John, Lesa, and Tabir form a limited liability company. John contributes 60% of the capital, and Lesa and Tabir each contribute 2%. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60% of the profits by his contribution. Lesa and Tabir, however, assume that the profits will be divided equally. A dispute over the profits arises, and ultimately a court has to decide the issue.
Use the IRAC structure to identify issues and apply law and facts to the case. The IRAC method has four steps:
Identify the issue.
Relevant law – Here you need to explain the law, not just state it. This could be sections/s of the Corporations Act or case law.
Application to the facts – the law applies to the problem’s facts.
What law will the court apply?
In most states, what will result?
How could this dispute have been avoided in the first place?