• Pam and Pat agree to open a gift shop.They agree that profits and losses will be shared equally.Pam and Pat each contribute $5,000 to the business and borrow $5000 from Pat's uncle.The business is successful but after two years, Pat decides that she wants to go to law school and she retires from the business.
• 1.Pam and Pat have formed a partnership _______________________________.(at will/ for a term)
• 2.The agreement between Pat and Pam __________________________ be in writing.(must/ need not)
• 3.Pat has the ____________________________________ to retire.(power but no right/power and the right)
• 4.When the partnership is dissolved __________________________ will receive $5000 before the others.(Pat/Pam/Pat's uncle)
• 5. If there are other debts, Pat and Pam will be personally ________________ (liabile/not liable).
• Sam, Sid, and Rod form a partnership for the purpose of operating an appliance store.The agreement says nothing about division of profits and losses.Sam and Sid work as salesmen; Rod keeps the books and provides the land for location of the store.Betty purchases a steam iron from the store.Sam tells her that the iron is guaranteed for four years and the store will replace any defective iron during the time.Rod is in some financial difficulty and he uses his partnership interest and the entire inventory of the business as collateral for a loan with First Bank.
• 6.Sam and Sid are automatically ____________________________ to asalaryfrom the business.(entitled/ not entitled)
• 7.Sam's promise to Betty__________________________bind the partnership.(did/ did not)
• 8.Sid and Rod are ______________________________liable to Betty.(jointly/not)
• 9.Rod ______________________ assign his partnership interest to the bank(can/cannot)
• 10.Rod _______________________ assign the store's inventory to the bank.(can/ cannot)