ICE TASK I BUSINESS ENTERPRISES

Mickey Donovan consults you with the following problem:

1. He and Ray Donovan decided to open a beach bar on Camps Bay beach, in order to make a profit
2. Ray loaned Mickey R100000-00, as Mickey had no money and then they could each put R 100000-00 into the beach bar. This they used to buy stock.
3. They had two theme parties at the beach bar on two consecutive Saturday nights.
4. Each put in R100000-00 and they purchased R100000-00 worth of stock. The Rio Carnival party was a success and the profit was R150000-00.
5. The R150000-00 profit was used to buy more stock for the Swedish snow party at the beach bar and with the R200000-00 they originally invested and returns made on the first party, they purchased an ice machine to make snow.
6. The party is a dull event and they still have R75000-00 worth of stock over and the snow machine.
7. Ray told Mickey that the party was largely a flop because Mickey was drinking more than he was selling, and he is actually not convinced that the event was a loss. He says Mickey is hiding the cash on the side.
8. Ray issues summons for a loss of R150000-00 against Mickey as he says he cannot understand that they doubled their money on the first round and he believes they doubled their money again, but that Mickey is hiding the money.
9. Ray wants the books of account but Mickey says they are his and Ray cannot have them.
10. Mickey comes to consult you , and has the following questions:
11. What kind of business do he and Ray have he says he thinks he is a sole trader and Ray the money lender, is this true?
12. What are the main aspects of their business and what rights and obligations does he have?
13. Ray apparently purchased a Harley Davidson and the creditors think that he is also liable, could this be possible?
14. Can Ray issue the summons against him?
15. Since he and Ray cannot come to a joint agreement how can they resolve the matter and describe the process.
16. Can Ray issue a summons against him personally for the repayment of the loan?
17. Is Ray entitled to the books of account as it was agreed that only Mickey wild deal with administration?

20 marks