Discussion Forum Unit 8

As a consequence of David's embezzlement from the partnership, Farah may encounter

several liabilities, both legally and financially.

Firstly, from a legal perspective, being a partner in the sports memorabilia retail

partnership, Farah could be held jointly and severally liable for David's actions ( Franklin et

al. , 2019 , p. 930 ). Creditors or vendors seeking payment from the partnership may pursue

full restitution from either partner individually or both partners collectively. This means that

even if Farah had no direct involvement in the embezzlement, he might still be held

responsible for settling any unpaid bills or debts resulting from David's actions (Franklin et

al. , 2019).

Secondly, David's embezzlement places Farah's reputation and trust at risk. Business

partnerships rely on a foundation of trust, and the revelation of embezzlement within the

partnership could undermine the credibility and integrity of the entire business, including

Farah's standing. The loss of trust from customers and suppliers might lead to missed

business opportunities and adversely impact the bottom line (Franklin et al. , 2019).

Thirdly, the embezzlement leaves the partnership in a precarious financial situation.

With limited cash flow and outstanding debts, Farah may struggle to keep the business afloat

and fulfill its financial obligations. He might be compelled to inject personal funds or seek

external financing to cover the losses and stabilize the business (Franklin et al. , 2019).

Regarding the stance on partnerships, its desirability depends on the specific

circumstances and the individuals involved. Partnerships can be a valuable way to combine

resources, skills, and expertise to operate a business effectively. When partners share similar

values, visions, and work well together, they can complement each other's strengths and
mitigate weaknesses. A robust partnership fosters innovative ideas, enhanced decision-

making, and better resilience to challenges.

In summary, Farah and David's case highlights the inherent risks in partnerships,

especially concerning financial management and trust. While embezzlement and dishonesty

can occur in any business structure, partnerships carry the potential for one partner's actions

to significantly impact the other. To mitigate such risks, conducting thorough due diligence,

establishing clear roles and responsibilities, and implementing effective financial controls are

imperative before forming a partnership.

References

Franklin, M. Graybeal, P. & Cooper, D. (2020). Principles of accounting, volume: Financial

accounting. Open Stax Rice University. https://openstax.org/details/books/principles-

financial-accounting