2014 (Civil Law) Bar Exam Questions: Question 29

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XXIX.

Timothy executed a Memorandum of Agreement (MOA) with Kristopher setting up a business venture covering three (3) fastfood stores known as “Hungry Toppings” that will be established at Mall Uno, Mall Dos, and Mall Tres.

The pertinent provisions of the MOA provides:

Timothy shall be considered a partner with thirty percent (30%) share in all of the stores to be set up by Kristopher;

The proceeds of the business, after deducting expenses, shall be used to pay the principal amount of P500,000.00 and the interest therein which is to be computed based on the bank rate, representing the bank loan secured by Timothy;

The net profits, if any, after deducting the expenses and payments of the principal and interest shall be divided as follows: seventy percent (70%) for Kristopher and thirty percent (30%) for Timothy;

Kristopher shall have a free hand in running the business without any interference from Timothy, his agents, representatives, or assigns, and should such interference happen, Kristopher has the right to buy back the share of Timothy less the amounts already paid on the principal and to dissolve the MOA; and

Kristopher shall submit his monthly sales report in connection with the business to Timothy.

What is the contractual relationship between Timothy and Kristopher? (4%)

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