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Question $3(20$ Marks$)$

a$)$ Saif and Sarah, both Malaysian citizens, and they have been friends since their time in college. They

are also passionate about technology. They choose to work together on a company project to create

and market cutting$-$edge mobile apps. They start cooperating, combining their resources, and splitting

the venture's earnings. There's an unwritten understanding between Saif and Sarah that they will

collaborate and split earnings from their ventures. Sarah and Saif decided to divide the money received

from the sales of their mobile apps evenly. They also decided to split any losses they suffered during

the marketing and development stages. In order to fund the early development costs, Saif gave

RM$150,000,$ and Sarah offered her marketing and software development abilities. Both partners actively

participate in the operations and decision$-$making of the company. They both take part in$.$

Required:

Determine whether the partnership is existing or not on the collaboration of Saif and Sarah in relation

to the Partnership Act $1961.$

b$)$ Bob, Chan and Don have been holding preliminary discussions with a view to forming a partnership

to buy and sell antiques. The position has now been reached where the prospective partners have

agreed the basic arrangements under which the partnership will operate. Bob will contribute RM$240,000$

as capital, and up to RM$100,000$ as a long$-$term loan to the partnership, if needed. He has extensive

other business interests and will not therefore be taking an active part in the running of the business.

Chan is unable to bring in more than RM$50,000$ as capital initially, but, because he has an expert

knowledge of the antique trade, will act as the manager of the business on a full$-$time basis. Don is

willing to contribute RM$100,000$ as capital. He will also assist in running the business as the need arises.

In particular, he is prepared to attend auctions anywhere within the Malaysia in order to acquire trading

stock which he will transport back to the firm's premises in his van. On occasions he may also help

Chan to restore the articles prior to sale to the public.

At the meeting, the three prospective partners intend to decide upon the financial arrangements for

sharing out the profits $($or losses$)$ made by the firm, and have approached you for advice.

You are required to prepare a set of explanatory notes, under suitable headings, of the considerations

which the prospective partners should take into account in arriving at their decisions at the

Required:

Recommend with proper arguments to the partners, Bob, Chan and Don in developing a method for

sharing of profit or losses.

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