Question
In January 2020, Amy, Brenda and Carol set up a bakery called Pastry Delights in partnership. The names of the partners appeared in the Register
In January 2020, Amy, Brenda and Carol set up a bakery called Pastry Delights in partnership. The names of the partners appeared in the Register of Partnerships under the Registration of Businesses Act 1956. The partners had executed a partnership agreement. Clause 5 of the partnership agreement provided that: No partner shall enter into any contract on behalf of the partnership in excess of RM10,000 without the prior consent of all the partners.
Sometime in June 2020, Amy ordered 2 commercial stainless-steel ovens and other kitchen appliances from Ken Kitchen Supplies (Ken) costing RM15,000 without obtaining the prior consent of Brenda and Carol. She told the supplier that the kitchen appliances were for the bakery business and to invoice the items in the firms name. When the supplies were delivered to the firms business address, Brenda and Carol told Ken that they refuse to pay for the supplies stating that Amy did not have the authority to purchase these items.
In December 2020, Carol retired as a partner from Pastry Delights due to some differences, she had with the other two partners over how the business was to be conducted. She set up a bread shop with her sister. Carol had informed Amy and Brenda of her plans. They expressed no objections and wished her success in her new venture. Business was great at Carols bread shop. The shop made a profit of RM10,000 in the first month of operation. However, things were different at Pastry Delights which was experiencing financial problems. The firm owed Sun Traders a debt of RM20,000 as of 1st December 2020 and an additional sum of RM10,000 in June 2021.
With reference to the partnership law in Malaysia:
- advise Pastry Delights whether the firm will be liable to pay Ken Kitchen Supplies for the ovens and kitchen appliances that were purchased by Amy. (10 marks)
- Advise Carol of her liability for the outstanding debts to the creditors of Pastry Delights. (10 marks)
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