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LAW OF BUSINESS ASSOCIATION- INSTRUCTIONS FOR LAW OF BUSINESS ASSOCIATION- ANSWER EACH QUESTIONS DISTINCTIVELY MAKING REFERENCE TO CASES AND ONLINE ARTICLES WHERE POSSIBLE. ALSO, MAKE USE OF THE LAW STYLE OF REFERENCES WHICH IS THE OSCOLA REFRENCE WHICH ENTAILS THE USE OF FOOTNOTES AND BIBLIOGRAPHY. YOU MUST ANSWER BOTH QUESTIONS AND WORD COUNT IS 2500 WORDS.
Question 1 (40 marks) For the purposes of this part of the assessment you are a junior lawyer advising a client named Daniel Smith who has been trading as a sole trader setting up and designing websites for some 10 years. Daniel has grown the business gradually, but now wishes to go into partnership with James Colburn, who also runs a web design business locally. The two think they could do better commercially working together rather than continuing in competition with one another. Daniel has told you that one of the reasons James is keen to go into partnership with him is that he (James) has been unwell recently. Daniel has the following concerns:-
(a) James earned profits of only £12,000 last year, and although he is now back to working full-time, Daniel is concerned that he, Daniel, will continue to earn the bulk of the partnership income for some time;
(b) If James becomes unwell again, Daniel does not want to be responsible for supporting him indefinitely. If it becomes clear after a reasonable period that James is not going to return to work, Daniel wants to be able to take over the business and pay James off;
(c ) Daniel will be providing his extensive office equipment including expensive computers for use by the new firm.
What advice would you give Daniel in relation to clauses in the partnership agreement dealing with the above three concerns, and why? What advice would you give Daniel about the new firm’s liabilities and his potential responsibility for them?
Question 2 (60 marks) English law provides the directors of companies limited by shares with powers to manage the companies; what safeguards exist to protect the interests of the owners?
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