Business Law Question:

On August 2018, Alex and Karen, friends who shared their love of healthy foods and nutrition, opened up a health food grocery in Chicago selling organic and environmentally conscious foods and nutritional supplements. Karen had no previous experience in retail, but Alex worked for a long time as a manager at a Whole Foods. Karen provided $100,000 in capital contribution to start, and she and Alex agreed that in lieu of his capital contribution in cash, Alex would run the day-to-day operations, and that they "would be equal partners." The business was popular and profitable, and operated under the name "A&K Health Foods" (A&K). Although Alex and Kare did not have a written partnership agreement, the business was a success, and they shared in the profits and liabilities equally.

From day one, A&K rented the

building that the store was located in. Karen helped throughout the store only

when needed at first, but Alex ran the store operations, including the hiring

and buying. By the end of the first year, both Alex and Karen grew comfortable

in Karen's role as more of a "silent partner," although she and Alex

spoke periodically to discuss the business.

After business turned promising

enough to plan for A&K's longer term business prospects, Alex and Karen wanted

to buy the building they were in. Alex asked the owner of their building, an

elderly gentleman who talked about moving closer to his kids in Florida,

whether he would sell the building to them. Alex asked him several times over a

period of two years, but the owner repeatedly said the building was not for

sale.

One month ago, the building owner

visited the store and said to Alex, "I'm planning to retire and would like

to see if you're still interested in buying the building. You've been such a

good tenants. I'll sell the building below market value if you still want

it." Alex replied, "Yes, but may we have a week to think about

it?"The building owner agreed.

Five days later, Alex texted Karen

the following:

Hey K - I've been doing a lot of

soul searching, and decided that I am withdrawing from our partnership. I will

wind up the partnership's business and send you a check for half your share. I

promise to do this fairly and apologize for telling you this over text.

Karen did not reply.

Without letting Karen know, Alex called

the building owner five minutes after he sent the text to Karen and made an

offer for the building. The building owner accepted, and he and Alex entered

into a contract for the purchase/sale of the building. Four weeks later, Alex took

ownership and title to the building, and two weeks ago, Alex sent to Karen a

check for half the total dissolution distribution and explained everything to Karen

in a letter, in which he included a full accounting of dissolution.

After receiving the check, Karen sent

Alex the following text:

Dude - WHAT?! I got your check, but

I'm not cashing it. I never agreed to end the partnership. Not right that that

you did this without talking to me first! And then purchased OUR building

without me! It is OUR building, so you should the title to the building should

be in OUR partnership. Can you even end the partnership by yourself? What makes

you think you can do that? I paid all the money to start our business, and now

you're gonna throw me over the bus like this? By giving me only half of what's

left?

Alex replied by text:

I am so, so sorry, K. I needed a

change in my life. I loved working with you, but feel like I had to do

something on my own. I enjoyed our partnership, but it is dissolved, and I've

moved on. Please understand and do the same.

Alex then proceeded to operate the

store as "A's Health Foods," with the same employees and selling the

same products.

Karen sues Alex for withdrawing

from the partnership and for breaching his partner duties.

QUESTION:

1.Assume that Alex's withdrawal was not unlawful and that the following are the valuations for winding up:

Liabilities to creditors are $40,000;

Outstanding receivables are $30,000; with $10,000 of this received by the time winding up is completed

Equipment, furniture, fixtures, and stock are $300,000

Losses are $20,000

Karen's capital contribution totaled $100,000, and also loaned the partnership $10,000 interest-free to buy a replacement freezer.

If Alex calculated Karens check correctly, how much was the check Karen received?