Contract Law

Introduction

The following report contains information regarding Jenny Banks’s taxi business and the expansion of it in setting up a partnership with Michael and Trevor. She needs to know how to distinguish differences between different forms of business organisation and the law that surrounds it. In addition to this Jenny will need to know about the paperwork involved in setting up a private limited company.

The report will also address Jenny Banks’s raising concerns of the business’s name and what they can and cannot call it. Furthermore, there will be information and advice on how to remove Trevor from the business and the implications around the issue.

Types of Business organisation

There are various types of partnerships that Jenny can decide to go into with Michael and Trevor and thus the following explanations and definitions shall be in aid of helping to choose the right partnership to set up.

The first type of partnership is a General partnership. The usual case when this type of organisation is set up is when two or more people combine forces in the same area of business to generate a profit in accordance to the Partnership Act (PA) 1890.(1). The general managing and responsibilities of the business is equally divided about all partners involved in the organisation, which means that each person shares an equal amount of liability for anything that may occur. Therefore this may be seen as a big disadvantage because if one partner acts in contradiction to the other and is sued, all parties in the business will be held liable for one’s actions. In addition to this, if the partners have not specified otherwise in the contract and something happens to one of the partners such as death, bankruptcy, or leaves the partnership, it will dissolve and any underlying debts or assets will be equally divided among the remaining partners. If Jenny is concerned about Trevor’s work ethic and wants to remove him from the business, then setting up a General partnership could be a potential risk to both parties as she could be held liable for mistakes and mishaps that Trevor may have caused, therefore she would want to be protected if any legal action were to be taken against the business. (CASE?)

Unlike a General partnership,