Case 2

This case study begins with two friends Alex and James who worked at an organization as

employees. At some point, they decided to start their own business together - a business where

they would be partners on equal footing but in terms of profit, as Alex was only investing capital

but James was taking part in management and other business activities and he was also investing

capital. They had a small start-up capital for their enterprise. With that capital, they began doing

business in the fields of wholesale trade and small-scale transportation. The level of competition

in these fields was moderate. Eventually, the company needed to hire two employees. Alex gave

idea about Terry, one of their mutual friends, he was contacted to be partner as Terry was very

good at management. Terry asked them not to disclose to the public that he is partner in this

business but he will participate in daily management and day to day activities, plus he will also

invest in business, although his partnership with Alex and James should be confidential.

Within two years, the company was making a small profit. However, then the state of its finances

began to deteriorate, even though the partners tried running the business in different ways. They

were in bad position financially. Partners were trying their best to stable their business in different

ways.

Q 3: Name and explain the type of partners, Alex, James, and Terry are?

Q 4: As Terry partnership is confidential, is he liable for the debts of business?