Mark and Louis have just left university where they both studied computer science degrees. They have some innovative ideas for computer software which could be used in the tourist industry. They want to see if they can start a business together. They both live back at home with their parents in London and will work from home. They did some work together during their final year at university and their business ideas arise out of their joint final year project.
Over the summer Mark starts work but Louis takes a long holiday travelling in Malaysia. When Louis gets back in October, Mark has already been working on some business ideas for 3 months and has secured a contract with a large travel company. Mark and Louis disagree about the way the business is proceeding and in particular Mark feels that he has done all the work and wants to continue on his own.
Advise Mark and Louis as to whether they have taken sufficient steps to form a partnership. You should refer to relevant case law. 750 words
Some time later Mark and Louis overcome their differences and resolve to work in business together as partners with a fresh start. They decide to share profits equally, they have very small capital costs but those will be shared equally. They will not receive a salary.
The contract with the travel company is ongoing and will be transferred to the partnership.
Areas of concern:
Mark is concerned that Louis may want to go off travelling again. Louis is concerned that Mark will want to work on his own pursuing his own contacts or may make contracts and enter into commitments without telling Louis.
If Mark and Louis were to subsequently go into partnership together what clauses would you suggest they should include in their partnership agreement to cover their specific concerns and why?
You should refer to the Partnership Act 1890 , the partnership precedent agreement in your Unit Guide pp 10-21 and relevant case law.
You should not draft any clauses but should deal with the following issues: duration of partnership , leaving the partnership , partners working in competition with the partnership and dealing with third parties.