Question One (Relation between partners & third party)

Fina, Jae and Luna are partners in a laundry business under the name Clean N Crisp. Fina had bought two new washing machines worth $15 000 from Famous Electric on credit under the firm's name.

Luna entered into a contract of loan for $80 000 with Finance Sdn Bhd. The money was credited in the firm's account but Luna took $8 000 out of the money to pay her personal notebook computer.

Last week, the firm received claims from Finance Sdn.Bhd for two-defaulted payment of the loan. Fina who was angry with Luna for taking the firm's money to buy personal notebook refused to pay the loan and claimed that the firm is not responsible for the loan, as Luna has no authority to enter into any transaction above $50 000.

Luna, on the other hand, told Fina that the firm will not pay the bill issued by Famous Electric on the ground that Fina has no authority to buy assets without her consent.

Yesterday Jae had senttwo months' notice to retire from the partnership.

Advise:

a.)Whether the firm would be liable to the debts made by the partners with Finance Sdn. Bhd and Famous Electric.

b.)Whether Jae will also be liable for the above debts since she had tendered her retirement as a partner.

Question Two (Relation among partners)

Bob and Kamal are both partners in Engine Enterprise. They were authorized by the firm to negotiate the purchase of some properties belonging to Maju Sdn. Bhd.. Last month, they successfully acquired the properties on behalf the firm but slightly at a higher price.

The other partners recently discovered that:

i)Bob is a substantial shareholder of Maju Sdn. Bhd.; and

ii)Kamal had later purchased for himself some properties belonging to Maju Sdn. Bhd. and resold them at a profit.

Advise the other partners as to whether they have any cause of action against these two partners in respect of what they did.