In this case, we first realize that Maingi and Patricia are partners in a partnership.

The
facts tell us that a significant amount of capital was brought into the business. It is
established that Patricia put in a capital of Sh 500,000. No fact stated thereof that this
partnership is in any way a limited partnership. Therefore, it is to be treated as a
General Partnership. Shortly after the formation of the Partnership, Patricia falls ill and
stays ill for the period of approximately one year. However, in that period she never
ceased to be a partner. A partner ceases to be a partner if the person dies or if the
partnership is dissolved or by court order or bankruptcy. In the case of the inclusion of
Karen into the business it is admittable as an employment contract. According to
Section 26 of the Partnership Act, a person may become a partner in a partnership with
the full consent of all the existing partners. Therefore, Karen was never entitled to the
perks of being a Partner such as sharing in the profits or interest on the capital. Karen
does not contribute any capital or shares. Given that legally she is only an employee,
she is only entitled to remuneration. However, given that Karen is a third party, both
Patricia and Maingi are liable in a tortious manner to any action instituted by Karen. A
partnership is bound by an act of a partner who is carrying on the business of the
partnership. Maingi is bound by the Partnership Act to keep his partner informed of any
matters affecting the partnership. Maingi illegally wired money from the partnership
business accounts to his own venture, Kiatu Shoe store. Maingi had a duty to act in
good faith towards the partnership but broke it by being fraudulent with the accounts.
According to section 16 of the Partnership Act, every partner shall have the
responsibility to ensure that accounting records of transactions affecting the Partnership
in which he is involved are properly kept. Given that there are only two partners, Patricia
has no power to expel Maingi for breaching the partnership agreement. Patricia can
apply to the court to order a breakup of the partnership. As an applicant of the order,
Patricia will be indemnified by Maingi who is the partner at fault in respect of any loss
suffered by Patricia which is attributable to fraud. For this, Maingi still retains his shares
but ceases to be a partner. Therefore, the partnership is automatically dissolved, and
Patricia can run the business as sole proprietor. In any case, the court must give
directions accordingly.