TASK
15. Adam, Stanley, and Rosalind formed a partnership in State X to distribute beer and wine. Their agreement provided that the partnership would continue until December 31, 2020. Which of the following events would cause the ABC partnership to dissolve? If so, when would the partnership be dissolved?
a. Rosalind assigns her interest in the partnership to Mary on April 1, 2018.
b. Stanley dies on June 1, 2020.
c. Adam withdraws from the partnership on September 15, 2019.
d. A creditor of Stanley obtains a charging order against Stanley’s interest on October 9, 2017.
e. In 2018, the legislature of State X enacts a statute making the sale or distribution of alcoholic beverages illegal.
f. Stanley has a formal accounting of partnership affairs on September 19, 2019.
C A S E P R O B L E M S
16. Phillips and Harris are partners in a used car business. Under their oral partnership, each has an equal voice in the conduct and management of the business. Because of their irregular business hours, the two further agreed that they could use any partnership vehicle as desired. This use includes transportation to and from work, even though the vehicles are for sale at all times. Harris conducted partnership business both at the used car lot and from his home. He was on call by Phillips or customers at his home, and he went back to the lot two or three times after going home. While driving a partnership vehicle home from the used car lot, Harris negligently hit a car driven by Cook, who brought this action against Harris and Phillips individually and as copartners for his injuries. Who is liable? Explain.
17. Voeller, the managing partner of the Pay-Out Drive-In Theater, signed a contract to sell to Hodge a small parcel of land belonging to the partnership. Except for the last twenty feet, which were necessary for the theater’s drive- way, the parcel was not used in theater operations. The agreement stated that it was between Hodge and the partnership, with Voeller signing for the partnership. Voeller claims that he told Hodge before signing that a plot plan would have to be approved by the other partners before the sale. Hodge denies this and sues for specific performance, claiming that Voeller had actual and apparent authority to bind the partnership. The partners argue that Voeller had no such authority and that Hodge knew this. Who is correct? Explain.
18. L. G. and S. L. Patel, husband and wife, owned and operated the City Center Motel in Eureka. On April 16, Rajeshkumar, the son of L. G. and S. L., formed a partnership with his parents and became owner of 35 percent of the City Center Motel. The partnership agreement required that Rajeshkumar approve any sale of the motel. Record title to the motel was not changed, however, to reflect his interest. On April 21, L. G. and S. L. listed their motel for sale with a real estate broker. On May 2, P. V. and Kirit Patel made an offer on the motel, which L. G. and S. L. accepted. Neither the broker nor the purchasers knew of the son’s interest in the motel. When L. G. and S. L. notified Rajeshkumar of their plans, to their surprise, he refused to sell his 35 percent of the motel. On May 4, L. G. and S. L. notified P. V. and Kirit that they wished to withdraw their acceptance. They offered to pay $10,000 in damages and to give the purchasers a right of first refusal for five years. Rather than accept the offer, on May 29, P. V. and Kirit filed an action for specific performance and incidental damages. L. G., S. L., and Rajeshkumar responded that the contract could not lawfully be enforced. Discuss who will prevail and why.
19. Davis and Shipman founded a partnership under the name of Shipman & Davis Lumber Company. Four years later, the partnership was dissolved by written agreement. Notice of the dissolution was published in a newspaper of general circulation in Merced County, where the business was conducted. No actual notice of dissolution was given to firms that previously had extended credit to the partnership. By the dissolution agreement, Shipman, who was to continue the business, was to pay all of the partnership’s debts. He continued the business as a sole proprietorship for a short time until he formed a successor corporation, Shipman Lumber Servaes Co. After the partnership’s dissolution, two firms that previously had done business with the partnership extended credit to Shipman for certain repair work and merchandise. The partnership also had a balance due to Valley Company for a prior purchase. Five months later, two checks were drawn by Shipman Lumber Servaes Co. and accepted by Valley as partial payment on this debt. Credit Bureaus of Merced County, as assignee of these three accounts, sued the partnership as well as Shipman and Davis individually. Does the dis- solution of the partnership relieve Davis of personal liability for the accounts? Explain.
20. In August, Victoria Air Conditioning, Inc. (VAC), entered into a subcontract for insulation services with Southwest Texas Mechanical Insulation Company (SWT), a partnership comprising Charlie Jupe and Tommy Nabors. In February of the following year, Jupe and Nabors dissolved the partnership, but VAC did not receive notice of the dissolution at that time. Sometime later, insulation was removed from Nabors’s premises to Jupe’s possession and Jupe continued the insulation project with VAC. From then on, Nabors had no more involvement with SWT. One month later, Nabors informed VAC’s project manager, Von Behrenfeld, that Nabors was no longer associated with SWT, had formed his own insulation company, and was interested in bidding on new jobs. Subsequently, SWT failed to perform the subcontract and Jupe could not be found. VAC brought suit for breach of contract against SWT, Jupe, and Nabors. Nabors claims that several letters and change orders introduced by both parties show that VAC knew of the dissolution and impliedly agreed to discharge Nabors from liability. These documents indicated that VAC had dealt with Jupe but not with Nabors after the dissolution. VAC denies that the course of dealings between VAC and Jupe was the type from which an agreement to discharge Nabors could be inferred. Who is correct? Explain
