Recommend the form of business organisation??? Why

15 16 1 17 18 SEMESTER 1, 2020 Marks: This paper carries 25% of the total marks Sarah Alexandro and John William became friends while they were studying Business Law at Curtin University. After a few years of working with Glittering Floors Pty Ltd as marketing and sales executives, they resigned from Glittering Floors Pty Ltd in December 2019 and decided to set up their own business of selling timber flooring and tiles. They initially thought a partnership would be the best option. However, ultimately on 1 March 2020 they registered a proprietary company called Sparkle Pty Ltd. The company's business is financed through the issue of 500,000 $1 shares to Sarah, 300,000 $1 shares to John, and 2000 $1 shares to Thomas. Thomas is John's cousin. Sarah and John became the directors of the company. Sparkle Pty Ltd has the following inserted into its constitution: "The Replaceable Rules of the Corporations Act 2001 (Cth) shall apply to this company except for the following: 1. Thomas, an employee and shareholder of the company, shall be the company's marketing manager. 2. The company shall only operate the business of selling flooring materials. The company has appointed John as the managing director to manage the day-to-day business of the company. Sarah and John have decided to expand their business and sell kitchen furniture along with the flooring material as the house owners often look for purchasing both the products. On 1 July 2016, John entered into a contract to purchase 50 pieces of French provincial kitchen cabinets from a French company Soli France Lid. However, Sarah found this contract to be quite unreasonable. John is now hoping that there is a way that the company can avoid its obligations under the contract on the ground that the Company's constitution does not allow the company to sell kitchen cabinets. Whilst working with Glittering Floor Pty Lid, Sarah and John had signed non-compete clauses. The clauses prohibited Sarah and John from competing with the business of Glittering Floor Pty Lid during their employment as marketing and sales executives and post-employment for a period of three years. Sarah and John believe that the non-complete clauses cannot bind Sparkling Pty Ltd as it is not a party to the employment contract