Case Study : Albert And Baker

1152 Words Dec 27th, 2014 5 Pages
1. Albert and Baker have considered the merits of forming the company as a general partnership, thus a co-ownership of a business for profit. Under the Uniform Partnership Act, hence a model act that codifies partnership law, Albert and Baker’s respective rights to any profits of the company would be an equal share. According to Cheeseman, “Partnership agreements often provide that profits and losses are to be allocated in proportion to the partners’ capital contributions. The right to share in the profits of the partnership is considered to be the right to share in the earnings from the investment of capital” (2007, p. 298). For instance, let’s assume that Albert contributes $50,000 capital, and Baker contributes $75,000 capital and the partnership makes $150,000 in profit. According to the UPA, Albert and Baker would share the profits equally, thus allocating $75,000 to each. In addition to sharing a profit, Albert and Baker each have a right to participate in the management of the partnership and an equal vote in management decisions of the company. Therefore, Albert and Baker have the right to one vote, regardless of their contribution or share in the partnership’s profits.

2. Considering Albert and Baker were to form a general partnership, this type of business entity would impact each partner on a personal basis with regards to any liabilities owed by the new company. A tort, thus a wrong, can be a negligent act, a breach of trust, breach of fiduciary duty,…
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