Clark_11e-AM-Ch36.doc

Clark_11e-AM-Ch36.doc - 283 C HAPTER 36 P ARTNERSHIPS AND L...

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Unformatted text preview: 283 C HAPTER 36 P ARTNERSHIPS AND L IMITED L IABILITY P ARTNERSHIPS A NSWERS TO Q UESTIONS AT THE E NDS OF THE C ASES C ASE 36.1(P AGE 745) W HAT I F THE F ACTS W ERE D IFFERENT ? Suppose that Morens predominant motive in bringing her son to the restaurant had been to benefit herself because she wanted to feed him free pizza. Would the re- sult have been different? Why or why not? No, the result would not have been different. The court cited two decisions from other jurisdictions that address the issue in a persua- sive fashion. In one of those cases, the court held that even if the predominant motive of the partner was to benefit himself or third persons, such does not prevent the concurrent business purpose from being within the scope of the partnership. T HE L EGAL E NVIRONMENT D IMENSION What seems to have occurred in this case that might have served as an alternative basis for imposing liability on the partnership? (Hint: Who besides Moren had the authority to act on behalf of the partnership?) Amy Benedetti apparently authorized Nicole's conduct, in bringing Remington into the kitchen, or at least her bringing him into the kitchen did not appear to be prohibited by the rules of the partnership. Thus, the partners authorization of the conduct may have served as an alternative basis for establishing partnership liability. C ASE 36.2(P AGE 748) T HE E THICAL D IMENSION Was it unethical for Randall to file a suit against his parents to obtain money in this case? Why or why not? Randalls efforts towards the success of the ranch, in terms of time devoted to its operation, appears from the statement of facts to have been small. His capital contribution to the partnership, after deductions for distributions and other items, represented less than 10 percent of the total. When he tried to withdraw from the partnership and asked his parents for his share of the money, they could not agree on the amount. He retained counsel in an attempt to obtain what he felt was a fair price and ultimately this suit ensued. Whether Randall was acting unethically in the circumstances is not clear. He may have been greedy or resentful, or have had other base motivations, in 284 UNIT EIGHT: BUSINESS ORGANIZATIONS which case filing the suit could have been unethical. The same might be surmised of his parents. To all parties, it may have simply been business. T HE L EGAL E NVIRONMENT D IMENSION How and why might the value of a partnership interest in a going concern differ from the value of the same interest as a result of a liquidation? The court explained in this case, Application of the two methods to the same partnership may yield two distinct values. ... The method of valuation of a partnership interest in a going concern necessarily differs from the valuation of the same interest at the point of liquidation. The liquidation value looks to the value of the partnership's assets less its liabilities and determines each partner's appropriate share. When valuing a going concern, however, thedetermines each partner's appropriate share....
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Clark_11e-AM-Ch36.doc - 283 C HAPTER 36 P ARTNERSHIPS AND L...

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