Question 1 (8 marks)

(Suggest 500-650 Words)

Case scenario

15 marks

Jimin and Lisa have been friends since they studied together at the University of Auckland's Business School. In 2009, they formed a partnership to provide accounting and business advisory services to small Auckland businesses. They each contributed $50,000 in cash and agreed to share the profits equally. Their business grew steadily over the following 10 years and by 2019, the partnership was worth $1,500,000. Jimin and Lisa know this because Jimin had the business valued so he could borrow $500,000 from ABC Bank to buy a new family home in October 2019. To approve the lending, ABC bank needed to know what assets and liabilities

Jimin had.

By January 2020, the partnership employed 12 staff, including senior accountant Bella and office manager Steven. The March-April 2020 lockdowns were an extremely busy time for the partnership as the staff (Bella in particular) worked tirelessly to support their stressed clients. When they were back in the office, in August of 2020, Bella started asking Jimin and Lisa about becoming a partner of the firm.

Bella is aware of what the partnership was valued at in 2019. She does not have much money to buy into the partnership, as she is desperately saving to buy a house. However, she is prepared to risk only $100,000. Jimin is very excited about growing the firm and Lisa is excited about an injection of funds into the partnership. Jimin and Lisa agree to dissolve the existing partnership enter into a new partnership with Bella whereby Bella would risk no more $100,000.

Shortly after the new partnership agreement was signed, Steven developed concerns regarding the firm's finances. One day while he was transferring money between accounts to pay the upcoming wages bill, he realised the savings account was almost empty!

Lisa admits to Steven her interest in online gambling had become an addiction for her during the lockdown. She breaks down saying

"I have lost my life savings and even my house!"

Lisa then confesses that she has been withdrawing money from the partnership's accounts to gamble, in an attempt to recover her lost money. Bella and Jimin are immediately informed of the problem.

Required:

Using your knowledge of partnership law, what does this crisis mean for Jimin, Lisa, Bella and Steven respectively?

Question 2 (7 marks)

(Suggest 450-550 Words)

Case scenario

When Anna was a baby, her mother, (Ginny) had a written a popular Christmas song. The copyright to the song was owned by Ginny's employer, a production company. As part of a settlement of an employment dispute, her mother had acquired the right to receive royalty income from the song for 10 years. Anna was only 5 years old when Ginny died so the right to the royalty income was settled on a trust for Anna. Artie was the trustee of that trust. The royalty income derived by the trust was considerable.

When Anna was 12, the rights to the royalty income was coming up for renewal and the production company told Artie that they did not want to renew the agreement with Anna and the company was very definite about this decision. On hearing this Artie began discussing with the production company the possibility of purchasing the right to the royalty income for a further 10 years himself. The production company agreed to this, and so when the royalties agreement expired it was transferred to Artie. When Anna turned 18 she found out what Artie had done.

Required:

Outline the legal issues in this scenario and advise Anna of her legal rights and what remedies might be available to her.