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14516 1MWS69AMB1110BUS Solution

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14516 1MWS69AMB1110BUS Solution
Raju and Kamala set up a consultancy firm under the name of Expert Consultancy in June 2000. The partnership agreement clearly stated that the partnership shall remain for a ten year period. In December 2010, Kamala took a personal loan amounting to RM100,000 from Bank Business but failed to pay three installments. Kamala later assigned her interest in the firm to Bank Business. Raju was not happy with the assignment and gave a notice to Kamala for dissolution of the firm. Raju decided that if Kamala refused to accept the notice, he would apply for dissolution by a court order.

Discuss:
a) The right of Kamala to assign her interest in Expert Consultancy to Bank Business.
b) Discuss the ways for dissolution of a partnership. What are the grounds that Raju could use to apply for dissolution of partnership by way of court’s order?

Solution: Kamala had not right to assign her interest in Expert Consultancy to Bank Business. Her use of the firm's financial status for personal gain can lead to numerous tax and income implications that may eventually lead to a criminal offence and/or fraud against both partners of the firm. Raju has the right not to participate in such activities, and thus has the right to have his name removed from the partnership.
Raju can apply for the dissolution of partnership on several grounds:
a) One of the partners is in the breach of the partnership contract due to the fact that she is using the firm's financial standing for personal gain, and not for the benefit of the partnership.
b) The partnership contract is valid for 10 years, and considering that the Kamala's breach of contract occurred in 2010, and the firm was established in 2000, the contractual obligation of the partnership is close to the end (if not expired - depending on the month of the year).

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