Question
Alison told her partners in writing that she would be leaving the law partnership at the current partnership year end, January 31, 2014. At year
Alison told her partners in writing that she would be leaving the law partnership at the current partnership year end, January 31, 2014. At year end, Alison's partners bought her partnership interest and agreed that she would no longer be liable for any of the prior or subsequent partnership obligations. In February 2014, one of the remaining partners absconded with $2 million held for Mr. Smith a long time client, taken in trust in September 2013. Mr Smith sued the partnership, the partners and Alison. Based on the facts described, which of the following statement is true? A) Alison has no right to recover any funds she has to pay from her former partner B) Mr Smith can recover on his judgment out of the partnership assets. C) Even if Alison gave Mr Smith actual notice of her leaving the partnership, and he agreed that she would no longer obligated for the partnership, she can be held liable to Mr Smith. D) After the partnership assets are exhausted, Mr Smith can recover on his judgment from any of the remaining partners but not from Alison. E) Only the remaining partners, not Alison, have the right to recover anything they have to pay from the absconding partner.
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