In Violation of Their Contract, a Partner Quits a Partnership

question 265

Multiple Choice

In violation of their contract, a partner quits a partnership and goes into competition with her old partner. The old partner may ask the court for:

• A) compensatory damages requiring her to return to work with her old partner
• B) an injunction to prevent her from working in competition with the old partner
• C) special damages under the rule of Hadley v. Baxendale
• D) liquidated damages in compensation for the breach
• E) none of the other choices are appropriate

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded when they are actually received or paid out in cash.

IRR

The Internal Rate of Return is a financial measurement tool used to assess the profitability of prospective investments.

Accounting Basis

The method used to record financial transactions; common methods include cash basis and accrual basis accounting.

Scenario Analysis

A method of evaluating potential future scenarios by contemplating various possible results, often used for strategic planning purposes.