ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 37
ALL FORMS OF PARTNERSHIPS
37-1A. Partners as fiduciaries
The court found nothing tortious in the actions of Weisglass and Koenig in dissolving the at-will
partnership and forming a new partnership. The court recognized that Dunay was entitled to his
share of income and assets of the partnership but found that there were no partnership assets
37-2A. Indications of partnership status
The trial court found that Newsome Carpets was a partnership and not a corporation, and on
Allen’s appeal, the appellate court agreed. The appellate court stated that “[a]mong other
37-3A. Limited liability partnerships
The court granted the motion and dismissed the suit. The court pointed out that the federal
jurisdiction statute states only that a corporation is a citizen of the state in which it is in–
B-2 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 37
37-4A. Indications of partnership
Indications of partnership in this case include the sharing of profits among the parties and their
apparent intent to enter into a partnership, as shown by their “Master Partnership Agreement”
and that they often referred to themselves as partners. If there is a partnership, Design88 was
clearly a partner, as evidenced by what it did on behalf of the association. Indications that there
37-5A. Fiduciary duties
The court issued a summary judgment in Burdett’s favor, and Chaney appealed to a state
intermediate appellate court, which affirmed the judgment. Chaney appealed to the Georgia
Supreme Court, which reversed the lower court’s decision. The state supreme court recognized
that the partnership was dissolved on Chaney’s death and “if a partnership is dissolved because
of the death of a partner, the remaining partner or partners must wind up the partnership affairs.
37-6A. Limited partnerships
The appellate court held that Meadow had breached a fiduciary duty to the other partners. The
court terminated Meadow’s rights as a general partner. The court concluded that “Meadow
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 37 B-3
37-7A. Liability of limited partners
The trial court found that Pitman had participated in the control of the business by securing
credit for the partnership, that Flanagan had reasonably relied on that participation in extending
credit, and that Pitman was therefore liable to Flanagan for the debt subsequently incurred by
37–8A. Limited partnership
General partners owe their partnership a duty of loyalty and a duty of care, as well as an
obligation to discharge their duties in good faith and in a reasonable belief that they are acting in
the best interest of the partnership. General partners owe their co-partners, including any limited
37–9A. Partnership dissolution
Yes, the court affirmed the decision. The order requiring the partner’s heir (Thompson) to wind
up the business and affairs of partnership after death of both partners and distribute
B-4 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 37
37-10A. A QUESTION OF ETHICS
1. The court determined that Ghaffarian and Mardanlou had formed a partnership. On
Ghaffarian’s appeal, a state intermediate appellate court affirmed the lower court’s judgment.
A partnership is an association of two or more persons to carry on a business for profit.
The appellate court identified certain elements that establish the existence of a partnership:
“The parties must combine their property, money, effects, skill, labor and knowledge. As a
Evidence that Access Auto was not a partnership included Ghaffarian’s filing of the firm’s
tax returns only in his name.
The court noted that “Mardanlou’s lack of knowledge regarding the financial aspects of
the business does not defeat his partnership claim given that partners can divide labor and
responsibilities in any way they see fit, including giving one partner sole responsibility and
2. The court found that Ghaffarian had breached the partnership agreement when he
appropriated the partnership’s real property by titling it solely in his name. The court awarded
Mardanlou a one-half interest in the real property and ordered Ghaffarian to pay Mardanlou one-
half of the $83,500 its annual rental value, plus interest. Ghaffarian appealed to a state
3. The court held that Mardanlou was entitled to a share of Access Auto’s profits. On the
dissolution of a partnership, each partner can obtain a share of the firm’s profits, including those
attributable to the use of the partner’s right in the firm’s property. The court awarded Mardanlou
a one-half interest in the real property that Ghaffarian had bought with Access Auto’s money,