LW3902 Law Relating to Companies School of Law

City University of Hong Kong

Tutorial Question for Week 2: Business Vehicles

Angelina and Brandon wished to set up a business organizing wine tasting events. Theirs would
be the first professional wine events business in Hong Kong, and they feel that although the venture
would be risky, the business could well be quite profitable in the long term. Angelina is quite
knowledgeable in wines and will provide this expertise to the business. Brandon is a former
accountant and has considerable commercial experience, and will be responsible for the business
side of the operations. Both Angelina and Brandon will contribute some funds to the business, but
they will obtain the bulk of their initial funds from Carol who has agreed to initially contribute
$100,000. They will operate their business out of premises owned by Brandon. Angelina has
existing employment in a separate business owned and run by her parents, and she intends to keep
that job until her new business with Brandon becomes stable.

(a) Advise Angelina and Brandon as to the different forms of business organizations
that they could adopt for their business, discussing the advantages and
disadvantages of each in light of the particular circumstances.

(b) If the business is to be conducted as a partnership, advise Carol as to how she might
contribute the $100,000 to the business.

(c) Advise Brandon as to whether any issues arise from his agreeing to allow his own
premises to be used for the business.

(d) Assume that Angelina and Brandon have decided to use the partnership form to run
the business. They open a credit account with XYZ Wine Suppliers Ltd (“XYZ”).
Angelina made a number of purchases from XYZ and charged them to the account.
XYZ sent accounts to Angelina and Brandon at the address of Brandon’s premises.
The business between Angelina and Brandon was never established though, and the
accounts were never paid. Advise XYZ.