ECIVALDO JOHN SANTOSBUL 4222

WRITING ASSIGNMENT 3

INSTRUCTIONS: This writing assignment must be typed. It must be turned in on time. You may use your text to answer the questions. Your answer should thoroughly discuss the law and any applicable exceptions. You do not need to consult any other source other than your text in order to answer these questions, but you may do so.

Note: I do NOT want you to discuss every rule you have learned that even remotely applies to the facts. Make sure you answer the question(s) asked. Please submit your responses via Blackboard per the instructions there. Try to keep your answers short BUT complete.

Please review the “Legal Analysis” document posted in the “Course Information” content area of Bb before you begin and while you are preparing your responses to these problems. The most important thing here is for you to support your responses with a rule, a fact, a case, something. In other words, I am not looking for your opinion; I am looking for a well thought-out response.

1. In 1990, Jones and Smith entered into a partnership for the purpose of raising cattle and hogs. The two men were to share equally all costs, labor, losses, and profits. The business was started on land owned initially by Smith's parents but later acquired by Smith and his wife. No rent was ever requested or paid for use of the land. Partnership funds were used to bulldoze and clear the land, to repair and build fences, and to seed and fertilize the land. In 2000, at a cost of $2,487.50, a machine shed was built on the land. In 2005, a Deere unit was built on the land at a cost of $8,000. When the partnership dissolved in 2008, Jones paid Smith $7,500 for the “removable” assets; however, the two had no agreement regarding the distribution of the barn and the Deere unit. Jones sues Smith, claiming he is entitled to one-half of the value of the two buildings. Is Jones entitled to one-half of the value of the two buildings? Explain

The answer is “yes!”

Even though the partners had no agreement regarding the disposition of fixed assets upon dissolution of the partnership, the plaintiff Jones should be entitled to one-half of the value of the two buildings at the time of dissolution of the partnership.

In the absence of a partnership agreement (oral or written) state statutes govern the partner rights. Each Partner has right to equally share partnership interest in a property acquired with partnership funds. So all properties or improvement made during the partnership is partnership property.

Why?

A partnership arises from an agreement, express or implied, between two or more persons to carry on a business for a profit. Partners are co-owners of a business and have joint control over its operation and the right to share in its profits.

ECIVALDO JOHN SANTOSBUL 4222

Agency Concepts and Partnership Law:– Each partner is deemed to be an agent of the other.– There may be imputation of liability.– Each partner is a fiduciary of the other.– Partners are agents and fiduciaries of one another, but differ from agents in that

they are also co-owners and share in profits and losses

Rights of Partners: In the absence of a partnership agreement (oral or written) state statutes govern the partner rights:

Property Rights - Each partner has a property right, which includes:– An interest in the partnership.– A right in specific partnership property.– A right to participate in the management of the partnership, as mentioned above.

Each Partner has right to equally share partnership interest:

– A proportionate share of the profits earned and a return of capital on the partnership's termination.

– What she originally brought into the partnership, or

– Acquired on account of the partnership, or

– Purchased with partnership funds.

2. Joe and Sue Hill were involved in the operation of Joe’s Hamburger Joint in Miami, State of Nowhere, from the day their parents opened it in 1928. By 1979, Joe, Sue and her husband Jim were running it. The business was a corporation with Joe and Sue each owning half of the stock. Joe died in 2001, leaving his stock in equal shares to his sons, Joe and Mike. Son Joe never worked there. Mike did occasional maintenance work until his father’s death. Despite their lack of participation, the sons were paid more than $900 per week each. In 2000, Sue’s son Lawrence, who had graduated with a degree in restaurant management, that he earned while working part-time at the restaurant, took over its management. When his cousins became threatening, he denied them access to the business and its books. Sue refused Gregg and Joe’s offer of about $1.4 million for her stock in the restaurant, and they refused her offer of about $800,000 for theirs. They filed a suit against her, claiming, among other things, breach of fiduciary duty. Should the court order the aunt to buy out the nephews or the nephews to buy out the aunt, or neither? Why?

ECIVALDO JOHN SANTOSBUL 4222

Yes, the court should order the aunt to buy out the nephews. The reasons are that the nephews did occasional maintenance work until their father’s death. Neither one of them volunteered to take any responsibility in running the restaurant and neither one of them have any relevant restaurant experience. Meanwhile, Sue’s son Lawrence, who graduated with a degree in restaurant management while working part-time at the restaurant, has plenty of experience in running the business. Also, his mother Sue, who has been involved in the restaurant operations since the beginning, has more experience than the nephews to run the restaurant operations.The nephews claimed breach of fiduciary duty. It’s not the case here. A fiduciary duty is an obligation to act in the best interest of another party. In this case, Sue and her son Lawrence have been managing the business professionally, acting in everyone’s best interest.

Based in all these reasons and in the fact that all parties were looking for the same remedy, to buy each other share of the business, the court should order the aunt to buy the nephews share in the restaurant.