Question

Brain Food, Anyone? You and your classmates are about to go into the food business. Having spent many hours in the library without food or drink, you have received permission to operate a food cart in the lobby outside the library as long as you take re- sponsibility for keeping the area clean. You plan to provide bottled water, juices, and milk, as well as fruit, muffins, and trail mix. You will also offer gran- ola that can be purchased with milk, as well as hard-boiled eggs and yogurt. Your business will be called "Brain Food," and everything you offer will be healthy. The cart will have a cooler for the perishable items, but no stove. No electricity will be needed. Your plan is to operate the cart all hours that the li- brary is open. You and your partners will form a general partnership. In the next 30 minutes, please draft a basic partnership agreement, which will include the following: 1. Business vision 2. How initial equity investment will be divided and ownership 3. How profit and loss will be shared 4. Definition of business roles-How can you capitalize on each other's strengths? 5. Pay and compensation 6. Provisions for dissolution of partnership 7. Distribution of assets upon dissolution 8. Length of partnership 9. How disputes will be handled 10. What is the decision-making process? ©2017 Cepage Leanng AARgnts Reserved May not be scanned, opped ordpicased or posted t。apoey acossstia wonannoe or in pat

Answer 1

PARTNERSHIP AGREEMENT   

   " BRAIN FOOD"

• Executive Summary:
• The Partnership is entered into between (name of partners) on (date of agreement) , herein after will be known as partners for the purpose of this venture known as Brain Food.
• All the aspects of the Brain food ( herein after called as business) will be governed by the rules and regulation as stated in this partnership agreement.

1. Business Vision:

• The purpose of the business is to own and develop the food business in the lobby area outside the library.
• Business aims at providing healthy and hygienic food or drink to students and others who visits library.
• It plans to supply water bottles, juices and milk. It also aims at providing fruit, muffins and trail mix. Also, it aims to offer granola that can be purchased with milk, hard boiled eggs or yogurt.
• It also visions to keep serving all food at reasonable prices while maintaining utmost cleanliness.
• Business will operate for all hours as long as the library is open.

2. Initial equity investment and ownership:

• Partners shall equally divide all the capital cost that will be required to start and run the business.
• The capital contribution can be in the form of cash, physical property, or other assets required for operations of the business.
• The capital contributions made will establish each partner's equity in the business.
• A proper record shall be maintained in the name of partner's capital account for all the contributions made by the partners.  
• The size of the partners contribution will reflect their share of ownership into business.

3. Sharing of profit and loss:

• The profit and losses of the business must be shared in the same proportion as the partner's ownership or capital contributions.
• The sharing of profits or losses of the business among partners can be made six monthly or annually.
• The reinvestment of the profit into the business will depend on earnings of each year and shall be made only with mutual consent of both the partners.

4. Business Roles:

• Both the partners will be equally authorized and responsible to execute business transactions, manage day to day activity, make necessary expenditures required for running business operations smoothly.
• However, the decisions regarding opening of any Bank account in the name of partnership, borrowing money, transfer of assets, making contracts with third parties and other occasional business decisions shall be made only with the mutual consent of all the partners.  
• Any partner signing the contract on behalf of partnership shall bind all the partners with terms of such contract.
• In case of debt, each of the partner shall be personally liable to the extent of unpaid amounts.

5. Pay and compensation:

• Partners will be entitled to the interest @ 6% p.a. on the amount of loan given by partners to the firm.
• On the other hand, Partners shall pay interest @ 8% p.a. on any borrowing or loan taken by partners from firm.
• Interest @ 6% p.a. shall be paid to the extent of capital contributed by partners.
• Partners shall not receive any salary for the day to day activity and management of business. However, any extra effort can be compensated by mutual agreement of all partners,

6. Provisions for dissolution of partnership:

• Partnership can be dissolved anytime with the consent of all the partners.
• The partnership also stands dissolved on the death of one or both the partners of the firm.
• However, if any one partner exits voluntarily, the other partner may survive the business at his own discretion.

7. Distribution of assets upon dissolution:

• Upon termination of partnership, property of the firm shall be sold out to the extent of amount required for paying outside liabilities and debts.
• remaining proceeds of such sale shall be divided among partners in the proportion of their capital contribution.
• Other unsold property is to be divided among partners in the proportion of their capital contribution.

8. Length of Partnership:

• This partnership is intended to run for foreseeable future.
• However, partners can dissolve it as and when they desire.
• Also, partnership shall stand dissolved upon death of one or both the partners.

9. Handling of disputes:

• Any type of dispute shall first be tried to resolve mutually.
• In case, partners could not arrive at a mutual decision, the facts and the dispute may be resolved with the help of Arbitration.
• Partners shall be bound to agree and act according to the decision taken by arbitrator.
• Any compensation to be paid by the partner to other partner or firm or third party or any act required shall be acted upon by the partner within the time and manner as prescribed by the arbitrator.

10. Decision making process:

• The process of decision making shall involve all the partners and no decision shall be taken in absence or without acknowledgement of any of the partner of the firm.
• The decision shall be taken mutually by both the partners and in case of disagreement between the partners, decision that is more beneficial to the business shall be taken.
• No decision shall stand valid unless it is made in public interest and any wrong action shall held partner personally and severally liable for loss caused to other partner or firm or third party.
• Each partner shall be given equal opportunity to put his opinion on the proposed matter.
• Partners are authorized to ask questions and get reasonable and satisfactory answers to their questions.

All other matters of the partnership shall be governed according to law.