Is ‘Better Pets’ a partnership?
For Better Pets to be a partnership it must contain three elements contained in Section 1(1) of the Partnerships Act 1891 (SA) . The first element is determining whether Better Pets is carrying on a business. A business, under section 1B(1) includes any trade, occupation or profession1. This includes Sophie and her colleague’s professions as a vet surgeon’s and nurses. It is obviously seen that the business is being carried on as the modern style of keyhole surgery is performed by Sophie and her co-worker’s numerous times for over a year, showing the repetitive nature of their business. Better Pets is also leasing their premises from Sophie and her partner, Harry this also shows the intention of ongoing business. …show more content…
Section 2(1)(a) enhances the possibility of a partnership as they lease a business location out in Unley, this shows the intention to “carry on a business in common with a view to profit” . Also, under section 2(1)(c) the sharing of profits between the friends is prima facie evidence that this is a partnership1, further improving the odds of Better Pets being a partnership. By contributing to the start-up of the business Sophie, Liam, Mark, Rose and Caitlin have shown an intention to make it a partnership. Then by looking at the Canny Gabriel case it shows that even though it doesn’t state that losses are shared amongst partners, that it is implied by their actions. Lastly, even though there is no mention of the word partnership between the friends, by looking at Re Ruddock we see that the definition of the business isn’t as important as how the partners act. The actions and intentions in this scenario show that Sophie and friends are acting as if in a partnership, making it more likely that Better Pets is in fact a …show more content…
The partners would argue under Section 20(1) “All property originally brought into the partnership stock, or acquired ... for the purposes and in the course of the partnership business are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement.” It could be argued that Sophie bought this in as a contribution to make her input even amongst partners as we are unaware of how much the other partners they put in.
Sophie would argue that this is not Partnership property as she is being paid rent by Better Pets, showing that she is to remain the owner. Under section 24(1)(a) it states, “all partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses”. This shows that all partners must contribute equally towards the partnership start up. As Sophie and her husband are giving the shop to Better Pets at a discount, this is her contribution as well as contributing in cash to the start up and purchases of start up items for the business. If she were to put the whole business in it would make for an uneven contribution on her behalf. From past cases like Harvey v Harvey and O’Brien v Komesaroff we are shown that property owned by a partner used in a partnership doesn’t necessarily mean that it will be partnership property. It will come down to the intention of the