A Good Reason Why Partners Should Spell-Out the Details of Their

question 173

Multiple Choice

A good reason why partners should spell-out the details of their partnership arrangements in writing is:

• A)The partnership is not a legally recognized business unless they do so.
• B)A written agreement will help reduce misunderstandings and disagreements among the partners.
• C)Putting the agreement in writing will limit the liability of each partner to a specified level.
• D)Doing so will make it easier to convert the business to a corporation at a later date.

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Definitions:

Capacity

The legal ability of a party to enter into a contract.

Severely Intoxicated

A state of being under the influence of alcohol or drugs to a significant degree, impacting cognitive and physical abilities.

Capacity

In law, the ability of an individual to enter into a contract, evidenced by their being of sound mind and of legal age, or by a business to enter into agreements.

Ratification

The act of giving formal consent to a treaty, contract, or agreement, making it officially valid.