business law an analysis of case study

Pope was a partner in the farming venture with Mathis and was therefore personally liable for the debt.. Profits paid for the sale of business goodwill b Partner Liability Each partner i

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATION PROGRAMS

BUSINESS LAW

AN ANALYSIS OF CASE STUDY Pope v Triangle Chemical Co., 277 S.E.2d 758 (Ga.1981) Page 437

&

VIETNAMESE CASE STUDY FULL NAME: Vũ Tiền Hải 11219357

Lê Ngọc Khôi 11212896 CLASS: Business Analytics 63

INSTRUCTOR: Assoc Prof Tran Van Nam

Ha Noi, 2023

Table of Contents

PART L Case Introduction: Facts, Issues & Rules 2G S1 211221111 11121511111 x2 3

AI ae 3

EU 5

“` 5 PART 2 Judicial Decision & AnalyS1s L0 0220112111121 11221 112111101 111128111112 7 PART 3 Conclusion & Summary Map 2 2201220111211 1 121111152211 1111181111182 tk 9 PART 4 Application 1n Vietfiaim 1 2010201112011 121 11511115511 115551111 1155111 10 ca 10

"AI ' ae 10

3 The decision trial COULt.A II

“` 12

5 Opinion + Decision of appellate eouFf - - c2 1 2211222111211 112111111 11111 +2 13

PART 1 Case Introduction: Facts, Issues & Rules

1 Facts:

Triangle Chemical Company supplied $671.10 worth of fertilizer and chemicals to France Mathis to produce a cabbage crop When Mr Mathis first asked for credit, he was denied He then told Triangle that he had a new partner, Emory Pope The company president called Mr Pope, who said that he was backing Mr Mathis

Mr Nash, District Manager for Triangle, testified that Mathis told him "he and Pope were working together on this crop and that Mr Pope would be responsible for the bills."Because Mr Pope was to be paying the bills on the cabbage crop, at that point in time we decided to extend some credit based on the fact that both of them would be

“were growing this involved." Nash spoke to Pope who told him he and Mathis

cabbage crop together and he was acting as more or less handling the money and France, Mr Mathis, was growing the crop [Pope] told me in the conversation that he was responsible for the bill." Prior to this conversation, two purchases had been made

by Mathis amounting to $671.10 Nothing was placed in writing to verify Pope's purported agreement to be responsible for items purchased by Mathis

Pope testified that he had conversations with Clark and Nash, but denied he told them

he authorized purchases to be charged to his name or that a partnership existed between him and Mathis He stated that he told them only that he and Mr Mills "were supplying Mathis with the money and it was up to Mathis to settle the account." Mr Pope argued that his promise to pay the debt would have to be in writing to be enforceable under Georgia's statute of frauds Triangle Chemical Co claimed that Mr Pope was a partner in the farming venture with Mathis and was therefore personally liable for the debt

The jury was instructed on the formation of a contract, an agreement to pay for the debt of another, and the creation of a partnership both between the partners, and as to third persons

2 Definition:

a) Formation of Partnerships

A partnership can be formed voluntarily by direct action of the parties, such as through a partnership agreement or articles of partnership, or its formation can be implied by conduct However, conduct also creates partnerships

In certain circumstances, courts find that a partnership exists because of the conduct of the parties, a partnership by implication A partnership by implication arises because certain behaviors of the principals lead third parties to believe there is a partnership Courts examine a number of factors to determine whether a partnership by implication has been created Section 7 of the RUPA provides that if two or more parties share the profits of a business, it is prima facie evidence that a partnership exists (Prima facie evidence means that there is a presumption that a partnership exists.) However, the presumption of partnership by profit sharing can be overcome if someone recetved profits for any of the following reasons:

1 Profits paid to repay debts

2 Profits paid as wages or rent

3 Profits paid to a widow or an estate representative

4 Profits paid for the sale of business goodwill

b) Partner Liability

Each partner is both a principal and an agent to the other partners and is liable for the acts of others and to the others for individual acts If one partner enters into a contract for partnership business supplies, all the partners are liable Similarly, if one partner has a motor vehicle accident while on a partnership delivery, the individual partner is liable for his or her own negligence, but because the accident occurred under the scope of a partnership business, the partners and the partnership are also liable Under the RUPA, partners are jointly and severally liable for all obligations

If partnership assets are exhausted, each partner is individually liable Creditors can satisfy their clatms by looking to the assets of the individual partners after the partnership assets are exhausted Each partner in a partnership is both a principal and

an agent to the other partners and is liable for the acts of others and to the others for individual acts This includes being liable for the partnership's debts

The decision in Pope v Triangle Chemical Co was that Emory Pope was personally liable for the debt owed by France Mathis to Triangle Chemical Company The court

found that Pope was, in fact, a partner with Mathis and therefore jointly and severally liable for the partnership's debts, specifically the debt owed to Triangle Chemical Company

3 Issues:

a Did Mr Pope and Mr Marthis have formed any partnership?

Yes, a Partnership by estoppel, also known as "ostensible partnerships,” arose in this case This is when a person holds themselves out to the public as a partner in a business, even if they are not actually a partner Under the law, if a person presents themselves as a partner and another person relies on that representation to their detriment, the person holding themselves out as a partner can be held liable as if they were actually a partner in the business

b Was Mr Pope liable for the debt that Mr Marthis owed to Triangle Co.? Yes, Each partner is both a principal and an agent to the other partners and 1s liable for the acts of others and to the others for individual acts Under the RUPA, partners are jointly and severally liable for all obligations If partnership assets are exhausted, each partner is individually liable Creditors can satisfy their claims by looking at the assets

of the individual partners after the partnership assets are exhausted

4 Rules related:

2021 Georgia Code

Title 14 - Corporations, Partnerships, and Associations

Chapter 8 - Partnerships

§ 14-8-7 Determination of Existence of Partnership

In determining whether a partnership exists, the following rules shall apply:

1 Except as provided by Code Section 14-8-16 persons who are not partners as to each other are not partners as to third persons;

2 Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not of itself establish a partnership, whether such co-owners do or do not share any profits made by the use of the

property;

3 The sharing of gross returns does not of itself establish a partnership, whether

or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived;

4 The receipt by a person of a share of the profits of a business is prima-facie evidence that he is a partner in the business; provided, however, that no such inference shall be drawn if profits were received in payment of the following, even though the amount of payment varies with the profits of the business:

A A debt, whether by installments or otherwise;

B Wages, salary, or other compensation to an employee or independent contractor;

C Rent to a landlord;

D An annuity or other payment to a surviving spouse or representative of a deceased partner;

E Interest or other payment or charge on a loan;

F Consideration for the sale of good will of a business or other property, whether by installments or otherwise

PART 2 Judicial Decision & Analysis

- Partnership

Based on opinion from court of appeals, unfortunately, we cannot identify whether any certain partnership exists between Pope and Mathis, but here is the opinion from the appellate court:

(a) A partnership may be established either by a writing or by parol (Code Ann § 75-

101 (Code § 75-101)), or as to third persons such as Triangle and BVC, a joint interest

in profits and losses of the business, but a common interest in profits alone would not Code Ann § 75-102 (Code § 75-102) The defendant stated that his interest was limited to "backing" Mathis, with a 10% interest in the profits

Basically, the partnership would be recognized to third parties, such as Triangle and BVC, if there was a joint interest in both profits and losses of the business However,

if there was only a common interest in profits and not losses, then it would not be considered a partnership

The defendant claims that his role in the partnership was limited to providing financial backing for Mathis and that he had a 10% interest in the profits of the business It is not clear from this statement whether the defendant had a joint interest in both profits and losses or only a common interest in profits

- Liability

An actual contract by which a partnership is formed is not always essential to support the liability of one person as the partner of another "As to third persons, he may assume such a liability by inducing them to extend a credit upon the faith of his representations *388 made by him, either express or implied, to the effect that he was

a partner and as such liable." Carlton v Grissom & Co., 98 Ga 118, 121 (2) (26 SE 77) "Whatever may be the interest of the parties, and whether they be, in fact, partners under the bargain or not, they will be liable, as such, if they so act as to hold themselves out to the world as such." Sankey & Shorter v Columbus Iron Works, 44

Ga 228 (2) Thus, "[c]redit extended to a firm on the faith of representations by a person that he is interested in the same, will create a debt against him as a partner."

Carmichael v Greer, Lake & Co., 55 Ga 116 (3); accord, Southern Cotton Oil Co v Brownlee, 26 Ga App 782 (1) (107 SE 355)

This statement suggests that individuals can be held liable as partners, regardless of whether they have formally entered into a partnership agreement or not If these individuals act in a way that gives the impression to the public or to third parties that they are partners, they can be held responsible as if they were in a partnership

Now let’s considering the Statute of Frauds

Defendant's reliance upon the Statute of Frauds is not well founded The Statute does provide that a promise to answer for the debt of another must be in writing to be enforceable Code Ann § 20-401 (2), supra However, the promise required by this section to be in writing does not include an original undertaking Moate v H L Green Co., 95 Ga App 493, 504 (98 SE2d 185); see also Cordray v James, 19 Ga App 156 (1) (91 SE 239); Maddox v Pierce, 74 Ga 838; Crowder v Keys, 91 Ga 180, 181 (16

SE 986); Easterling v Bell, 29 Ga App 465 (1) (116 SE 50) Thus, where the promiser "guarantees" another's debt with additional qualifying words such as he would see that the creditor gets paid, and that he is responsible for the bill, and credit

is extended in reliance upon such words, the jury would be authorized to find that this was an original undertaking Chastain-Roberts Co v Better Brands, 141 Ga App

186, 190 (233 SE2d 5)

The statement is saying that the defendant's reliance on the Statute of Frauds is not justified because the law does not require a promise to be in writing if it is an original undertaking An original undertaking is a promise to pay the debt directly, rather than just guaranteeing that someone else will pay it

If the promiser uses qualifying words, such as "I will pay the debt" or "I am responsible for the bill," and credit is extended based on those words, then it could be considered an original undertaking and not subject to the Statute of Frauds

- Conclusion

"Partnership or no partnership is generally a mixed question of law and fact, and can not be resolved as a matter of law unless the verdict one way or the other is demanded

by the evidence." Miraglia *389 v Gose, 17 Ga App 639 (2) (87 SE 906) Whether a person has held himself out as a partner, and whether a third person has relied upon such acts, is a question of fact for the jury Chambliss v Hall, 113 Ga App 96, 99 (2) (147 SE2d 334).

The fact that Nash testified that Pope did not disaffirm the #390 previous items of credit does not change the result for this places those two previous items within the Statute of Frauds as previously discussed Accordingly, the judgment for Triangle will

be affirmed on condition that the pre-existing debt in the amount of $671.10 be written off, otherwise it is reversed

PART 3 Conclusion & Summary Map

SUMMARY MAP

Pope and Mathis

Deo aad

p€rsonally The judgment for Tnangle F

Guaranteed ie | will be affirmed on condition COURT OF APPEALS OF

"1 that the pre-existing debt in SG

debt on the open the amount of $671.10 be

account WTilen 0íT, otherwise II IS

FERTILIZER § C

TRIANGLE

CHEMICAL

COMPANY was a partner denied that he

with Mathis and

DU 2Ó parficipation was

†o provido tho money to Mathis

“BACKING” growing the crop

` N ` HANDLING

A

TESTIFIED BY ®

MR NASH

Plaintiffs alleged that they supplied fertilizer, chemicals, and other items to Pope and Mathis to produce a cabbage crop Plaintiffs contended that Pope and Mathis were partners and that Pope personally guaranteed the payment of the debt on the open account Pope denied that he was a partner with Mathis and his sole participation was

to provide the money to Mathis for the purpose of growing the crop He asserted the defense of the Statute of Frauds, e.g., that a promise to answer for the debt of another must be in writing See Code Ann § 20-401 (2) (Code § 20-401 as amended Ga L

1962, pp 156, 427)

PART 4 Application in Vietnam

1 Parties involved

- Plaintiff: Asia Commercial Joint Stock Bank (ACB)

- Defendant: T.H.T One Member Limited Liability Company, legal representative: Mr Nguyen Tien T - Position: Chairman and Mrs Nguyen Thi Th - Position: Director

- Parties with related rights and obligations: Mr Nguyen Tien T and Mrs Nguyen Thi

Th

2 Facts

- On October 15th, 2019, ACB granted a loan to T.H.T One Member Limited Liability Company with a total amount of 6,807,000,000 VND, with overdue interest rates of 150% of the in-term interest rate and late payment penalty interest rates of 10% per year

- The in-term interest rates and loan term were stipulated in 7 debt acknowledgment agreements as follows:

1 Debt acknowledgment agreement No 289645729 dated August 9th, 2019; disbursed amount: 1,900,000,000 VND; loan term: 6 months from August 10th, 2019 to February 9th, 2020; in-term interest rate: 9.00% per year, fixed for the first 3 months, and adjusted every 3 months thereafter

2 Debt acknowledgment agreement No 294256939 dated October 16th, 2019; disbursed amount: 300,000,000 VND

3 Debt acknowledgment agreement No 294358169 dated October 18th, 2019; disbursed amount: |,100,000,000 VND

4 Debt acknowledgment agreement No 294917949 dated October 26th, 2019; disbursed amount: 2,000,000,000 VND

5 Debt acknowledgment agreement No 295343579 dated November Ist, 2019; disbursed amount: |,500,000,000 VND

6 Debt acknowledgment agreement No 296729319 dated November 22nd, 2019; disbursed amount: 740,000,000 VND

7 Debt acknowledgment agreement No 296955629 dated November 26th, 2019; disbursed amount: 750,000,000 VND

- Mr Neuyen Tien T and Mrs Nguyen Thi Th pledged 04 land use rights and properties attached to the land belonging to their ownership and use, including: