[Parental Involvement] Lexie and Fernando, Both Artists, Discussed Forming a Partnership

question 48

Multiple Choice

[Parental Involvement] Lexie and Fernando, both artists, discussed forming a partnership to paint portraits. Fernando's parents were interested in investing in the partnership, but they wanted to avoid any liability. Fernando suggested forming a limited partnership. He told Lexie and his parents that they could do it very informally, that an oral agreement was sufficient, and that the parents would be protected from liability. However, Lexie insisted that a certificate of limited partnership be filed with the secretary of state, over Fernando's objection that it was a waste of money. After a few months, Lexie and Fernando decided that they wanted to add a new partner, Melissa, to the partnership as a general partner. Melissa had some expertise in the portrait field but she had also had some scrapes with local law enforcement. Fernando's parents objected strenuously to the admission of Melissa. Lexie and Fernando took the position that the parents, as limited partners, had no say in the admission of a new partner. Fernando's father, who had an interest in painting and was concerned that the partnership was not making very much money, decided to start coming to the partnership studio to manage the business and attempt to bring it into profitability.
-Which statement is true regarding the issue of Fernando's father deciding to manage the partnership?

• A) Before he can undertake management duties, he must get the approval of at least one half of all general and limited partners.
• B) There is no effect on the partnership agreement.
• C) He may be involved in all matters of management except strategic planning.
• D) He may be involved in management; but, as a limited partner, he may not be paid additional amounts for doing so.
• E) As a limited partner, he may not be involved in management and retain limited liability.

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Definitions:

Minnesota Multiphasic Personality Inventory

A widely used psychological assessment tool that evaluates personality traits and psychopathology.

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A psychological test in which subjects' perceptions of inkblots are recorded and then analyzed using psychological interpretation, complex algorithms, or both.

Pleasure Principle

A psychoanalytic concept proposing that individuals seek immediate gratification to avoid discomfort, driving much of their behavior.

Reality Principle

A psychoanalytic concept describing the capacity to postpone gratification and operate according to the conditions of the external world.