BT20403 COMMERCIAL LAW

SEMESTER 1, 2019/2020

GROUP ASSIGNMENT 1

PORTFOLIO
SETTING UP ( WONDERLAND BOOKSTORE. )

Name of Tutor: MS CHONG PIT KEE

Tutorial Class: Group 8 ( WEDNESDAY 11-12 am)

Group members: 1. OZZY JAS (BB16111066) (HE09)

2. SAKILAH BINTI SAINAN (BB18110434) (HE06)
2. NG PEE TSE (BB17110695) (HE08)

Date of Submission: 21 NOVEMBER 2019

1
CONTENT

No. Contents Page

1.0 Executive summary 3

2.0 2.0 Company description 4-5

2.1 Mission Statement
2.2 Vision
2.3 Objectives
2.4 Goals
2.5 Principal Members
2.6 Legal Structure
3.0 Market research 5
3.1 Industry
3.2 Detailed Description of Customers
3.3 Company Advantages
3.4 Regulations
4.0 Service line 6
4.1 Product/Service
5.0 Marketing and sales 6
5.1 Growth Strategy
5.2 Communicate with the Customer
6.0 Partnership agreement 7

7.0 The type of business entity 8

8.0 Legal procedur in setting up business 9

9.0 The nature of business related to legal implication 10-11

10.0 Conclusion 12

11.0 References 13

2
1.0 EXECUTIVE SUMMARY

Introduction
Wonderland Bookstore is a start-up bookstore at Kingfisher, Kota Kinabalu. It is the goal of
the company management to acquire local market share in the bookstore industry low price,
a dominant selection of products, a competitive variety of services including hard to find
book search, plus relaxing, friendly environment that encourages browsing and reading.
Company
Wonderland Bookstore is be a limited liability corporation registered in the state of Sabah.
The company will be jointly owned by Miss Ozzy Jas, Miss Sakilah Sainan and Miss Ng Pee
Tse. All of them is an young entrepreneur with the same passion towards books.
Wonderland Bookstore will be establishing its store in one of the busiest section of Plaza
Kingfisher in the area of Kota Kinabalu town. This area is well known for its upscale
residents and high-quality establishments. Our facility is a former 8,000 square ft. furniture
store which will allows the company to stock a large amount of inventory.
Products/ Services
Wonderland Bookstore will offer a wide range of book and magazines. This includes just
about every conceivable category including fiction, non-fiction, business, science, children’s,
hobbies, collecting and other types of books.
Market
Wonderland Bookstore will target the market within Kingfisher area and the area
surrounding it. As the business expands, the market will also expand and this will enable the
business to serve more customers even from other far areas. The business potential
customer will include students, children, the elder and those working in in school. They will
sell to both individual and also those buying in wholesales.

3
2.0 COMPANY DESCRIPTION

2.1 Mission Statement

To provide bargain-basement products and quality services to customer in a delightful

working environment to people while helping to create and sustains a community of lifelong
readers through :
1. Providing a wide variety of books by age.

2. Providing a wide range of books that meet the needs and requirements of customers.

2.2 Vision

Our goal is to become the largest book distributor in Malaysia as well as provide the book up
to date to meet the needs of users.

2.3 Objectives

There are several objectives of the business :

1. Ensuring the availability of the book stock.

2. Maintain and improve our bookstore financial record.

2.4 Goals
The goals of the Bookstore Wonderland are divided into two parts :

1. Short term goal :

 Attract more customers. To attract more customers, we plan to do some activities in the
coming months. Interesting activities such as children's storytelling, story writing and
drawing contests will be held. We're also launching a book to keep customers informed
about where our bookstore operates.

 Take stock. We are very careful about stock taking. To avoid the over payment of
stockpiles, we analyze and create a short list of books that are in high demand from
customers.

 Cover cost. We set the amount of book sales that must be sold each month to cover the
costs. This is to ensure that our business can survive in the short term.

2. Long term goal :

 Increasing sales. We expect to make a profit by September 2nd year with a profit of
RM7000. The book sales amount to 25000 units.

 Brand recognizing. Targeting more customers especially students and children knows
our bookstore.Regularly update and advertise our business on social media like
facebook for better known by the public.

4
2.5 Principal Members
Ozzy Jas - owner, primary consultant
Sakilah Sainan – owner, business manager/sales
Ng Pee Tse – owner, account manager

2.6 Legal Structure

Wonderland Bookstore is an partnership businesses.

3.0 MARKET RESEARCH

3.1 Industry
Consumer book have been called ‘analog’ in the digital age. Book is generally use for
entertainment and give information as it is the needs of people around the world, centuries
after the printing press was invented. Wonderland Bookstore will be a part of the bookstores
industry. Currently, bookstore are considered a niche market, comprised of different sized
companies. The largest bookstore company in Malaysia which is Popular Bookstore have
large inventories of products that are offered in all over the country.

3.2 Detailed Description of Customers

Wonderland Bookstore will primarily serve Kingfisher book lovers who live within the area.
Customer demographics will be vast and cut across a wide age gap as both children and
adults will find Wonderland Bookstore as a favorite place to grab their favorite books.

3.3 Company Advantages

Wonderland Bookstore has the following advantages compared to competitors:
1. Marketing
Wonderland Bookstore provide story hour for children and book discussions. Then, they do
the loyalty programs, such as "buy three books and get 20 percent of discount" or “buy one
free one book” to encourage customers to return. Social networking such as Instagram and
Facebook keep the customer informed as when new books arrived.
2. Book selection
Wonderland Bookstore serve the entire purchasing population of its geographical area but
focuses more on customer especially students and children.
3. Sales skill
Wonderland Bookstore use their knowledge to help sell more books. They will take some
time to talk with customers and learn about their literary tastes and interests. This will help
them to get the opportunity to help a customer find exactly what they are looking for and
then suggest a few more books as well.
Pricing
Books is priced within the customer expectations as well according to market price.
4. Return policies
Wonderland Bookstore does not offer return policies. Bookstore business is different from
other retailers in that books are usually offered with a return policy by the distributor or
wholesaler. Most consumer goods are not returnable to the distributor or manufacturer.

3.4 Regulations
Wonderland Bookstore must meet all federal and state regulations concerning book selling.

5
4.0 SERVICE LINE

4.1 Product/Service
Wonderland Bookstore will offer a wide range of book and magazines. This includes just
about every conceivable category including fiction, non-fiction, business, science, children’s,
hobbies, collecting and other types of books. Wonderland Bookstore also offer a search and
order service for customer seeking to find hard to get items. Wonderland Bookstore will
provide a relaxed shop environment through the placement of chair, coffee table and so on.

5.0 MARKETING AND SALES

5.1 Growth Strategy
To grow the company, Wonderland Bookstore will advertise in target markets, especially in
advance of the holiday season and back to school season.

5.2 Communicate with the Customer

Wonderland Bookstore will communicate with its customer by:
• Utilizing social media such as Facebook and Instagram.
• Providing contact information in front of the shop and the shop signboard.
• Adding labels on the price tag that include company name, contact info, and social
media.

6
6.0 PARTNERSHIP AGREEMENT
PARTNERSHIP AGREEMENT
THIS AGREEMENT made effective as the 19 day of November 2019.
BETWEEN:
OZZY JAS
University Condo Apartment 1, Jalan Tuaran 88450, Kota Kinabalu Sabah
and
SAKILAH SAINAN
No. 32, Lorong Flamingo 3, Taman Flamingo, Phase 1, Menggatal, 88400, Kota Kinabalu
Sabah
and
NG PEE TSE
Taman Kuala Menggatal, 88400 Kota Kinabalu Sabah
THIS AGREEMENT WITNESSESS that in consideration of the mutual covenants and
agreements contains in this Agreement, the parties hereby agree as follows:
1. Partnership Name and Business
1.01 The name of the partnership shall be Ozzy Jas, Sakilah Sainan and Ng Pee Tse. The
business of the Partnership shall be wonderland Bookstore. No person may be introduced as
a Partner and no other business may be carried on by the Partnership without the consent in
writing of all of the Partners.
1.02 The principal place of business of the Partnership for the time being is No. 17-0, Lot
200, Ground Floor Block E, Lorong Plaza Kingfisher 6, Plaza Kingfisher, Inanam, 884550,
Kota Kinabalu, Sabah.
2. Term
2.01 The Partnership shall commence on 19 November 2019 and shall continue until
terminated in accordance with this Agreement.
3. Partnership Shares and Capital
3.01 The Partners shall participate in the assets, liabilities, profits and losses of the
Partnership in the percentages set forth below beside their respective names:
Ozzy Jas 35%
Sakilah Sainan 33%
Ng Pee Tse 32%
3.02 The Partners shall contribute a total of RM100,000 in loan, each Partner to contribute
in proportion to their respective Partnership shares, to the start-up capital of Partnership by
no later than 31 December 2020
3.03 If additional capital is required to carry on the Partnership business, the Partners shall
contribute such additional capital as required in proportion to their respective Partnership
shares.

7
7.0 The type of business entity for your business

The type of business we choose is partnership. Partnership is a business association of two

or more persons where each partner shares the business profits and control of the business
operation and making it very profitable. After considering the long-term decisions and all the
risks involved, we decides that a partnership is right for our business. As we chose a
partnership because we want each partner to take on the task of developing a business. Our
business is to sell books and stationery. Wonderful Bookstore is the name of our store. We
chose this type of business in our business for several reasons.

1. Easy to establish.

A partnership is easier to set up, manage and run. The business is less regulated than the
company. This business are far more flexible in terms of management when the partner can
agree. An agreement as a partner can be formed by agreeing formally or in writing. Our
business is formed through an informal agreement in which we make an oral agreement to
partner.

2. Source more capital.

By having more partners, businesses can accumulate a lot of capital resources in starting a
business. The capital can be obtained by collection from partners. By using our shared
financial resources, we are able to buy everything we need for use in doing business. For
example, buying equipment such as bookshelves for business use.

3. Sharing expertise and knowledge.

Each of us has a different knowledge and expertise. Therefore, we can divide role according
to our knowledge and experience to help grow the business. For example, I may be good at
managing business finances but not good at promoting sales. The combination of ideas
between partners can help us grow our business to become more recognizable to our
customers.

4. Sharing the burden.

Every problem that occurs in a business will be shared with the partner. Therefore, the
problems that arise in our business can be solved with the benefit and support of our
partners.

5. Tax advantages.

Taxes are only charged once on profit. Partners enjoy the tax benefits of this partnership as
all income, deductions, gains and losses and business credit flows are directly attributable to
the individual.

8
8.0 Legal procedure in setting up business

Before starting a business there are several procedures to follow. The goal is to make sure
the type of business you choose matches the business you want to run. Always ensure that
all procedures are followed to avoid any problems that arise in the future.

1. Make decision about partner.

The basic principle of a partnership is to start a business with one or more other owners.
Some decisions need to be made in terms of roles, responsibilities and capital allocations to
other members. There are several different types of partnerships that can be selected based
on the business suitability. Among them are general partnership and limited partnership.
Partnership is a type of partner where all members participate in daily decisions and how
their partnerships work. Partners need to discuss to choose the type of partner for their
business.

2. Decide on partnership name.

The important thing in setting up a business is choosing a business name. Doing research
before choosing a name for a business is very important. This is to prevent name
infringement with other businesses. Set a business name that is easy to mention,
memorable and relevant to the business. For example, if the business is food based the
selected name must be in relation to food. For our business, we agree and choose
Wonderland Bookstore as our business name. We chose this name because it is easy to
write, memorable, and has no business similar to our business name.

3. Register your partnership.

Once all the relevant business information has been obtained, we register the business as
an online partnership on the Companies Commission of Malaysia website. We complete all
relevant information about our business online.

4. Creating a partnership agreement.

An agreement between partners is made to protect each partner in the event of a dispute or
one of the partners decides to leave the business. Through this agreement solutions can be
made more equitable in terms of determining all the assets that have been contributed to
the business by breaking the profit. The partnership agreement sets out in writing all the
processes and decisions that each partner has agreed to. Through discussions with partners,
we compile and fill out a list of agreements as to what might happen and what action will be
taken against partners who breach the agreement in the templates provided online.

5. Get other registrations, licenses and permits.

To obtain your Employer Identification Number (EIN), we register the IRS online. The EIR is
issued once the information form has been completed and verified. We also apply the sales
tax permit for our business.

9
9.0 The nature of business which may relate to legal implications
Management of Partnerships
All the partners share management responsibilities equal as stated in the agreement, which
same as the share personal liabilities and profits of the business.However, the partner with
majority stake in the enterprise has an advantage over the minority interests which mean
that he or she get the most return based on the share percentage. The partners are also
allow to manage other forms of partnership businesses based on their ownership interest.
Partners can also represent others in entering into agreements on behalf of the partnership,
except where the partnership agreement states otherwise. When important decisions
concerning the business are to be made, or disputes arise, partners can take a vote to
decide the outcome or final decisions. Partnerships are subject to state laws. However,
partners can decide to override the provisions of state laws with the agreement from other
partner.
Partnership Agreement
A partnership agreement is a written document that clearly written the ownership interests
and duties of partners who formed the business. Partnerships are a type of unique business
relationships that don't require a written agreement. However, it's always a good idea to
have such a document. Because partners share profits equally in the absence of a written
agreement, and could run into situations where some partners feel that they’re doing all of
the work, but another partner is still getting half of the profits. Partnership agreement is
legally binding according to the laws of the state where the partnership is operating and
serves as a code of conduct for the partners.
The agreement should be prepared immediately once the partners have decided to form the
enterprise with the guide of experienced attorney. The partnership agreement covers
 The purpose of the partnership
 Sharing formula for ownership interest which clearly state the partner’s share of
ownership
 Profit or salary distribution
 Voting Rights of each partners
 Withdrawals and Entry of Partners which state how partners will leave or become
partners in the enterprise
 Death or Disability which show how to manage the shares and capital of a dead or
disabled partner
 How to dissolve the partnership if differences become irreconcilable which is
dissolution
Tax Status of Partnerships
Wonderful bookstore doesn’t pay business income tax. That’s because the profits and losses
of the company are passed to the partners which is us who pay it through ours personal
income tax filings. This is one of the advantages of partnership compared to corporations.

10
Personal Liability
Partners assets can be used to pay off the debts and liabilities of the Wonderful bookstore if
the business assets can’t cover its obligations. In that case, creditors can go after our bank
accounts, shares, automobiles, and property to offset the balance of the debt owed by
Wonderful bookstore.
For example, if the partnership dissolves and there are still outstanding debts to suppliers or
lenders, those creditors can sue us personally to pay for the debts. Debts of the partnership
will expose ours personal assets to liability but however, since we’re a limited partner, our
liability is limited to the money we've invested
Termination of partnerships
In the absence of a written agreement, partnerships end when one partner gives notice
expressing the will to leave the partnership. But Wonderful bookstore partnership is bind by
agreement which need to outlines the process which the partnership will dissolve. For
example, the partnership can dissolve if a certain event happens such as death or it can
provide a mechanism whereby the partnership can continue if the remaining partners agree
to do so.

11
10.0 CONCLUSION
In conclusion, Wonderland Bookstore. constantly striving to make improvements
over time for the sake of business continuity. This is aimed at enhancing the business's
ability to survive in the book business industry. At the same time, we will ensure that our
customers are satisfied with the services we provide. We as partners will abide by the
agreement we have entered into.
In addition, our business will continue to maintain relationships with booksellers to
keep the stock in stock.
Finally, all applicable laws will be complied with and will serve as a guide for the
future.

12
11.0References :

1. Abdulrahman, O., & Abdulrahman, O. (2019, May 6) : What Are the Legal
Implications of Starting a Partnership? Retrieved from https://legalanchor.com/what-
are-the-legal-implications-of-starting-a-partnership/

2. Bruna Martinuzzi (2017) : What are the advantages and disadvatages of a

partnership ? Retrieved from
https://www.americanexpress.com/enus/business/trends-and insights/articles/what-
are-the-advantages-and-disadvantages-of-a-partnership/

3. Bplans (2019) : Convenience store business plan Retrieved from

https://www.bplans.com/convenience_store_business_plan/executive_summary_fc.p
hp

4. Jean Murray (2019) : How to start a Partnership in 7 easy Retrieved from

https://www.thebalancesmb.com/easy-steps-to-start-a-partnership-4150373

5. Jane Haskins, Esq. (2015) : How to start a business with a partner Retrieved from
https://www.legalzoom.com/articles/how-to-start-a-business-with-a-partner

6. KOHLER, M. A. R. K. (2019). Tax And Legal Playbook: game-changing solutions to

your small business questions.: ENTREPRENEUR Press.

7. The Legal Implications of Forming a Partnership. (n.d.). Retrieved from

https://smallbusiness.yahoo.com/advisor/legal-implications-forming-partnership-
133025086.html.

8. The Legal Implications of Implied Partnerships. (n.d.). Retrieved from

https://dodgelegal.com/general/implied-partnerships/.

13