Blog

[Big Spender] Ryan was a partner in ZYX law firm. He decided to withdraw from the partnership because he wanted to retire early in Costa Rica. The partnership agreement of ZYX law firm did not specify the objective or duration of the partnership. Although Ryan gave proper notice, the other partners claimed that he had no right to withdraw. Ryan was angry and decided to get even. Two days after he withdrew and before the partnership had provided notification to any suppliers of his departure, Ryan went to the office supply store at which he typically purchased supplies on account for the firm. He purchased several cameras, a computer, and other items, which he placed on the firm’s account. Ryan just smiled when Joe, the manager at the store, told Ryan that he really appreciated the law firm’s business. The next day Ryan headed for Costa Rica and cannot be located. Joe later requests that ZYX firm pay the bill for Ryan’s purchases. The law firm, whose members had decided to continue the partnership after the dissolution resulting from Ryan’s resignation, refused on the basis that Ryan had no authority to make the purchases. Joe says that he did not know that and that he expects to be paid immediately. ZYX law firm was what type of partnership?

[Horse Tracks] Min-ji, Marcus, and Penelope decided to form a corporation called Horse Tracks to raise horses. They all began the incorporation process by arranging for necessary capital and financing. They raised capital from their friends by making deals whereby their friends would purchase stock in the new corporation. After the corporation was formed, a problem arose with a contract for feed that Min-ji, Marcus, and Penelope had entered into while organizing the corporation. Callie, the seller of the feed, claimed that she had not been fully paid and threatened to sue the corporation. The contract Min-ji, Marcus, and Penelope had with Callie did not reference liability after the new corporation came into legal existence. Min-ji, Marcus, and Penelope asked for a novation, but were uncertain as to whether that would occur. Min-ji, Marcus, and Penelope would be identified by what term in their arranging for necessary capital and financing for the corporation?

[Partnership Problems] Jamar, Kenya, and Tamika want to form a partnership to sell students resume preparation and employment search services. Jamar asks Kenya and Tamika if they should draw up some sort of agreement. Kenya replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Jamar and Tamika, however, Kenya agreed to a written document setting up the partnership, which they all signed. It was a simple agreement listing the partners and did not specifically address the right to management or allocation of profits and losses. Kenya has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership; she keeps the payment she receives for herself. When Jamar and Tamika find out, Kenya replies that she was doing two-thirds of the partnership work, particularly in regard to management; that she, therefore, has two-thirds of the voting rights; and that she voted that her actions were appropriate. The articles of partnership does not address the right to share in management, but Jamar and Tamika strongly disagree with Kenya. Is Kenya’s statement that a written agreement is not necessary to set up a partnership correct?

Which state in the U.S. has more than half of the publicly traded corporations?

[Horse Tracks] Min-ji, Marcus, and Penelope decided to form a corporation called Horse Tracks to raise horses. They all began the incorporation process by arranging for necessary capital and financing. They raised capital from their friends by making deals whereby their friends would purchase stock in the new corporation. After the corporation was formed, a problem arose with a contract for feed that Min-ji, Marcus, and Penelope had entered into while organizing the corporation. Callie, the seller of the feed, claimed that she had not been fully paid and threatened to sue the corporation. The contract Min-ji, Marcus, and Penelope had with Callie did not reference liability after the new corporation came into legal existence. Min-ji, Marcus, and Penelope asked for a novation, but were uncertain as to whether that would occur. Min-ji, Marcus, and Penelope would be identified by what term in their arranging for necessary capital and financing for the corporation?

[Candy Company] Milton, Ava, and Hiro own a candy company. The business is failing and Milton is declared bankrupt by the bankruptcy court. Ava wants to keep the business running because she is sure she can turn it around. Hiro tells her that, it’s too late, the partnership is already over because of Milton. Ava tells him that no one has asked to end the partnership so they do not have to dissolve. The partnership debts include a loan to the bank, loans Ava made to the company, and the initial capital that all three partners invested. Milton has no money to pay any of their debts. If the bank loan cannot be paid off after sale of the partnership assets, who is liable for the remainder of the loan?

Which state in the U.S. has more than half of the publicly traded corporations?

_________ tissue is commonly called fat.

[Nail Salon] Thea and her friends Josef and Danny, all U.S. citizens, want to open a nail salon. They would all like to avoid personal liability for debts of the business and/or wrongful acts of each other. They would also like to minimize taxation. Thea is in favor of a corporation and asks if there is any problem with that form of business. Josef and Danny say that they are concerned about double taxation with a corporation and that they are in favor of a partnership, even if personal liability is a concern. Thea said that she was concerned about the deductibility of losses if the corporate form was chosen. She did some research and suggested an S corporation to Josef and Danny which she claimed would avoid the problem of double taxation. Is there an impediment to the business qualifying as an S Corporation, based on the information available?

BONUS (2 points) Which of the following statements is correct regarding the location of the stomach?