Law

Question 1: Sale of interest in NHS practice

This case discusses Mike Blackham, who was in partnership with David James, and they both work as NHS general medical practice. To manage and develop the practice, they both decided to dissolve the partnership. Both Mike and David had an equal share in the company, but David is interested in taking Mike’s share so that he can operate medical practices[1]. Case mentions that Mike has no objection to giving his share to David. If Mike gives away his share, then his patients will continue using the medical practice, and David will benefit through Mike goodwill. Therefore, Mike is interested in getting a high price for his share, as it also reflects the goodwill, which he doesn’t want to sell to David. The question here is to explore the legislation of the UK that prevents a person from selling his interest at an inflated price, which also reflects his goodwill[2].

According to the Partnership Act 1890, it mentioned that in the accounts of the company after dissolution, the goodwill become subject to contract among the partners, and it’s included as a part of the asset, or either it can be sold separately or with the property of the company[3].  The Act mention about the case of goodwill sold after the dissolution of partnership; partners can undertake the business from buyers, and they can even promote it through ads, but they are not liable to use name of the company, present themselves as owners of company or either solicit the persons, who deal with the company, before the dissolution of partnership[4]. As per the case, after the dissolution of the partnership, David can purchase the share of Mike, but cannot take the goodwill from Mike, until he sells it out.

The main issue discussed in this case is of goodwill. Goodwill is more than a probability that all the old customers will resort to the old place[5]. Goodwill is often linked with the business, personality of the business owner, its nature and character of business, reputation and name. Mainly, goodwill affects the contemporary market along with that its impact the prevailing socio-economy.

As per the UK legislation, at the time of dissolution, goodwill is sold separately than other assets of the firm[6]. Therefore, while the partnership dissolves with the condition that, the assets will be given to the particular partner, and there is no mention of the goodwill in the agreement[7]. Then, in that case, it is assumed that goodwill will come in the hands of a partner, who is getting all the assets.

As per the Partnership Act 1890, during the time of partnership dissolution, all partners hold the right to sell their goodwill to the other partner of any other company. But the same doesn’t restrict their right merely with the general dissolution[8]. As per the case, Mike can use the goodwill after partnership dissolution and used it for his good. He can even advertise his business through that goodwill[9]. If Mike wants higher price for his goodwill, he can claim that. After the goodwill is sold to David, then Mike cannot claim it.

When the partnership is dissolved, then it effectively doesn't exist, only its residue is left over. Part of this residue to the goodwill of the business, which holds value. Therefore, if one of the partners wants to continue doing his business under the same name, then they have to put individual money for buying the goodwill through the partnership[10]. As per the case David is liable to pay Mike, if he wants to purchase his share of interest from the business, along with his goodwill, if he wants to continue doing the medical business under the same premise.

Despite the availability of law about the transfer of goodwill issue, it acne is mentioned that according to Partnership Act 1890 its settled and goodwill is considered as the saleable asset during the time of partnership dissolution and even render specific obligations on the part of the purchaser, and seller[11]. The restraint are imposed under the Partnership Act 1890, which mentions that one who sells the goodwill in the partnership agree with the buyer to refrain from undertaking the same business, having certain limits, so long the purchaser deriving the goodwill from them, and carry out the business; provided that these limits can be seen in the court as reasonable, regardless of having nature of business[12]. Partnership Act 1890 importantly includes goodwill determination and duties related to it, and it even makes sure that they do consonance with the learning of humanity and commercial morality. According to Partnership Act 1890, Mike is liable to sell his goodwill to David, but Mike is also responsible to take high amount while selling his goodwill, else he can do business in the name of his goodwill[13].

Question 2: Purchase of timeshare

This case discusses Andrew Thrower, who had bought a timeshare last week and after his purchase, he came to know about the issues going on this property. Andrew Thrower bought a timeshare from the Timeshare Limited at the Holiday show, which was undertaken at National exhibition centre. Me Thrower bought timeshare, and he had even given 10% of amount through cheque, but he had not paid the balance of cost money of timeshare. After he had made the payment, he came to know about the disparaging reviews as well as malpractices related with timeshare. After knowing about the problems associated with property, Mr Thrower wants to cancel this agreement. But according to the paperwork, there was no withdrawal form as well as no reference made about the right of cancellation or either withdrawal[14]. The case doesn’t mention whether Mr Thrower holds any statutory rights for cancellation of the contract. Now the question arise is that if Timeshare Ltd had committed any crime, to whom Mr Thrower should report to anyhow the contract can get cancelled[15].

Timeshare market in the UK is around £108 million every year. It’s noted that EU timeshare directive had mentioned about the spread of rogue trading in the European and Britain market. However, it’s pointed out that, these factors had led to rogue tendering, and traders had also developed new products like holiday club, to avoid the effects of legislation[16]. In result of this, the consumers are abuse in the market, and they had explored that, they cannot claim for the cancellation rights, which are designed for redressing the issues. It’s noted that 31% of the enquiries, which were made about CAB, were related to timeshare as well as holiday clubs cancellation of contract or withdrawal[17]. In this case, it’s disappointed that the government of UK had not tried to widen their scope towards UK laws, which deals with the domestic purchase, and the same is not covered under the Timeshare Act 1992[18]. The current EU Directive based on the doorstep sales permits the members states, to select not only to apply for the cancellation rights, in which doorstep is deemed to be solicited through the consumers. In the UK, the sales of solicited doorstep fail in attracting the statutory cancellation rights. As per the case, it’s not clear, whether Mr Thrower holds any statutory rights of cancellation or not. If not, then it might be an issue for him[19].

The EU constitutional rights mention that while many members’ states had offered their consumers with the better protection, it can be seen that countries like Ireland, Denmark, Greece, Poland and Finland have selected, not to opt for cancellation rights in the solicited sales[20]. It implies that cancellation rights don’t apply, where consumers had enquired about the company for more information related to products, but instead of that, they had only received the sales. It is noted that in the UK, doorstep selling legislation had failed the consumers, mainly the ones who are quite expensive[21].

Credit cancellation rights applied in the UK are sold off the trade premises and at those places, where consumers had face to face meeting with the trader or lender, who had offered the credit[22]. According to the case of Mr, Thrower, if the meeting with timeshare limited is done face to face, then credit cancellation of rights are applied. According to Consumer Credit Act 1974, cancellation rights are also implemented in the distance credit sales. All these rights are designed to support in tackling the problems related to pressure selling. Nevertheless, CAB had experienced that, trade premise sales also include techniques of high pressure, and consumers are left with no option to get out of the previous credit contract[23]. As seen from the case Mr Thrower is stuck in the situation, where it’s difficult for him to come out of the agreement, as there was no reference to cancellation or withdrawal in the paperwork. All across the European Union, this issue is explored within the present drafting of the new consumer credit directive. Article 13 of Consumer Credit Act 1974 mention about the withdrawal through the credit agreements, and even permits 14 days period of withdrawing the contract. This decision is welcomed by Citizens advice[24]. Consumer Contract Regulations 2014 also mentions that UK consumers hold the cancellation rights for the sale of credit, which is linked with purchasing of consumer products. All these credit cancellation rights are connected with the rules of doorstep selling and even connects with the home visit that is both solicited or unsolicited.

According to the review conducted of Distance selling regulations by UK transposition, citizen advice had tried to argue with consumers, whether they should be able to cancel the use of same way, which was previously used for making a purchase[25]. But UK government had decided that no provisions should be formulated for consumers to cancel the contract, which is done through phones. According to the Consumer Contract Regulations 2014, the consumers had to cancel in writing in spite of how the contract was initially created[26]. It is believed by Citizen Advice that all these changes are necessary and even reflect the expectations of consumers[27]. And for the one, who fails to trace the mobile phone sender, it can resolve the present challenges in making use of cancellation rights[28]. In the case of Mr Thrower, the contract was either made through the direct meeting, then it can be a problem to cancel the agreement, but still there are few provisions made under the UK Enterprise Act 2002.

The codes of practices held under UK Enterprise Act 2002, certain provisions are made for B2C, which is also approved by OFT[29]. Guidance based on the contents of the code, which is also approved by the state of the code, does beyond what is needed by the law[30]. The requirement for cancellation of rights is better as compared to offer in the consumer protection legislation, and is even identified in various voluntary codes. For instance, Direct Selling Association members provide 14 days period for cancelling the agreement, whether the doorstep visit is either unsolicited or solicited and offer consumers with the protection they require[31]. Therefore, as per the case, Mr Thrower had an opportunity to go according to consumer protection legislation and try to cancel the agreement within 14 days from the contact is made[32].

Citizen advice had mentioned that it wouldn’t be enough for the European Union to retain the right of cancellation in its present form. According to the UK European Consumer Centre, the primary concern of Citizen Advice is related with huge variation in rights coming from various EU states, which creates an issue in advising the consumers that need support while following the cross-border purchase[33]. As Mr Thrower had made his purchase in the UK, citizen advice can be followed; that mentions that EU should legalise the cancellation rights, which are made by its member's states and this legislation includes, 14 days period for cancellation of the agreement, by categorising, whether it’s a working or non-working days. It also includes the typical time required for the cancellation clock to start, and even consider all issues ongoing in different markets. The purchase, which is made directly can be cancelled directly on papers[34].

In case, timeshare Ltd had conducted any criminal malpractice; then such case should be reported to police. Already many cases against the timeshare Ltd are reported under Section 420 of the Penal Code. According to the Criminal Procedure Code, police are liable to conduct an investigation of the suspected Criminal offences[35]. Mr Thrower can inform the cops, who will take action, by working with the consumer association of UK. They will alert the potential customers and the general public on the timeshare scams, and by working with Consumer Protection Fair Trading Act (CPFTA), it can protect the consumers against from Timeshare. Police will also provide protection as well as flexibility and try to encourage timeshare organisation to review all its services and products[36]. Under CPFTA, police can be errant the traders for doing unfair practices like pressure selling as well as misleading claims.

Work Cited

CAB evidence briefing (2005) 

Consumer Contracts Regulations (2016) 

Consumer Credit Act (2016) 

Consumer Credit Directive (2008) 

Dissolving a partnership (2016) 

Partnership Act 1890 (2016) 

Partnership Agreement (2016)