[Grooming Grievances] Andrew, Marie, and Cruz Formed a Partnership to Groom

question 71

Multiple Choice

[Grooming Grievances] Andrew, Marie, and Cruz formed a partnership to groom dogs. Because they were good friends and anticipated making a profit sufficient to compensate all partners well, the articles of partnership did not allocate profit or losses. Marie was appointed managing partner. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. Cruz claimed that he should not have to share in losses because he had groomed more dogs than anyone. Cruz also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his extensive work. Marie claimed that she should not have to share in losses because she contributed more capital than did either of the others. Andrew claimed that he should not have to cover the losses because both Marie and Cruz had been hiding the books from him. He demanded to inspect the books and also to review a listing of all partnership assets and profit statements listing distributions to partners. Marie and Cruz denied that they had been hiding the books and claimed complete innocence of any wrongdoing.
-Is Andrew entitled to a review of all partnership assets and profit statements listing the distributions to partners?

• A) Yes, because partners are always entitled to an accounting.
• B) No, because there is no evidence that one of the other partners failed to disclose a profit or benefit earned from the partnership.
• C) Yes, if he can establish that a review would be just and reasonable.
• D) No, because he had not been appointed the managing partner.
• E) No, because there is no evidence that one of the partners committed fraud against the partnership.

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