Chris is the owner of a small bookshop while Kelvin is an expert who provides bu

Question

Chris is the owner of a small bookshop while Kelvin is an expert who provides business consultancy services. Chris has relied on Kelvin’s business advice since six years ago. On 1st January, Kelvin invited Chris to do an online bookselling business project together. Chris agreed and they then signed an agreement as to the project. Chris did not read the agreement carefully when he signed the agreement. There was a statement in the agreement saying, in an average size, that while Chris and Kelvin would share the profits of the said business equally, only Chris was to bear the debts of the said business in case it incurred debts (they did not discuss who was to bear the debts of the business before they signed the agreement). Kelvin also did not explain the terms of the agreement to Chris (Chris understood all the words in the agreement).

On 4th January Chris noticed the said statement about his sole liability for the potential debts of the said business. He demanded to cancel the agreement immediately (Kelvin and Chris had not commenced business yet).       

Discuss whether Chris can cancel the agreement made with Kelvin.

Explanation / Answer

Partnership is the relation that exists between persons carrying on business in common ways with a view to earn profit. Partnership form of an enterprise is very easy to popular because i) it is easy to form, ii) it allows several individuals to combine their talent and skills in a particular business venture, it provides a means of obtaining more capital than a single individual can obtain and allows sharing of risks for rapidly growing business.

A) Partnership must be the result of an agreement between two or more persons.

B) The agreement must be to share profits or losses of the business.

C) The business must be carried on by all or any of them acting for all.

in the absence of any of these essentials, it is clear that partnership cannot be formed.

In the above mentioned case the agreement is signed between Chris and Kelvin to start new online book selling business. Since Chris relied on Kelvin for all his advices which he has provided when Chris took consultancy services from Kelvin 6 years ago, with this trust and beliefs Chris agreed to start new online book selling business proposal from Kelvin and entered an agreement with Kelvin to start project. Though Kelvin did not explain the terms of agreement to Chris but he had mentioned this in the agreement of sharing profit equally and only Chris should bear the debts in case if the business turned to debts. Later Chris noticed that the said statement about his sole liability for the potential debts of the said business he demanded for cancel the agreement immediately.

Since no work has begun yet after signing agreement can be cancelled or terminated with immediate effect, so that no further steps or major movement relating new business can be stopped from immediate effect. . As i mentioned earlier with absence of any essentials of partnership cannot be formed.

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