Solutions Manual for Business
Law Today, Standard Text &
Summarized Cases 12th Edition
By Roger LeRoy Miller (All
Chapters 1-36, Unit 1-7, 100%
Original Verified, A+ Grade)
Part 1: Chapter 27-36
Part 2: Chapter 17-26
Part 4: Chapter 1-16
Part 4: Unit 1-7
Supplementary files download
link at the end of PDF.
,Solutions Manual Part 1: Chapter 27-36
CHAPTER 27
ALL FORMS OF PARTNERSHIP
ANSWERS TO LEARNING OBJECTIVES
AT THE BEGINNING OF THE CHAPTER
1A. What are the three essential elements of a partnership? The three
elements are (1) a sharing of profits and losses, (2) a joint ownership of a business,
and (3) an equal right in the management of the business.
2A. What are the fiduciary duties of partners in a general partnership?
The rights and duties of partners may be whatever the partners declare them to be. In
the absence of partners’ agreements to the contrary, the law imposes certain rights
and duties. These include:
• A sharing of profits and losses in equal measure.
• The ability to assign a partnership interest.
• Equal rights in managing the firm (subject to majority rule).
• Access to all of the firm’s books and records.
• An accounting of assets and profits.
• A sharing of the firm’s property.
The duties include fiduciary duties, being bound to third parties through contracts
entered into with other partners, and liability for the firm’s debts and liabilities.
3A. What is dissociation? What happens when a partner dissociates
from a partnership? Dissociation occurs when a partner ceases to be associated in
the carrying on of the partnership business. Dissociation normally entitles the partner
to have his or her interest purchased by the partnership. It also terminates the
partner’s actual authority to act for the partnership and to participate with the partners
in running the business.
Once dissociation occurs, the partnership normally may continue to do
business without the dissociating partner. If the partners no longer wish to (or are
unable to) continue the business, the partnership may be terminated (dissolved).
1
© 2020 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
,2 UNIT FIVE: BUSINESS ORGANIZATIONS
4A. What advantages do limited liability partnerships offer to
businesspersons that are not offered by general partnerships? An advantage of
a limited liability partnership over a general partnership is that, depending on the
applicable state statute, the liability of the partners for partnership and partners’ debts
and torts can be limited to the amount of the partners’ investments. Another
advantage is that partners in a limited liability partnership generally are not liable for
other partners’ malpractice.
5A. What are the key differences between the rights and liabilities of
general partners and those of limited partners? General partners, unlike limited
partners, are personally liable to the partnership’s creditors. Limited partners enjoy
this limited liability only so long as they do not participate in management.
ANSWER TO CRITICAL THINKING QUESTION
IN THE FEATURE
BEYOND OUR BORDERS—CRITICAL THINKING
Do local participation rules benefit countries in the long run? Explain. Probably
not. Such policies appear to inhibit foreign investment. This is because investors fear
that if the partnership breaks up, the technology and expertise it has developed will
end up in the hands of a future competitor.
ANSWERS TO CRITICAL THINKING QUESTIONS
IN THE CASES
CASE 27.1—CRITICAL THINKING QUESTIONS
LEGAL ENVIRONMENT
Harun’s income tax return and other documents prepared by the bookkeeper on
behalf of Spice–N–Rice identified the business as a sole proprietorship. Should
the appellate court have reversed the finding of a partnership on this basis?
Explain. No. The appellate court should not have reversed the finding of a partnership
between Harun and Rashid on the basis stated in the question. The identification of
the type of organization of a business on documents is not sufficient evidence of the
existence of that organization. In the circumstance of an alleged partnership, essential
factors include a sharing of profits, indications of joint ownership, and an apparent
equal right to manage the business. The court found all of these factors in the Harun
© 2020 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
, CHAPTER 27: ALL FORMS OF PARTNERSHIP 3
case. Also, as noted in the facts, the bookkeeper expressed concern about the
reporting of Spice–N–Rice’s income on Harun’s tax return. This fact indicates that the
bookkeeper knew the business was a partnership.
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that the appellants had complained there was a lack of evidence of an
agreement between Harun and Rashid to share losses. Would the result have
been different? Why or why not? No. If the appellants had complained there was a
lack of evidence of an agreement between Harun and Rashid to share losses, the
result would not have been different.
The Uniform Partnership Act defines a partnership as “an association of two or
more persons to carry on as co-owners a business for profit.” The sharing of both
profits and losses from a business is enough to create a presumption that a
partnership exists. But an agreement to share losses is not necessary to create a
partnership. In the absence of an agreement to the contrary, partnership losses are
generally charged against each partner in accord with the partner’s share of the
business.
Moreover, in the Harun case, and contrary to the assertion in the question,
Rashid presented evidence that he and Harun agreed to share in the losses of the
business. Consequently, even assuming an agreement to share losses is necessary
to the existence of a partnership, the court found that it here.
CASE 27.2—CRITICAL THINKING QUESTION
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that Salmon had disclosed Gerry’s proposal to Meinhard, who had
said that he was not interested. Would the result in this case have been
different? Explain. Yes, because telling Meinhard about the offer would have met
Salmon’s fiduciary duty of loyalty to his partner. Without a breach of the duty, there
would not have been the same ground on which to award Meinhard “the value of half
of the entire lease.”
CASE 27.3—CRITICAL THINKING QUESTION
LEGAL ENVIRONMENT
How are the penalties likely to be apportioned among the three defendants?
Explain. Whichever penalties the trial court determines to impose on remand, Valley
View Enterprises, Inc., is likely to be held liable for violations of the Phase I permit,
and Valley View Properties, Ltd., and Joseph Ferrara are likely to be held liable for
violations of the Phase II permit.
© 2020 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
Law Today, Standard Text &
Summarized Cases 12th Edition
By Roger LeRoy Miller (All
Chapters 1-36, Unit 1-7, 100%
Original Verified, A+ Grade)
Part 1: Chapter 27-36
Part 2: Chapter 17-26
Part 4: Chapter 1-16
Part 4: Unit 1-7
Supplementary files download
link at the end of PDF.
,Solutions Manual Part 1: Chapter 27-36
CHAPTER 27
ALL FORMS OF PARTNERSHIP
ANSWERS TO LEARNING OBJECTIVES
AT THE BEGINNING OF THE CHAPTER
1A. What are the three essential elements of a partnership? The three
elements are (1) a sharing of profits and losses, (2) a joint ownership of a business,
and (3) an equal right in the management of the business.
2A. What are the fiduciary duties of partners in a general partnership?
The rights and duties of partners may be whatever the partners declare them to be. In
the absence of partners’ agreements to the contrary, the law imposes certain rights
and duties. These include:
• A sharing of profits and losses in equal measure.
• The ability to assign a partnership interest.
• Equal rights in managing the firm (subject to majority rule).
• Access to all of the firm’s books and records.
• An accounting of assets and profits.
• A sharing of the firm’s property.
The duties include fiduciary duties, being bound to third parties through contracts
entered into with other partners, and liability for the firm’s debts and liabilities.
3A. What is dissociation? What happens when a partner dissociates
from a partnership? Dissociation occurs when a partner ceases to be associated in
the carrying on of the partnership business. Dissociation normally entitles the partner
to have his or her interest purchased by the partnership. It also terminates the
partner’s actual authority to act for the partnership and to participate with the partners
in running the business.
Once dissociation occurs, the partnership normally may continue to do
business without the dissociating partner. If the partners no longer wish to (or are
unable to) continue the business, the partnership may be terminated (dissolved).
1
© 2020 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
,2 UNIT FIVE: BUSINESS ORGANIZATIONS
4A. What advantages do limited liability partnerships offer to
businesspersons that are not offered by general partnerships? An advantage of
a limited liability partnership over a general partnership is that, depending on the
applicable state statute, the liability of the partners for partnership and partners’ debts
and torts can be limited to the amount of the partners’ investments. Another
advantage is that partners in a limited liability partnership generally are not liable for
other partners’ malpractice.
5A. What are the key differences between the rights and liabilities of
general partners and those of limited partners? General partners, unlike limited
partners, are personally liable to the partnership’s creditors. Limited partners enjoy
this limited liability only so long as they do not participate in management.
ANSWER TO CRITICAL THINKING QUESTION
IN THE FEATURE
BEYOND OUR BORDERS—CRITICAL THINKING
Do local participation rules benefit countries in the long run? Explain. Probably
not. Such policies appear to inhibit foreign investment. This is because investors fear
that if the partnership breaks up, the technology and expertise it has developed will
end up in the hands of a future competitor.
ANSWERS TO CRITICAL THINKING QUESTIONS
IN THE CASES
CASE 27.1—CRITICAL THINKING QUESTIONS
LEGAL ENVIRONMENT
Harun’s income tax return and other documents prepared by the bookkeeper on
behalf of Spice–N–Rice identified the business as a sole proprietorship. Should
the appellate court have reversed the finding of a partnership on this basis?
Explain. No. The appellate court should not have reversed the finding of a partnership
between Harun and Rashid on the basis stated in the question. The identification of
the type of organization of a business on documents is not sufficient evidence of the
existence of that organization. In the circumstance of an alleged partnership, essential
factors include a sharing of profits, indications of joint ownership, and an apparent
equal right to manage the business. The court found all of these factors in the Harun
© 2020 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
, CHAPTER 27: ALL FORMS OF PARTNERSHIP 3
case. Also, as noted in the facts, the bookkeeper expressed concern about the
reporting of Spice–N–Rice’s income on Harun’s tax return. This fact indicates that the
bookkeeper knew the business was a partnership.
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that the appellants had complained there was a lack of evidence of an
agreement between Harun and Rashid to share losses. Would the result have
been different? Why or why not? No. If the appellants had complained there was a
lack of evidence of an agreement between Harun and Rashid to share losses, the
result would not have been different.
The Uniform Partnership Act defines a partnership as “an association of two or
more persons to carry on as co-owners a business for profit.” The sharing of both
profits and losses from a business is enough to create a presumption that a
partnership exists. But an agreement to share losses is not necessary to create a
partnership. In the absence of an agreement to the contrary, partnership losses are
generally charged against each partner in accord with the partner’s share of the
business.
Moreover, in the Harun case, and contrary to the assertion in the question,
Rashid presented evidence that he and Harun agreed to share in the losses of the
business. Consequently, even assuming an agreement to share losses is necessary
to the existence of a partnership, the court found that it here.
CASE 27.2—CRITICAL THINKING QUESTION
WHAT IF THE FACTS WERE DIFFERENT?
Suppose that Salmon had disclosed Gerry’s proposal to Meinhard, who had
said that he was not interested. Would the result in this case have been
different? Explain. Yes, because telling Meinhard about the offer would have met
Salmon’s fiduciary duty of loyalty to his partner. Without a breach of the duty, there
would not have been the same ground on which to award Meinhard “the value of half
of the entire lease.”
CASE 27.3—CRITICAL THINKING QUESTION
LEGAL ENVIRONMENT
How are the penalties likely to be apportioned among the three defendants?
Explain. Whichever penalties the trial court determines to impose on remand, Valley
View Enterprises, Inc., is likely to be held liable for violations of the Phase I permit,
and Valley View Properties, Ltd., and Joseph Ferrara are likely to be held liable for
violations of the Phase II permit.
© 2020 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
