NO Plaguarism
i
€ For Review
, what advanLages and disadvanrages are associated with the sole proprietorship? ' what is meant by.loint and several liabrlity? why is this olten consiierecl ro b!, disadvantage of doing business as a general partnership?
:' what advantages do limited liabihty partnerships ofler to entreprenellrs thar are not oflfered by general partnerships? ':" whal are the key differences between the rights_and irabilities of ger,e.u1 partners ancl those oili"mited pa.tne.s? ':' How are limited liability companies formed, and who decides how rhey wr11 be managed and operated?
iff timited tiabilig Companies. John, Lesa, ancl Tabir form a hmited liability company. John contributes 60 percent of the capital, and Lesa and Tabir each conrribure 20 percent. NoLhing is decicled about how profits u.ill be clivicle d. John 2rssumes rhat hc will be enritled ttr 60 percent ol the prol_ its. in accordance rvith his contnbution. Lesa and Tabrr. hor.r,ever, assume that tl're profits r,r,rll be clivided equally A dispute cx,er the questron arises, ancl ultimately a court has to decide the issue. What l:r* iull the courr apply? ln mosr sti.!es. what ",tt r,.tffiri;I;;
Questions and Case problems
Partnership. Donnda, Luis, and Elizabeth lorm a limited partnership. Dorinda is a general par.rner. and Lurs and Elizabeth are limired partners. Consider each ol the separate even[s below., and drscuss luilv ri.hich s,ould constirure a dissolurion of the limiLed partnership. : Luis asslgns his partnership interesr ro Ashley
=". Elizabetl'r rs petitioned rnto involuntery bankr-uprcy -. Donncla dies.
-For a sample answer to euestion l4-2, go to Appen_
{ix E at the end of this text. rtnership Formation. Danicl is rhc ou,ner o{ a chain ol
reputationof abusiness to drawcustomers, get themto retum, and contribure ro future profitabiliry) How can a sole propri_ etor's reputation, skill, and relationships with customers be valued? Could these qualities be divided inro ..personal', and "enterprise" goodwill, with some goodwill associated with the business and some solely due ro the personal qualities of the proprietor? If so, what might comprise each rype? Is this an effecLive method for valuing Gaskillb pracrice? Discuss. lGashillv. Robbys,282 S.Vl3d 306 (K>r 2009)l l4-5. limited Partnership. James Carpenrer contracred wirh Austin Estates, LB to buy property in Texas. Carpenter asked Sandra McBeth ro invesr in the deal. He admitted that a dispute had arisen with the city of Austin over water for the property, but he assured her thar it wouid nor be a significant obstacle. McBeth agreed to invest $800,000 to hold open the option to buy the properry She became a limited panner in Stonelake Ranch, Lp Carpenter acred as the firmb generai partner. Despite his assurances to McBeth, the purchase was delayed due to the water dispute. Unable to complete the purchase in a timely manner, Carpenter paid the $800,000 to Austin Esutes without noiifying McBeth. l-ater, Carpenter and others____
l4-5. Fiduciary Duties of partners. Karl Horvath, Hein Rusen, and Carl Thomas formed a partnership, HRr Enterprises, to buy a vacant manufacturing plant and an annex build- ing on eleven acres in Detrolt, Michigan. HRr leased the plant to companies owned by the partners, inciuding Horvath's Canadian-American Steel. When Horvath,s firm missed rhree pa),rnents under its lease, HRT evicted it from the plant. Horvath objected but remained an HRT partner. l-ater, Rusen and Thomas ieased the entire plant to rheir company, Merkur Steel. Merkur then sublet the premises to City Sreel and Merkur Technical Services-both of which were owned (or substantially owned) by Rnsen and Thomas. The rent these companies paid to Merkur was higher than
shoe srores. He hires Rubya to be the manager ol a new store, which rs ro open in Grand Raprds, Mi.higrn. Daniel, by written contracr, agrees ro par. Rub1.a a monthly salary and 20 percent o[ the profits.
ithout Danrels knowledge, Rubya represents himsell to Classen as Daniel,s partner, showing Classen the agreement to share profits. Ciassen exrend. tredit ro Rub1a. Rubra delrult.. Drsruss raherher
!j::ru!_&]rd Danici rab,r rl prr,n.r]..,-..-...-------..-- So oral and max- illolacial surgeon in Bowling Green. Kentucky Her meclical pracrrce is a sole propfietorshrp rhar consists of Gaskill as the sole sLlrgeon and ar-r ollice staff. She sees e\.ery parienr, exercises all prolessionaljudgntent and skill, and manages the business When Gaskill and her spouse, John Robbins, initiaLed clivorce proceedings in a KcnLucki.sta[e ctrurt. her accollnlant estinrarecl the va]ue of the practice at $221,610, excluding goodrvill. Robbinss accountanr estimated rhe value ar $669,075, including goodwrll. (Goodu,ill is the ability or
l4-3.
