Partnership ILAC Hypothetical Problem Solving Question:
John, Paul, George and Ringo own an architect business in Brisbane City called Quarrymen Designs Architects (QDA). They started the firm (business) in 2012, a few years after graduating from university. As the firm became more successful, each took a separate role in itsmanagement.Under the firm agreement, John is now in charge ofQDA purchases up to a limit of $50,000, Paul looks after designing new quarries, leaving George to network with clients. Ringo was involved in setting up the business, but no longer takes part in its day to day management, and whilst he no longer takes any share of the profits, hereceives an annual retainer to provide architectural advice.
On three occasions during 2015, to aid the drawing of construction site plans, on behalf of QDAJohn purchased design equipment from Brisbane Computer Sales (BCS), up to the value of $40,000 each time.Having paid the previous BCS invoices via the firm's credit card when the invoices were due,John again dealt with BCS earlier this year on behalf of QDA by faxing the orders on the company letterhead.The first purchase on 1 February 2016 was for $50,000and the second purchase in mid-March 2016 was for $90,000.In mid-April 2016 QDA lost a major contract, placing the firm into financial difficulty. Last week, QDA received an invoice from BCS demanding payment for both lots of equipment that arrived at QDA at the same timelast week. Aware that the firm is now unable to pay the debt, John contacted Ringo for help, however Ringo simply replied, "... sorry, not my problem mate, you got us into this mess, you're responsible for purchases!"
Due to personal problems George recently started drinking heavily and gambling. He now has a large gambling debt that he owes Big Stars Betting Pty Ltd. To pay off his debts,George decided to start another architect firm called Nathan Architect Design Surveys (NADS) located at Nathan about 11km from Brisbane City. George sometimes works from home, but as he has been fighting with his wife a lot recently, he has been using his QDA city office to do this work. Last week George and his wife had another argument about their own personal financial problems. Fed up with her husband's gambling, George's wife called Paul and told him about George's other businessNADS. She said that he had made a $50,000 profit running NADS over the last 6 months, using former clients of QDA.When confronted by Paul, Georgestated that he was highly embarrassed about his drinking and gambling debts, and started NADS in his own time at nights so John and Paul would not find out about his bad habits.
Using ONLY the Partnership Act 1891 (Qld) and the relevant common law from the textbook and partnership lecture slides (do not use sections or cases outside of these materials), advise QDA about all issues as of today's date. You do not deal with any sections or cases dealing with the dissolution of a partnership.