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Chapter 38 - Operation of Partnerships and Related Forms
V. ANSWERS TO PROBLEMS AND PROBLEM CASES
1. No. The court found that partnership agreement demonstrated the parties' focus was on the
The also rejected Szymanowski and Wheeling's contention that Brace's development of
Danylko # 2 and # 4 wells usurped business opportunities the law preserves for partnerships
Finally, the court rejected Szymanowski and Wheeling's argument that Brace's development
2. She should include a clause in the partnership agreement that she is permitted to keep that
client and all the benefits of that client to herself, in order to avoid violating the fiduciary
duty not to compete with the partnership. Will the other partners agree to that clause? It is
3. Yes. All the breaches of duty fit under the duty to account. Brosseau breached that duty by
4. Yes. The court found that O'Neal breached his fiduciary duty to his partnership (the Clinic)
by diverting to himself funds that belonged to the partnership. Although O'Neal argued that
5. No. The default rules would allow them to receive as their sole compensation only a share of
profits. There will be no profits for this LLP for several years. Moreover, even if there are
profits, the amount that is distributed will be determined by a majority of partners. If Carney,
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 38 - Operation of Partnerships and Related Forms
6. No, for all three. Moving the offices is outside the ordinary course of business of the
partnership and may be done only with unanimous partners’ consent. As for buying the mall,
while the partnership’s ordinary business is buying and operating shopping centers, this
7. Yes. As a partner of the partnership, Paul Ballinger held the authority to bind the partnership
to the sale of the partnership's real property, as the sale was consistent with carrying on the
8. Yes, possibly. The court held that the nuisance created by the swine could be grounds for the
liability of the general partner, Jimmy Tosh, if the partnership has liability, on the grounds
9. No. The court held that Nicole’s partnership was liable to Remington and that the partnership
was not entitled to indemnity from Nicole, his mother, because Nicole was acting in the
ordinary course of business while negligently supervising her son, Remington. The court was
Note that Nicole may not escape full liability for the injuries to her son. As a partner, she
shares in a portion of the liability to the extent it reduces the assets of partnership. Also, note
10. Yes. The court found that the fraudulent activities of a partner, Kersner, were within the
ordinary course of business of the partnership and that the partnership benefited from those
11. Florence was not held liable for the intentional tort of her partner/husband. Although
Florence knew that Michael had a history of violence directed at her, she did not have reason
to know that Michael would attack a patron at their cafe. Hence, she had no liability for his
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 38 - Operation of Partnerships and Related Forms
38-3
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
