Assignment task: Alexis and Linette have been running a food distribution service for the last four years. The business is called LA Foodstuffs and operates from premises just outside Bridgetown, which are leased from Linette. Both Alexis and Linette contributed about 28,000 Barbados dollars of capital to the business on start-up. They have tended, up to now, to share the management of the business as well as profits equally.
As the business is doing well, despite recent global circumstances, Alexis and Linette now wish to take on another partner to invest in, and to help expand, the business. They have been approached by Madge who has experience in food delivery business management. Alexis and Linette feel she would fit well into the business. They have been discussing how best to admit her to the partnership. They are also considering formalizing the arrangements between the three of them, as they currently have no written partnership agreement. It would make sense, for example, to specify the management responsibilities of each partner, and to clarify how profits are to be shared. Alexis would take on the role of senior partner as he has more experience.
Madge has indicated that she would be able to contribute up to 39,000 Barbados dollars in additional capital. She is also offering to provide a van for business use.
Advise Alexis and Linette on:
A. Why the business structure currently used by Alexis and Linette is an unlimited liability partnership;
B. The benefits of formalizing, in a written partnership agreement, the business arrangements between Alex, Lina and Madge;
C. Whether or not the van provided by Madge would be partnership property.