Leon’s restaurant business suffers from a lack of capital. He is currently the sole owner of the business and is thinking about taking on two partners. He has approached several investors who have told him that they will only invest if they have limited liability. 1) Why would it be advisable for Leon to draft up a Partnership Deed prior to entering into the business arrangement with any new investors? 2) What would be the outcome if there is no Partnership Deed? 3)In a situation in which a Partnership Deed exists and a dispute arises, which would take precedence, the Partnership Deed or the Partnership Act?
Leon’s restaurant business suffers from a lack of capital. He is currently the sole owner of the business and is thinking about taking on two partners. He has approached several investors who have told him that they will only invest if they have limited liability. 1) Why would it be advisable for Leon to draft up a Partnership Deed prior to entering into the business arrangement with any new investors? 2) What would be the outcome if there is no Partnership Deed? 3)In a situation in which a Partnership Deed exists and a dispute arises, which would take precedence, the Partnership Deed or the Partnership Act?
Chapter6: Deductions And Losses: In General
Section: Chapter Questions
Problem 22DQ: Ray loses his job as a result of a corporate downsizing. Consequently, he falls behind on the...
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Leon’s restaurant business suffers from a lack of capital. He is currently the sole owner of the business and is thinking about taking on two partners. He has approached several investors who have told him that they will only invest if they have limited liability.
1) Why would it be advisable for Leon to draft up a Partnership Deed prior to entering into the business arrangement with any new investors?
2) What would be the outcome if there is no Partnership Deed?
3)In a situation in which a Partnership Deed exists and a dispute arises, which would take precedence, the Partnership Deed or the Partnership Act?
4)Who are considered silent or sleeping partners?
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