What action could Janet take against Katy

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Reference no: EM133935756

Question

You act for Janet Webb. Janet is in a partnership called The Toy Corner, an online toy shop. There two partners, Janet and Katy Horwood. There is no written partnership agreement. However, the partners have shared profits equally since the business started, and they each have their own roles and areas of responsibility. Janet deals with the sales and purchases of stock and Katy deals with the day-to day running of the business, including the accounts. Each partner has the power to make decisions within her own particular area of responsibility but, for 'major decisions', unanimity is required. Beyond that, there does not appear to be any other express agreement.

Katy recently ordered a new range of high-end collectible bears and children's bedroom furniture on behalf of the firm on the basis that she thought they would both add significantly to the firm's profitability (see invoice at Document A). The goods have been delivered, but Janet is refusing to pay for them because they are not part of the firm's existing business and they have no immediate plans to expand into these areas. The suppliers are demanding payment and Janet is concerned that the creditors can sue her, personally, for payment.

1. Explain whether Janet is liable for the sum claimed and if so, to what extent.

2. What action could Janet take against Katy?

3. Assume for the purposes of this question that the dispute set out above has been resolved and the business has asked Kai Fletcher to join the business. Janet has asked your firm to advise Kai about this.

4. How would you respond, and why?

Reference no: EM133935756

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