ASSIGNMENT
What is the extent of Muir’s personal liability and the personal liability of Jones and Ray as to (a) the judgment obtained by Ware and (b) the debt owing to XYZ Bank?
6. Lauren, Matthew, and Susan form a partnership, with Lauren contributing $100,000, Matthew contributing $50,000, and Susan contributing her time and skill. Nothing is said regarding the division of profits. The firm later dissolves. No distributions to partners have been made since the partnership was formed. The partnership sells its assets for a loss of $90,000. After payment of all firm debts, $60,000 is left. Lauren claims that she is entitled to the entire $60,000. Matthew contends that the distribution should be $40,000 to Lauren and $20,000 to Matthew. Susan claims the $60,000 should be divided equally among the partners. Who is correct? Explain.
7. Adams, a consulting engineer, entered into a partnership with three others for the practice of their profession. The only written partnership agreement is a brief document specifying that Adams is entitled to 55 percent of the profits and the others to 15 percent each. The venture is a total failure. Creditors are pressing for payment, and some have filed suit. The partners cannot agree on a course of action.
Explain how many of the partners must agree to achieve each of the following objectives?
a. To add Jones, also an engineer, as a partner, Jones being willing to contribute a substantial amount of new capital.
b. To sell a vacant lot held in the partnership name, which had been acquired as a future office site for the partnership.
c. To move the partnership’s offices to less expensive quarters.
d. To demand a formal accounting.
e. To dissolve the partnership.
f. To agree to submit certain disputed claims to arbitration, which Adams believes will prove less expensive than litigation.
g. To sell all of the partnership’s personal property, with Adams having what he believes to be a good offer for the property from a newly formed engineering firm.
h. To alter the respective interests of the parties in the profits and losses by decreasing Adams’s share to 40 percent and increasing the others’ shares accordingly.
i. To assign all the partnership’s assets to a bank in trust for the benefit of creditors, hoping to work out satis- factory arrangements without filing for bankruptcy.
8. Charles and Jack orally agreed to become partners in a tool and die business. Charles, who had experience in tool and die work, was to operate the business. Jack was to take no active part but was to contribute the entire $500,000 capitalization. Charles worked ten hours a day at the plant, for which he was paid nothing. Nevertheless, despite Charles’s best efforts, the business failed.
The $500,000 capital was depleted, and the partnership owed $500,000 in debts. Prior to the failure of the partnership business, Jack became personally insolvent; consequently, the creditors of the partnership collected the entire $500,000 indebtedness from Charles, who was forced to sell his home and farm to satisfy the indebtedness. Jack later regained his financial responsibility, and Charles brought an appropriate action against Jack for
(a) one-half of the $500,000 he had paid to partnership creditors and (b) one-half of $80,000, the reasonable value of Charles’s services during the operation of the partnership. Who will prevail and why?
9. Glenn refuses an invitation to become a partner of Dorothy and Cynthia in a retail grocery business. Nevertheless, Dorothy inserts an advertisement in the local newspaper representing Glenn as their partner. Glenn takes no steps to deny the existence of a partnership between them. Ron, who extended credit to the firm, seeks to hold Glenn liable as a partner. Is Glenn liable? Explain.
10. Hanover leased a portion of his farm to Brown and Black, doing business as the Colorite Hatchery. Brown went upon the premises to remove certain chicken sheds that he and Black had placed there for hatchery purposes. Thinking that Brown intended to remove certain other sheds, which were Hanover’s property, Hanover accosted Brown, who willfully struck Hanover and knocked him down. Brown then ran to the Colorite truck, which he had previously loaded with chicken coops, and drove back to the hatchery. On the way, he picked up George, who was hitchhiking to the city to look for a job. Brown was driving at seventy miles an hour down the highway. At an open intersection with another highway, Brown in his hurry ran a stop sign, striking another vehicle. The collision caused severe injuries to George. Immediately thereafter, the partnership was dissolved, and Brown was insolvent. Hanover and George each bring separate actions against Black as copartner for the alleged tort committed by Brown against each. What judgments as to each?
