Question 1: (10 Marks)
Steve, Sunita, and Lily have just graduated from La Trobe University. They wish to go into business together providing book-keeping services to accounting firms. Their intention is to start small, but they hope to eventually grow the business into a large provider of contract book-keeping services to both large and small accounting firms. None of them has much money, although Sunita’s mother, Mary is prepared to invest most of the money they need to get the business started. Steve has developed a book-keeping computer software program which the business will use. Lily tried to set up a similar business with some other friends during the second year of her studies but that fell apart when it was discovered that she had ‘borrowed’ some of a client’s money to buy herself a new car – without asking the client.
Give Steve, Sunita and Lily advice on the most appropriate business structure for their proposed book-keeping business.
Question 2: (10 Marks)
Assume the business was set up as a Victorian partnership – LLB Book-keeping. Unfortunately, there are some problems:
(a) Lily has taken a client’s money. She used it to buy herself some shares on the stock-market. The client has advised he plans to sue the partnership for compensation. The police are also investigating;
(b) Steve wants to sell his book-keeping computer program to a national accounting firm and keep all the profits; and
(c) Mary has heard of the troubles and is demanding access to the business records and accounts and is complaining about not getting a say in the way the business in being run.
Give the partnership legal advice on each of the problems.
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