John Elliott and James Gardiner Form a Partnership to Buy

question 62

Multiple Choice

John Elliott and James Gardiner form a partnership to buy, repair and sell used cars. John is to do all the work; James supplies $10,000. They sign a limited partnership agreement limiting James's liability to $10,000 but do nothing else with the agreement. Which of the following statements is true?

• A)A partners' liability can never be limited to $10,000
• B)James's liability could be limited but the failure to publicly register the limited partnership makes the limitation ineffective.
• C)James's liability is limited to $10,000 because he is a limited partner in the partnership agreement.
• D)Both A and B
• E)None of the above.

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