Prashant and Tumpa run a small plant nursery called Terra Cotta. Prashant does not take an active role in the day-to-day management of the nursery and so Prashant and Tumpa have agreed that Prashant will only receive 25 per cent of the profits while Tumpa will receive 75 per cent. They have also agreed that Prashant will only be liable for 25 per cent of the costs of the business. No one but Prashant and Tumpa are aware of this arrangement. After some success, the business has suddenly failed and closed down. Tumpa has withdrawn all the cash from the Bank and gone to Spain. Before leaving, Tumpa borrowed $10,000 from a finance company, Loans Ltd, at very high interest rates. Tumpa told Loans Ltd she was authorised by Terra Cotta to borrow the money for the purpose of expanding the business. This was not true. The money disappeared along with Tumpa. Loans Ltd wants Prashant to repay the $10,000. Prashant claims that he is not responsible as the money was used for Tumpas own purposes. Alternatively, Tumpa claims that, if he is liable, his liability is limited to $2,500 (that is 25 per cent of the loan amount). Required: Discuss whether Prashant is liable to Loans Ltd; and, if he is, how much he must pay to Loans Ltd. You should support your answer with reference to relevant sections of the Partnership Act and, where relevant, to cases. In your answer discuss the elements of partnership. (10 marks)