A

Adam and John owned AJ's Pizza. When they opened up the shop Adam spent $25,000 of his own money to buy the kitchen equipment they would need. John spent $5,000 of his money on rent and security deposit for the shop and $10,000 on advertising, website and office equipment for the business. Their goal was to share all profits and losses equally and also make all business decisions together and they never formalized any agreement between the two of them. They opened up the shop and things went very well for them. Before long they needed to buy a second oven and a second deep fryer. The two went to the bank together and applied for a small business loan on behalf of AJ's so they could purchase the two items. The loan was approved for $15,000 and they bought the equipment for the shop. John and Adam had a disagreement about how AJ's was to be run. The disagreement eventually turned into such a stalemate between the two men that the business was rendered dead simply by their inability to make a decision on anything. The business was nearly bankrupt, with insufficient assets to pay the debts of the business, including several loans that both Adam and John individually made to the business. How would the court handle the debts? What would the court order?

b

Adam and John owned AJ's Pizza. When they opened up the shop Adam spent $25,000 of his own money to buy the kitchen equipment they would need. John spent $5,000 of his money on rent and security deposit for the shop and $10,000 on advertising, website and office equipment for the business. Their goal was to share all profits and losses equally and also make all business decisions together and they never formalized any agreement between the two of them. They opened up the shop and things went very well for them. Before long they needed to buy a second oven and a second deep fryer. The two went to the bank together and applied for a small business loan on behalf of AJ's so they could purchase the two items. The loan was approved for $15,000 and they bought the equipment for the shop. Adam and John were getting along well but Adam needed to leave AJ's due to his wife's relocation. True or False, the business, AJ's, could continue only so long as the buy-sell agreement allows for it.

Select one:

True

False