Law Basics

Part A) I would recommend a partnership business structure. A partnership is the relationship that exists between persons carrying on business with a common view to profit. The nature of a partnership structure is a relatively simple and flexible form of a business organisation suited Sandy and Dannii as there is more than one individual and they wish to go into business together.

Partnerships are governed by statute law, common law and partnership agreements so there will be regulations that Dannii & Sandy need to adhere to however they are less stringently regulated then companies or trusts therefore a partnership structure may be better suited then Dannii’s idea of possibly registering a company as there are many uncertainties around there new business proposal .The establishment of a partnership is simple and inexpensive , administration is relatively simple and costs are low which is an advantage especially due to Dannii’s limited funds. This opposes Sandy’s idea of registering in a company which would involve more expensive and ongoing costs not suited to their financial position. Finance will be easier to raise than in the case of a sole trader as there is two persons .

The most important consideration is the partnership agreement, which is a written, verbal or implied agreement between the parties. The partnership has no existence in law separate from its partners and the partnerships existence is not usually tied to the involvement of any one of the persons . A partnership structure will give Sandy and Dannii control of the organisation, as the partners own and operate the business and make all the decisions. However decisions must be made jointly by the partners and some decisions require unanimity.

There are no necessary formalities involved in establishing a partnership which is suited to Dannii’s unwillingness to stay in the business long term. If Dannii decides she no longer wants to manufacture sunhats and move onto a different organisation...