The potential liabilities of partners for debts in ordinary partnerships case law example with JME Wedding Dresses

The potential liabilities of partners for debts in ordinary partnerships case law example with JME Wedding Dresses

Using relevant case law, explain the potential liabilities of partners for debts in incurred in ordinary partnerships using the case law example of JME Wedding Dresses below;

 

 

 

Introduction to the case

In January 2017, Jonathan, Mario and Emily formed a partnership, under the Partnership Act 1890, to run a wedding dress business trading as JME Wedding Dresses. On formation, Jonathan invested £3000 into the business, Mario invested £2000 and Emily invested £1000. All of them took an active part in the operation of the business and the partnership agreement stated that all profits and losses should be divided in proportion to the capital contribution. However, as Emily was the person who would actually be making the wedding dresses, it was agreed that she would not be liable for any more than her initial contribution towards any future debts. 

In August 2017, Emily was approached by Michael, who asked her if she would make a wedding dress for his daughter, Sophia. During Emily’s discussions with Michael and with Sophia, it was stipulated that they required particular silk fabrics and lace that could only be obtained from Italy. Emily pointed out that the materials in question were both unusual and very expensive. Michael responded that the cost was unimportant and that he wanted Sophia to have the dress she wanted for her wedding.

Emily entered into a contract, on behalf of JME Wedding Dresses, with Michael which provided that Emily would design and make a wedding dress to the requirements stipulated by Michael and Sophia for Sophia’s wedding. The price agreed was £10,000. All the money was paid up front. 

Emily used materials of similar quality but not imported from Italy and on the day of the wedding, the train of the dress came apart and the bride suffered great embarrassment and also realised that the materials used for the dress were not what had been agreed with JME Wedding Dresses.

Michael is now suing JME Wedding dresses for the price of the dress and wants further compensation for the embarrassment suffered by his daughter. 

 

B) Explain, in the context of the particular form of partnership, the potential liabilities of Jonathan, Mario and Emily for the partnership debts.

 

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