Business Law 380 14. Fay was admitted to Global Associates, an existing general
ID: 454054 • Letter: B
Question
Business Law 380
14. Fay was admitted to Global Associates, an existing general partnership on January, 2014. In June, 2014, a partnership debt incurred in October, 2013 came due. Fay is:
a) Not liable for the debt because the debt was incurred prior to her joining the partnership.
b) Only liable for the debt up to the amount of her capital contribution to the partnership.
c) Personally liable only for 50% of the total debt if 50% of the other partners do not pay.
d) Personally liable for the full extent of the debt if the other partners do not pay.
15. Kelly, Lars and Mona agreed to be partners in Neighborhood Deliveries (ND), all splitting the profits equally. Kelly contributed 70% of the capital upon formation of the partnership. Later, the partners agreed to dissolve the partnership as it was not as profitable as they had expected, and its liabilities were greater than its assets.
The losses are paid by:
a) All the partners in proportion to their capital contributions.
b) All the partners in proportion to their share of the profits.
c) Kelly alone because she contributed the most capital.
d) Lars and Mona because they contributed the least amount of capital.
Explanation / Answer
15) Since Fay has entered into a general partnership, he should have looked into upcoming debt and had a discussiion before joining the contract. Due to being in general contract he will be personally liable for the full extent of the debt if the other partners do not pay. (Answer is D )
16) SInce the partnership included equal split of profit so in this contract all the losses are to be in proportion to their share of profit. (Answer is B)
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