10. In January 2011, Han, Ita and Jo formed a partnership,
under the Partnership Act 1890, to run a pottery business trading under the
name HIJ Potteries. On formation, Han introduced £6,000 into the business, Ita
introduced £3,000 and Jo introduced £1,000. All of them took an active part in
the operation of the business and the partnership agreement stated that all
profits and losses should be divided in proportion to the capital contribution.
However, as Jo was the person who would actually be making the pottery, it was
agreed that she would not be liable for any more than her initial contribution
towards any future debts. After some time, Han provided the partnership with a
loan of £1,000 in order to sustain the operation of the business.
Unfortunately, the business was not successful and made
significant losses. The partners concluded that it would be best to stop
trading and dissolve the partnership. Its assets were worth £5,000 and its
external debts were £9,000.
Required:
In the context of the particular form of the partnership,
explain the potential liabilities of Han, Ita and Jo for the partnership debts.
