26. X and Y are about to start an online ad placement service that they will con

Question

26. X and Y are about to start an online ad placement service that they will conduct as a partnership. X is contributing substantially fewer tangible assets to the partnership than Y is contributing, but X’s prominence in the business community and his business connections are vital to the success of the partnership. Both X and Y have asked you to determine the relative percentage ownership that each should have in their new partnership. Y is aware that you have had a long-standing social and professional relationship with X and have consented to waiving this conflict of interest.

Based on your friendship with X, you know that he has a serious heart condition that might soon prevent him from actively working in furtherance of the new partnership. You have asked X to disclose his health condition to Y, but X does not want any- one to know about this potential physical limitation. X reminded you that, years ago, you agreed to respect his medical condition as private and confidential. Can you perform this professional engagement for X and Y? Explain?

Explanation / Answer

As the situation describes, X has and advantage of the Business Networking while Y has the capital. X also has the heart condition which might soon prevent him from actively working.

While X wants to keep the medical condition confidential, Y wants him to disclose.

To take forward any business partnership, clarity and openness are really necessary. Thus X should come forward and share his medical conditions as it affects the business's long term objectives if he is not able to participate actively. He can ensure that he has someone then who can perform his work and he can then control the function by participating passively.

While X is not able to put in any tangible assets, the partnership should be based on the 50:50 ration beween Y and X respectively. As Y is putting more assets, he definitely deserves to have a bit higher share. X is putting his intangible assets over her along with small tangible assets which will help bring business and critical to long term objectives.

Thus bringing mutual agreement and building trust this professional engagement will be possible.

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