You act for Simon Shepperton. In March 2018, Simon retired from Sibert & Sons (“Sibert”), a cyber-business which he set up in partnership with Robert Maynard in 2010. Being friends, Simon and Robert did not enter into a partnership agreement when they set up the business, and simply shared everything equally. Simon took no legal advice at the time of set-up and did not take any upon his retirement because, for tax reasons, he needed to extricate his share of the business within the tax year 2017/18. Therefore, the valuation of his share was basic and did not take into account his share of debts incurred by Sibert at the date of his retirement. Maxine Prentice (an existing employee of the business) bought his share of the business and with Robert’s assent became a partner on Simon’s retirement. The only administrative task that Simon requested Robert to undertake was to remove his name from all business stationery and from the business website. Simon has recently received a letter of claim from solicitors acting for Bennetts Electronics, a supplier of Sibert (Document A).
(a) Explain whether Simon is liable for the sum claimed and if so, to what extent. (8 marks)
(b) Assuming Simon is liable, explain whether there is anything you would advise Simon to do now to prevent any further liability in relation to Sibert’s future debts. (6 marks)
(c) Simon is considering investing some of the proceeds from the sale of his share in Sibert and asks whether you think investing in land for development purposes is as good as he is led to believe. He would not need any external finance to invest. Your firm is not authorised by the Financial Conduct Authority. How would you respond, and why? (6 marks)
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