Legal Writing – Business organisations, rules and procedures (Sparkling Carpets)

From: Partner Sent: 11 February 202# To: Candidate Subject: Arjun Gupta – Sparkling Carpets I had a telephone conversation yesterday with a new client, Arjun Gupta. Arjun contacted us for advice regarding Sparkling Carpets (the 'Business'), a business that he operates in partnership with his cousin, Priti Singh. Arjun and Priti started the Business around four years ago to provide carpet cleaning services to local customers. The Business is conducted from premises located in Sheffield and both partners work full time for the Business during its regular business hours of 9am to 5pm Monday to Friday. They are equal partners in the Business and share all expenses and profits equally. They do not have a written partnership agreement. Although the Business is doing well, two issues have arisen recently which are of concern to Arjun. The first issue relates to a customer of the Business, Alessia Ricci, a local hotel owner who also owns a large holiday rental property. This customer regularly uses the Business's carpet cleaning services for her local hotel and recently mentioned in conversation with Arjun how pleased she was with Priti's work in providing carpet cleaning services at her rental property to ensure her carpets were in perfect condition for guests. Alessia Ricci told Arjun that Priti has been attending her holiday rental premises from time to time outside the Business's normal business hours to clean the carpets in between bookings. Arjun was unaware of this and asked Priti about it. She explained that she has a good relationship with Alessia Ricci and has been making some extra money for herself by providing these additional cleaning services in her spare time using the partnership equipment. Arjun would like to know whether Priti is entitled to keep the money she has made from this additional work. The second issue is that Priti has recently been trying to persuade Arjun to purchase an expensive robot carpet cleaning machine (the 'Cleaning Machine') to enhance the Business's existing cleaning facilities. Arjun has told Priti that the Business cannot afford the Cleaning Machine. The partners took out a five-year bank loan when the Business was first set up, on which the Business is making regular repayments, and Arjun wishes to have this loan repaid in full before making any further investment in equipment. The loan will not be paid off until the end of next year. Arjun is concerned that Priti may nevertheless go ahead and purchase the Cleaning Machine without his agreement. If so, Arjun would like to know whether the Business would be liable for the purchase. I informed Arjun that we would send him a letter advising him on these two issues. I also briefly discussed with him the benefits of having a written partnership agreement. Arjun indicated that he would like to discuss this further in due course but for now wishes to deal only with the two issues outlined above. You therefore do not need to address the benefits of a written partnership agreement in your letter. I have already dealt with all client care and money laundering issues, so there is no need for you to deal with these. Please write a letter to Arjun in my name, briefly explaining: 1. Whether Priti is entitled to keep the money she has made from the additional carpet cleaning services she has provided to Alessia Ricci; and 2. Who would be liable to pay for the Cleaning Machine if Priti purchases it without Arjun's agreement. Arjun is not a lawyer, so it is important that your letter is simple and straightforward. However, he wishes to understand the legal background to your advice, so please provide brief legal explanations where appropriate. Thanks Partner Note to Candidates: You do not need to deal with any client care matters (including costs), money laundering, financial services or taxation issues. Please do not record your name on the answer template.