NEED Help

IRAC Method is applied

Vern Victor was a famous cyclist who retired in 2012. However, he still loved riding bicycles. He was getting bored, so he decided to start a bicycle selling business. The business was called Beaut Bikes. After several months, he was getting very busy, and he found many aspects of running the business difficult. He approached his friend, Jimmy Herd, and asked if Jimmy could give him some help. Jimmy was a retired footballer, and he agreed to join Vern. During a meeting, it was agreed that Vern would be responsible for marketing, advertising and buying stock for the business, and Jimmy would be responsible for running the shop itself and also for bookkeeping. It was also agreed that for his work, Jimmy would receive a weekly payment of $800 - and he got all the usual benefits of an employee. If sales were strong, Vern also gave him a box of beer at the end of the week. After a short time, it became clear the business was under-capitalised, and Vern's friend, Robert, agreed to lend $50,000 to Beaut. Robert agreed to accept 40% of the profits from the business every year until the loan was paid off (the interest rate was 7% per annum). Robert also worked in the store from time to time, but not regularly. Early on a Sunday morning in March 2013, Vern was out cycling on his regular early morning ride. As usual, he was wearing clothing with the Beaut logo. On his way home, he was in a rush to watch a major cycling competition on TV, took a short cut through a pedestrian mall where, because he was rushing, he crashed into a woman, Mrs Summers, who was walking along the mall. Mrs Summers was badly injured, had to spend 2 months in hospital, and now requires regular physiotherapy for her injuries. She has lost 5 months wages due to her injuries. In April 2013, Vern, who had been wasting a lot of money during overseas trips, realised he had very little left in the way of assets and his returns from Beaut Bikes were not high, and in fact, he barely enough money for his daily expenses. He will apply for bankruptcy. (a) Was Beaut Bikes a partnership? Be sure to discuss the roles and activities of Vern, Jimmy and Robert. (5 marks) (b) Could Mrs Summers obtain compensation for her injuries and losses? Assume, for this question, that Beaut Bikes was a partnership, and that, because Vern will soon be bankrupt, there is little point in suing him personally. (5 marks) (c) Assume that Robert was a partner. What steps should he take if he was going to leave the partnership