cover the invoice. In the meantime, George commits a serious error when designing a web site for a client, causing a malfunctioning of the clienta s computer operating system. The client sues both you and George in tort and contract for the loss suffered. {14 Marks Total} A. Explain fully the contractual issue or rule that supports the supplier's demand for interest due on payments made after the 30 day period and identify a defence that you and George may be able to raise to avoid liability for the interest payments. (4 Marks) B. Applying agency law to partnerships, explain fully the extent to which you may be found personally liable for the supplier's invoice for the cost of software and interest owing, what per cent of the debt are you liable for and what percent is George liable for? (4 Marks) C. Identify the type of unintentional tort that would be claimed. Explain each element and the legal test that the client must prove in court in order to find George liable for the website design error. (5 Marks) D. Explain fully how your exposure to liability would be different in the event that you and George had incorporated a company and you and George were both directors and shareholders of the company. (1 Marks)