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Sumir and Pete each operated businesses selling business communication equipment. Sumir's business was incorporated and Pete worked as a sole proprietor. Each promoted different lines of business equipment. The two friends were discussing business one evening when it occurred to them that they could pool their resources and work together for greater combined profit.
Pete decided to combine his sole proprietorship with Sumir's corporation in return for an equal share of Sumir's business shares. They then combined their inventories. Sumir assumed Pete's accounts receivable and payable and line of credit. Pete obtained signing authority from the bank for cheques drawn on Sumir's business accounts. Pete also brought his client base and line of products with him to the venture.
Some time after they had combined their businesses, Pete and Sumir began having disagreements about certain business matters. In particular, they could not agree on a uniform marketing plan or customer territory. Most notably, they could not agree on an appropriate division of commission based on who provided what client base and, making matters worse, Pete had little cash to inject into the business. These difficulties occurred before Pete and Sumir's solicitor had been able to transfer to Pete his equal share of stock.
The business was dissolved, and Pete sought an equal share of profits and capital. Discuss the legal issues which will be raised by the parties. What would be the likely outcome should litigation ensue?
Government Deficit
A scenario in which a government spends more than it earns over a certain timeframe, usually resulting in the need to borrow funds.
Government Budget Deficit
A financial situation where a government's expenditures exceed its revenues in a given fiscal period, leading to borrowing or debt accumulation.
Political Reforms
Changes introduced to the political system of a country or region aimed at improving governance, enhancing democracy, and addressing flaws in the existing structure.
Interest Rate
The percentage of a sum of money charged for its use, often expressed as an annual rate.
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