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Business and labor law ( Mgt611)
Assignment no 1
Scenario: Mansoor – the sole owner of a well-established construction firm had been associated with construction business for the last 20 years. His business spans over all major cities in the country. Besides this, he also renders consultancy services to other construction players in the industry. Aslam, who is also in construction industry for the last 7 years entered into an agency relationship with Mansoor for a newly start-up construction project undertaken by the later. This project, located in heart of the city, successfully completed in 30 months. After completion of the project, Aslam showed his intentions to Mansoor to sign a partnership deed with him to which Mansoor agreed on sharing of future profit or losses in equal proportion. They formed a new construction firm under the name of Model Construction. The net assets contributions in the new firm were Rs. 25.75 million by Mansoor and Rs. 25.50 million by Aslam. The partnership deed is silent on all other monetary benefits to the partners except monthly drawings of Rs. 150,000/- to each individual against his share in the yearly profit.
Required: Answer the following questions: (2 * 5 Marks)
a) Briefly describe the duties of Mansoor while having agency relationship with Aslam.
b) How can they convert their agency relationship into partnership?
c) Despite of varying amount of contributed capitals, how they can share the future profit or loss of the firm?
d) If any of the partners intends to convert half of his drawings into salary, describe the provisions of the Partnership Act in this regard.
e) Can, in case the firm needs finance to meet its business operation, a partner borrow an amount from his wife at a promised mark-up rate and lend this money to the firm on his own behalf? State your answer as per provision of the Partnership Act 1932. --------------------------------------------------------
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Part(e) Ans required......have anyOne?..Plz share
Mansoor are bound to carry on the business of the firm to the greatest advantage, to the just and faithful to aslam and to render true accounts and full information of all things affecting the firm to any partner or his legal representative.
MAnsoor shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.
They convert their agency relationship into partnership by sharing their profits and losses and also by investments.
A relationship becomes a partnership when both parties begin to seek solution that serve the long-term interests of each other; not just their own.
Necessary for a partnership:
assets by mansoor =25.75
assets by aslam=25.50
total assets= 25.75+25.50 = 51.25
See this paragraph and get answer your question
RELATIONS OF PARTNERS TO ONE ANOTHER 9. General duties of partners.— Partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other, and to render true accounts and full information of all things affecting the firm to any partner or his legal representative. 10. Duty to indemnify for loss caused by fraud.— Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm. 11. Determination of rights and duties of partners by contract between the partners.— (1) Subject to the provisions of this Act, the mutual rights and duties of the partners of a firm may be determined by contract between the partners, and such contract may be expressed or may be implied by a course of dealing. Such contract may be varied by consent of all the partners, and such consent may be express or may be implied by a course of dealing. (2) Agreements in restraint of trade. Notwithstanding anything contained in section 27 of the Contract Act, 1872 such contracts may provide that a partner shall not carry on any business other than that of the firm while he is a partner. 12. The conduct of the business.— Subject to contract between the partners - (a) every partner has a right to take part in the conduct of the business;