Legal Relationship with Powers and its Legal Issues and Implications - Essay Example

In my opinion, the relationship is not a limited partnership as Powers played an active role in the management of the computer business. In Ontario, limited liability partnerships can only be used for carrying on a profession, where statute permits. Examples include lawyers and accountants (Shani, 5). The relationship between Lawrence and Powers is thus not a limited liability partnership as they are not in a profession such as doctors and lawyers but rather entrepreneurs in the copier and computer renting business.

A partnership is a relation that subsists between persons-individuals or corporations-carrying on a business in common with a view to profit (Shani, 2). A partnership can be a formal relationship (that is, express partnership agreement) or an informal relationship. The court may hold that the relationship is a partnership even if the parties don't realize they are in a partnership (deemed partnership) (Shani, 3). But the receipt of such a share or payment, contingent on or varying with the profits of a business, does not of itself make the person a partner in the business, and in particular, a contract for the remuneration of a servant or agent or a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such (Shani, 8).

Lawrence told Powers, "If you will agree to operate the new computers, I can pay you more by sharing the profits from that branch of our new business with you." Powers agreed. Hence, there is a relationship that subsists between Lawrence and Powers to carry on the personal computers renting business with a view to profit. However, more information is needed as to whether there is an employment contract between Lawrence and Powers that makes him a servant or an agent. The relationship between Lawrence and Powers for the personal computer renting branch of the business is assumed to be a partnership since there was no mention of contract by Lawrence.

Even if Powers is not aware that his relationship with Lawrence is a partnership, the court may construe otherwise.Where there is no partnership agreement, the partnership is governed by the Partnerships Act (Shani, 5). The Partnership Act sets out the fiduciary duty of partners. No partner is allowed to incur secret benefits - that is, each partner must account for all benefits received by him/her personally from any transaction arising from the use of the partnership's name, property or business connections - if he/she fails to get permission of his/her partners beforehand, the benefit then belongs to the partnership (Shani, 6).

Applying the law to the case, Powers purchases the computers from Intelli Inc., an office equipment and supply company of which shares are held by Hugh Powers mother and father. Powers has incurred secret benefits because the purchase price of the computers entered into by Powers was at the manufacturers suggested retail price and did not reflect any form of volume discount, even though volume discounts were routinely given by