Kath and Kim own and operate a wedding venue in Melbourne calledNewlyWedz. Kath has provided $20,000 to renovateNewlyWedzpremises, while Kim has agreed to provide her Mercedes for weddings. The written terms of their partnership also provide:

1)Kath is entitled to 10% interest per year on her $20,000 capital contribution, and to be repaid this $20,000 amount within five years or earlier if the partnership ends;

2)Any purchase of goods or services greater than $1,000 must be approved by both Kath and Kim.

In the first year of operationNewlyWedzdoes reasonably well. Kim who manages the financial accounts pays herself a salary of $20,000 without first paying Kath $2,000 in interest.

a)Advise whether Kath is entitled to $2,000 interest and Kim can pay herself a salary under their agreement and/or under thePartnership Act1958 (Vic.).

While Kath is on holiday, Kim offersNewlyWedzas the venue for her friend Sharon's wedding, at the discount price of $5,000 (usually $10,000). Additionally, Kim engaged withLimoRUSto hire two limousines (cars) for Sharon's wedding at a discounted price of $3,000 (the lease would have normally cost $6,000). The discount was a result of Kim promising to the manager that as the co-partner ofNewlyWedz,LimoRUSwill be the exclusive supplier of limousines for the firm.

b)Advise whether Kim had the authority to hire the two limousine cars undercommon law agencyrules?

After Sharon's wedding, Kim takes her car on a holiday to Surfers Paradise where she spends the $5,000 received from Sharon. When Kath returns from her holiday, she finds an unpaid $3,000 account for the limousine hire. She also finds a note that says Kim does not wish to be a partner to the firm anymore because she wishes to pursue an acting career.

c)Advise Kath of the following matters:

i)Whether Kim has breached any of her fiduciary duties as a partner in relation to the $5,000 Kim received from Sharon, and Kim's use of the venue and;

ii) Describe two ways Kath can protect herself from future partnership debts if Kim continued to hold herself out as a partner despite leaving the partnership?