You are approached by three clients, Misha, Tanya and Irving, who are partners in an IT business that produces software for appliances and for machinery used in factories. They sell software, both on its own and also ready-loaded onto hardware appliances, so their sales include both software and hardware. The business has become successful, so they have been considering whether they should incorporate, but they don't know much about it.

Part 1 (10 marks) You need to explain to the clients the benefits of incorporation, and compare it to their risk exposure while operating as a partnership. You particularly need to address their potential liability to third parties, and the effect of the corporate shield. You should refer to appropriate cases to illustrate your advice. Since the clients are only concerned with their external liabilities, you SHOULD NOT address issues of rights and duties amongst themselves.