QUESTION 1
Ali and Bob had recently completed a degree in computing and decided that they could begin a computer repair business. They found some suitable premises to lease for a year with an option to continue for two more years and each contributed half the annual cost of the lease. In addition they set up a joint bank account and each contributed $25,000 as capital. They registered the business name as Klever Komputer Repairs. Cheng, who had also studied with Ali and Bob, heard of their venture and asked if he could assist in some way. He had recently inherited some money and was willing to invest $30,000 in Klever Komputer Repairs. Ali and Bob agreed that with extra funds, they could advertise more broadly and could travel further to more businesses to carry out repairs. They accepted Cheng's offer and agreed that for the $30,000 Cheng was to receive 8% of the net profits. He could also attend monthly management meetings and contribute to all management decisions.
As Cheng had no other employment, he spent considerable time at Klever Komputer Repairs premises and carried out some of the work in the office and in the repair shop for which he was paid an hourly rate. Ali and Bob referred to him as ‘our other partner.' One day when Ali and Bob were not at the office, Dale, a sales representative from a company selling a new software program, called in to the office, offering a heavily discounted price if the software was bought on that day. Since Cheng could not contact Ali or Bob he decided the decision was up to him and he went ahead and contracted to purchase the software for $30,000 on behalf of Klever Komputer Repairs. Dale had regularly visited Klever Komputer Repairs and spoken to Ali, Bob and Cheng although this was his first major sale to them.
When the account for payment arrived, Ali and Bob were furious with Cheng. They pointed out that they did not need the program, nor could they afford it. In fact they reminded him that at a previous management meeting they had decided that no one was to make purchases over $10,000 without all being in agreement. They toldCheng he would have to pay for it out of his own funds and could keep the software but Cheng replied that he has spent most of his inheritance and expected the business to pay for it.
The sales company is demanding payment from Klever Komputer Repairs.
Using the Partnership Act 1891 (SA) and relevant cases discuss the information above and, giving reasons for your decision, explain who is in this business partnership.
QUESTION 2
Consider the above scenario and ASSUME that all three are in this business partnership.
Using the Partnership Act 1891 (SA) and relevant cases discuss the information above and, giving reasons for your decision, explain who is liable for the debt for the software.
QUESTION 3
Klever Komputer Repairs business has expanded and the partners have decided to hire another person, Josie, to help with the work. Josie has a contract which describes her as an independent contractor. Josie is paid on an hourly basis at a set rate and has some flexibility in regard to when she needs to work at Klever Komputer Repairs premises and when she can work from her own home. She has explained to the partners that she cannot work during school holidays because she needs to look after her children during that time and this has been allowed. To do the repairs Josie uses software supplied by the partners.
Because they believe that Josie is an independent contractor, the partners have not paid Payroll Tax for her. Nor have they insured her under the relevant South Australian workers compensation scheme. However the Commissioner for Payroll Tax disagrees that Josie is an independent contractor and has demanded the relevant payment.
Using the relevant law and cases, explain whether or not Josie is an employee AND explain the consequences for the partners if a court determines that she is an employee.
Referencing: Harvard
2,000 words (excluding the bibliography, in-text citations and footnotes) All questions have an equal value