Toma was the owner of a restaurant called "Luau-Talo Bar and Restaurant". He had been fortunate enough to buy the premises in which the restaurant was situated and to furnish it as he had wanted. Due to a huge increase in recent competition in the surrounding area, Toma's profits declined and he struggled to meet costs. He approached his friend Simi for a loan of $100,000 and they agreed to draw up a loan agreement which included the following:

The lender will receive a share of the profits and losses to the extent of 40%

The lender has the right to examine the business books at will

The lender has the right to a quarterly business statement

The lender has the right to be consulted and contribute to any major decisions regarding the business.

With the injection of money into the business, Toma and Simi decided that the way to improve trade was to refurnish the restaurant. Most of the money was spent on this and the business improved and made a profit. Simi spent considerable time at the restaurant and came to know many of the suppliers, some of whom thought he was in a partnership with Toma.

Three years later, Toma decided he wanted to retire and sell the business. he consulted with Simi who told Toma he would be happy to buy out Toma's share of the partnership. Toma was surprised. He had never considered Simi to be a partner although Simi obviously thought himself to be one. Simi argued that the $100,000 was the equivalent of of the capital that Toma had contributed and that he was therefore entitled to of the proceeds of the sale of the assets of the business.

Using the relevant sections of the Partnership Act 1975 and the ILAC format, discuss whether Toma and Simi are in a business partnership.

Requesting for you to review my response to the above question whether it is correct

Is there an existence of a business partnership between Toma and Simi? While reviewing this issue, it would be interesting to extract the definition of Partnership from the partnership Act (s4(1)PA1975 "the relation which subsists between persons carrying on a business in common with a view to profit" Therefore we would like to discuss the following in order to resolve this issue between Toma and Simi.

Is Toma and Simi carrying out a business in common with a view to profit? According to facts stated, Toma is the owner of the "Luau-Talo Bar and Restaurant". Due to a huge competition in the surrounding area, Toma struggled with his business and his profits continued to decline. That is when he decided to approach his friend Simi for a loan of $100,000. And there was a loan agreement which was drawn up as conditions for the loan which was adopted by both parties involved. With the stipulations made under the loan agreement, The lender will receive a share of the profits and losses to the extent of 40%

oThe lender has the right to examine the business books at will

oThe lender has the right to a quarterly business statement

oThe lender has the right to be consulted and contribute to any major decisions regarding the business.

It is aslo stated that Simi spent considerable amount of time at the restaurant and was familiar with many of the suppliers of the restaurant. It is also stated that they jointly made decisions in regards to the progress and improvement of the restaurant.

I would therefore conclude that there is no existence of a partnership between Toma and Simi. Their relationship if a loanee and and lender and the terms of their relationship is spelt out on their loan agreement. But the decision to for Toma to sell the business to Simi, it should be decided and agreed to by both of them as the last clause in the loan agreement states that Simi to be consulted and contribute to any major decision regarding the business.

(Please be advised that is the question....) i guess most of the relevant info to assist can be collected from Samoa Partnership Act1975 - PacLii