Business Organizations

Business Organizations

Ungraded mid-term exam – 23 February 2022

Anna and Bob decided to enter in business relationship as a simple partnership. Their Business is a restaurant called “ Fish Market”. Bod invested 2 millions and Anna 1 million. Bob is a passive investor and Anna is a full time manager of the business. They are sharing half the profits and both of them don’t have any salary or any kind of remuneration from that business in their agreement. Anna despites the bad news or bad decision she confronted she always shared all her information with her partner Bob.

Both parties are in a general partnership = def + rules applicable to this type of business + explain their factual situation

Part 1 🡪 Anna Loan + où est la loyautéééé

Anna invested $1 in the business but in the full time manager with all the powers linked to her position. Even on the financial part.

She needed more funds in 2020 thanks to a line of credit, but all the bank interest rate were 8 or 9% and she was not able to align her budget with that, so after she inherited a huge amount of money, she decided to act like she was the bank and invest 200k$. But she decided to apply the same interest rate to her own company : 8% so in 1 year she was able to gain more than 16k$ just with the interests.

Is it possible to act like that ? is it legal?

Part 2 🡪 The hiring of Sam as financial operations manager

Anna is also in the full capacity of hiring the different employees of the restaurant. After the financial operations manager dismissed, she decided to hire her son-in-law. But that guy has only one thing good his good diploma, but without any experience and practice of the job. But despite that facts she decided to give him a higher salary that the previous financial operator manager who had much mor experience.

Is it justifiable? Can the other partner complain about that ?

Part 3 🡪 the Member Plan

After some difficult times for the restaurant and a slow growth of the Business, Anna decided to hire a Marketing consultant and to put in place a membership for her clients, to perpetuate their coming. Normally, most of the time, the client don’t use fully the advantages of their membership. BUT here it was the case. So with a long term vision, the restaurant will loose mor money than without the membership, so Anna decided to stop that possibility. It is risky for the business to quit that advantage because people like them. So the decision to stop it after just one year could have as a consequence to loose un huge part of their customers.

Can Bob say something about the strategy to adopt?

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The contract of partnership is for 10 years ! started in march 2018 et will end in 2028. We are in 2022. We are at the beginning of the 5th year of the existence of that business. What can Bob do about the partnership? have a chance to end the partnership? Can he recover its investment or part of it?

Use the RUPA the explain all the possibility and causes. And use the case referring to UPA and RUPA relevant to that case and those facts.

Correction :

Which Law ? which type of business ? causes of action? Rights and liabilities? Provides information to your client?

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