Analysis of Legal Questions - Assignment Example

Analyses of Legal Questions Daniel is the owner of a chain of shoe stores. He hires Rubya to be the manager of a new store, which is to open in Grand Rapids, Michigan. Daniel, by written contract, agrees to pay Rubya a monthly salary and 20 percent of the profits. Without Daniel's knowledge, Rubya represents himself to Classen as Daniel's partner and shows Classen the agreement to share profits. Classen extends credit to Rubya. Rubya defaults. Discuss whether Classen can hold Daniel liable as a partner. Classen can hold Daniel liable as a partner because Rubya receives a 20% share of the profits in addition to a monthly salary. Therefore, since Daniel gives Rubya a salary—even though Classen does not know that Rubya is not a full partner, he is a partial partner. This means that Classen can still hold Daniel at least partially liable as a business partner. Unfortunately for Daniel, this means that—even though Rubya misrepresented himself regarding the percentage of the profits they shared—Daniel and Rubya are still seen as partners and therefore Daniel is liable for Rubya having defaulted. Meyer, Knapp, and Cavanna establish a partnership to operate a window washing service. Meyer contributes $10,000 to the partnership, and Knapp and Cavanna contributes $1,000 each. The partenship agreement is silent as to how profits and losses will be shared. One month after the partnership begins operation, Knapp and Cavanna vote, over Meyer's objection, to purchase another truck for the firm. Meyer believes that because he contributed $10,000 the partnership cannot make any major commitment to purchase over his objection. In addition, Meyer claims that in the absence of any provision in the agreement, profits must be divided in the same ratio as capital contributions. Discuss Meyer's contentions. 
 Wherever there are inequitable amounts of money being placed into a partnership, there is bound to be conflict. First of all, since Meyer contributed $10,000 to the partnership, that does not necessarily mean that Knapp and Cavanna can’t vote in order to purchase another truck for the firm. Since they are in a partnership without a set agreement, basically it is like the Wild Wild West—everything is fair game. Just because there is an absence of provision in the agreement that was made regarding profits, does not mean that profits must be divided in the same ratio as capital contributions. Obviously, they all have some agreements to make in order to assure that everyone is satisfied with the partnership. James Carpenter contracted with Austin Estates, LP, to buy property in Texas. Carpenter asked Sandra McBeth to invest in the deal. He admitted that a dispute had arisen with the city of Austin over water for the property, but he assured her that it would not be significant obstacle. McBeth agreed to invest $800,000 to hold the option to buy the property. She became a limited partner in Stone Lake Ranch, LP. Carpenter acted as the firm's general partner. Despite his assurance to McBeth, the purchase was delayed due to the water dispute. Unable to complete the purchase in a timely matter, Carpenter paid the $800,000 to Austin Estates without notifying McBeth. Later, Carpenter and others-excluding McBeth-bought the property and sold it at a profit. McBeth filed a suit in a Texas state court against Carpenter. What is the nature of the fiduciary duty that a general partner owes a limited partner? Did Carpenter breach that duty in this case? Explain. Carpenter and his partners breached his duty to share in the profits with Sandra McBeth. He can’t just use her $800 thousand dollars without getting her permission, since it was her money in the first place. He gave the money to Austin Estates, LP, without consideration for Ms. McBeth’s financial situation. Here she had lent money to help Mr. Carpenter complete his project, and then when he couldn’t get what he wanted he spent the money anyway once he could get something he wanted. This is not just my personal view—it is the legal view on how things should be done and matters should be conducted. Therefore, McBeth has the right to sue against Carpenter for neglecting his duty of care towards her. 
 John, Lesa, and Tabir form a limited liability company. John contributes 60 percent of the capital, and Lesa and Tabir each contributes 20 percent. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60 percent of the profits, in accordance with his contributions. Lesa and Tabir, however assume that the profits will be divided equally. A dispute over the profits arises, and ultimately a court has to decide the issue. What law will the court apply? In most states, what will result? How could this dispute have been avoided in the first place? Discuss fully. The law that the court will apply will definitely come from the application of the law with regard to the state. Since the partners all formed a limited liability company, just because John assumes he will get 60 percent of the profit for having donated 60 percent of the money to the cause, this is not a logical assumption. It might be a natural assumption, but, when a limited liability company forms, it is not necessarily the duty of the company to divide the profits with the ratio of who invested what into the company—unless an agreement was written down on paper, which could have avoided problems. Since a court can only go by official records, in most states, the courts would probably find for Lesa and Tabir here. Walter Van Houten and John King formed 1545 Ocean Avenue, LLC, with each managing 50 percent of the business. Its purpose was to renovate an existing building and construct a new commercial building. Van Houten and King quarreled over many aspects of the work on the properties. King claim that Van Houten paid the contractors too much for the work performed. As the projects neared completion, King demanded the LLC be dissolved and that Van Houten agree to a buyout. King sued for dissolution. The trail court enjoined (prevented) further work on the projects until the dispute was settled. As the ground for dissolution, King cited the fights over management decisions. There was no claim of fraud or frustration of purpose. The trail court ordered that the LLC be dissolved, and Van Houten appealed. Should either of the owners be forced to dissolve the LLC before the completion of its purpose-that is, before the building projects are finished? Explain. The court should not force either of the owners before the completion of the building projects unless there is reasonable cause that something unlawful is occurring. “Most state LLC statutes provide for the dissolution of an LLC upon the death, disability, bankruptcy, or withdrawal of a member” (“Limited Liability Companies, 2011, pgh. 1). Since neither member has withdrawn, the LLC is still viable and should not be forced to close. REFERENCES Limited liability companies. (2011). Available: . Read More