Zach and Tasia operate YELLOW GOODS, a distributor of Swiss cheese. Zach is responsible for marketing and buying inventory. Tasia is responsible for hiring, accounting, and other administrative duties. Zach and Tasia, however, split all other management responsibilities equally. Tasia is entitled to 50% of the profits. Zach is entitled to a salary of $135,000 per year. His salary is drawn from the profits, but he is not entitled to a percentage of profits or any funds beyond his $135,000.
- The presentation of your paper shall adhere to the following structure:
- Issue – Identify the issue
- Rule – Identify and explain/define the applicable rule, term, or concept
- Analysis – Apply the applicable rule, term, or concept to the facts. And, present arguments for both sides.
- Conclusion – Pick one side and give a conclusion
Zach and Tasia own Yellow Goods, a company that distributes Swiss cheese. The two have a local agreement on how to benefit from the business. The agreement entitles Zach to an annual salary of $135,000 irrespective of the profits and losses made. The agreement designates Tasia to scoop 50% of the benefits that arise from the business. The two partners also share responsibilities as follows. Tasia is responsible for all activities relating to hiring, accounting, and other administrative duties. Zach is in charge of buying and marketing inventory.
There is an issue in how the two share benefits from their correlation as distributors. The agreement is strict and favors apart than the other. The agreement between the two gives more privileges to Tasia than Zach. The agreement may also support Zach than Tasia. If the business makes profits, Tasia will be the primary beneficiary. The situation will be the opposite if the company instead makes losses. Zach enjoys a fixed annual salary that does not depend on the profit made. He will be more advantageous in situations where the company will not make much profit given that his salary is fixed (Mandelbaum & Leventhal, 2008).
According to the rules, partners in business should have a written agreement that states on how they should share profits and losses. The agreement will also dictate how partners draw the salary. The agreement protects the two partners and states that they have a duty of loyalty to themselves. According to the agreement, a partner should not enrich himself or herself by taking an advantage of the other partner. Rules dictate that partners should equally benefit from transactions and profit that the business or company makes (Guilbaud, 2015).
The two partners should have had a written agreement to govern the benefits arising from their business. In addition, the partnership rule dictates that partners should earn equal benefits from the business. The two are co-owners and are subject to similar benefits. The agreement between Zach and Tasia entitled Zach to a constant annual amount. On the other hand, Tasia was to enjoy 50 percent of the profits that the business made. The agreement contradicts the partnership rules. The terms reached between Zach and Tasia may favor a party and exploit the other partner. The law states that partners in an agreement should equally share profit and responsibilities. According to the partnership rules, an agreement that is not written is invalid (Åstebro & Serrano, 2011). Zach may sue Tasia and demand an equal share of profit if the business makes more profit that he expected. Partnership rules govern both parties on equal measures. In this case, Tasia will have to compensate Zach and from there henceforth, share the responsibilities and profits equally. If the business struggles to survive and make little profit or losses, Tasia may sue Zach and demand the withdrawal of his annual salary (Greene, 2015).
The two should have a written agreement that states their responsibilities and how to share profits. Firstly, the two do not have a written contract. Secondly, the two are partners and entitled to equal share of the cake. Zach and Tasia should share responsibilities, profit and losses that arise from the business. The partnership rule discourages situations where a partner takes advantage of the other partner and use the company to extort money and profits. The law states that partners should be loyal and equally share profits from the business.