Adam Is Lending $50 000 to a Partnership Being Carried

question 34

Essay

Adam is lending $50 000 to a partnership being carried on by Selma and Jennifer.The arrangement he has with them is that they will pay him back out of their annual profits.Selma and Jennifer will decide how much to pay back out of profits in each year.Interest of 10 percent per year will have to be paid on whatever amount is outstanding after the payment of the profit share in each year.He is content with this rather uncertain arrangement because he does not need the money currently and the 10 percent return is a good rate.In order to protect his investment, he wants Selma and Jennifer to enter into a contract that requires them to continue carrying on the partnership business and to make monthly reports to him.Adam is concerned that he may be considered a partner in the business.Is he? Is there anything he can do to reduce the risk of being found a partner?

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Definitions:

Genus

In biology, a rank used in the classification of organisms that groups together species sharing common characteristics; in logic, it refers to a general term that describes a broad category.

Differentia

This refers to the traits or attributes that allow us to distinguish between different species within the same genus.

Genus

In biology, the rank in the classification hierarchy that is above species and below family, used to group species that share common characteristics.

Writing Utensil

An instrument or tool used for writing, such as a pen, pencil, marker, or stylus.