Dave and Grace Sullivan are getting a divorce after nearly 30 years of marriage. Grace needs to know about her rights and responsibilities in regards to the family business ‘Sullivan’s Camping Supplies’. She tells you the following:a.Dave’s father started the business in 1976 when he was made redundant from a government job. b.Dave and Grace took over the business in 1987, the year they were married. They paid Dave’s father $40,000. Of this amount $10,000 came from Dave’s savings and $30,000 from a loan from the Bank. The loan was secured against the business assets. c.The loan from the Bank was repaid in 1999. d.The business name remains registered in Dave’s father’s name. When the renewal is due, he lets Dave know and Dave makes sure that payment is made.e.The business operates in rented premises. f.All business documentation is in the business name.g.Dave works full-time in the business and is the manager. Grace works part-time and so do Dave and Grace’s two teenagers, Lizzie and James.h.Grace doesn’t know anything about accounting and so she can’t remember seeing the accounting records for the business or the tax returns. All these affairs are looked after by an external accountant, Fred Snell. Grace signs documents when Fred asks her to.i.All the profits from the business go into the joint marital bank account and Grace pays all household and personal expenses from this account.j.She knows that Lizzie and James are paid an hourly rate for any work they do in the business.Please provide Grace with whatever assistance you can as to:•Whether it is likely she and her husband are operating as a partnership.•What additional information would assist you to determine whether it is a partnership.(ii)One day, Grace receives a call from Fred Snell, the accountant. He says that he has just become aware that Grace’s estranged husband, Dave has entered into a contract to purchase two cruise tickets for himself and his new girlfriend Deidre. The tickets cost $8,100 in total and the money has been taken from the business bank account. Assuming that Grace and Dave are in a partnership, is the partnership bound by this transaction?(iii)Assuming that Grace and Dave are in partnership and that it is agreed that Grace will be bought out of the partnership and her interest in the partnership will be transferred to Deidre, advise Grace about her liability for any partnership debts incurred after she retires from the partnership and what steps she can take to prevent any liabilities.
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