cristobaleri47812Lv1

7 Feb 2023

Fiona, Celine and Donna have recently commenced a business together making custard pies using the name 'FCD's Custard Pies' as their trading name. They also sell coffee and soft drinks.

 

Only Donna has put capital into the business, and no formal agreement exists between them. However, on many occasions Fiona has purchased stock for the business from their various suppliers by using her own money, and she has also set up an account with the suppliers in the name of 'FCD's Custard Pies'. Celine also has often placed orders on behalf of the business with their various suppliers for stock.

 

At their next meeting Fiona suggests selling alcoholic beverages. Donna likes the idea, but Celine does not. Celine says that such a change would require renovation of the shop, and also obtaining a licence to sell alcohol. This requires an application to the relevant government authority, which may reject the application.

 

After giving it lots of thought, Donna decides to leave the business in two months but wants to make sure that she has no further obligations and commitments once she leaves the business.

 

In six months, Celine decides to retire. Upon Celine's retirement, Lucy joins the business (ie, "FCD's Custard Pies'). The business is later sued for defaulting on a loan payment, and both Celine's and Lucy's names are added to the action against the business.

 

Please answer the following questions, and support your answers by the relevant authorities (ie, case law and legislation):

 

2b)

 

(i) What should Donna do before she leaves the business?

 

(ii) Can Celine and/or Lucy be held liable for debts incurred by the 'FCD's Custard Pies'?