Jemima and Ali have been running a business together called IC2U since July 2016. It sells ice-creams at markets and other events, mostly on the weekends. Jemima owns the van they use and Ali pays for the stock. They share the profits from IC2U 60/40, with Jemima taking 60% because she owns the van and has agreed to do the accounts for the business. They have never put their arrangement into writing because they've decided they don't want to have any legal connections between them. In early November 2016, Jemima disappeared, taking the van with her, and leaving the stock of ice-cream behind in her garage. Ali soon discovers that Jemima had run up a lot of debts. Jemima's debts are as follows:

$1750 for repairs to the van after Jemima damaged it when she took it on a holiday in May 2016, prior to starting IC2U with Ali. Ali had asked about the van when they started out, but Jemima said 'there's nothing owing on it anymore - I own it outright so we can use it for the business, no problems'.

$850 for a vehicle wrap (a decorative plastic sheeting that is applied to vehicles to carry advertising) that had been placed on the van, showing the IC2U logo and various slogans for the business.

$2400 for IC2U's logo design and a large stock of flyers and other marketing material that had been printed for the business.

Ali also finds an account book in Jemima's garage that shows Jemima was keeping more of the profits from the business than they had agreed to - it is more like 80%

a) Legally, what type of business relationship are Ali and Jemima in? Consider the various types of business structure (as discussed in this Module) and determine whether any of them apply to IC2U.

b) Does Ali have to pay any or all of the debts Jemima has left behind? If so, which ones does he have to pay and why?

c) If Jemima and Ali had formed a corporation through which to own and run IC2U, how would your answer about these debts vary?

d) What share of the profits from IC2U was Ali entitled to and why?

e) IC2U was starting to get rather popular before Jemima left, and with Summer here, Ali is considering whether he should continue with the business. He wonders whether he should try to continue by himself, perhaps with a rented van, or whether he should join in with another friend, Jo, who has a suitable van and is looking for weekend work. What advice would you give to Ali about suitable business structures he could adopt if he does decide to keep IC2U going? Of those we have looked at which one do you think would be the best for him?