Question 1

We are 1 June 2020 and Chidi is very happy.Having just graduated, he is starting a new position at an accounting firm called Numbers R'US. Although it was founded in 2019, the firm has been very successful and is made up of 10 partners, including Michael and Tom, the two founding members. The firm is not an incorporated limited partnership.

Chidi is working at Numbers R' Us full time and is quickly becoming more involved with the business of the firm. He is paid $65, 000 per year. This is a fixed salary that does not change according to the profit made by the firm. He is very diligent and full of promise. Everyone notices his work ethic and commitment to the job. Within a few weeks, Chidi has become a star employee. So much so that from now on, Chidi will work with one for the founding members, Michael.

On 3 July 2020, Michael has an important meeting with a potential client of the firm, Sparkling Ads Pty Ltd. The managing director of Building Blocks is Emily. When Michael arrives at the meeting, he introduces Chidi as 'his partner'. Chidi is a little surprised as this title but sees it at nothing more than a sign of respect from Michael.

A.Is Chidi a partner of the firm? Use the Partnership Act and case law to support your argument. (10 marks)

The meeting goes very well and Michael signs an advertising contract for $10,000 on behalf of the firm at the end of the meeting.

A couple of weeks later, the ads are delivered and Michael is very happy with it.The invoice is enclosed and he gives it to Tom, another partner to pay. The invoice was due to be paid on 20^th July but it has not been processed by Numbers R'Us.On 22th July, Emily cannot get hold of Michael. She contacts Tom and asks for immediate payment. Tom has been very busy and only now look at the ads. He calls back Emily and states that he never requested the ads and that even if he did, they are so horrible, they will drive customers away and not attract them. He refuses to pay.

B.Is Tom liable to pay? Use the Partnership Act and case law to support your argument (5 marks)