Stan and Frank Have Started a General Partnership

question 40

Multiple Choice

Stan and Frank have started a general partnership. Stan has contributed 95 percent of the start-up capital and has the business experience and contacts, while Frank's primary contribution is the labor necessary to operate the business. Management decisions are jointly made. At the end of the year, the business has shown a $100,000 profit. Stan and Frank have no formal written partnership agreement.

• A) Stan is entitled to $95,000, and Frank gets $5,000.
• B) The RUPA mandates that each get $50,000.
• C) The RUPA mandates that Frank be paid a fair amount for his labor contribution and the remaining profits be split with 95 percent going to Stan and 5 percent going to Frank.
• D) The RUPA mandates that Frank be paid a fair amount for his labor contribution and the remaining profits be split equally between Stan and Frank.

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Definitions:

Preemption

A doctrine under which certain federal laws preempt, or take precedence over, conflicting state or local laws.

Police Powers

The inherent authority of a government to regulate behavior and enforce order within its territory, often for the protection of health, safety, welfare, and morals of its citizens.

Ninth Amendment

A part of the U.S. Constitution suggesting that the listing of specific rights in the Constitution does not mean that other rights not listed are denied to the people.

Dormant Commerce Clause

The Dormant Commerce Clause refers to the principle that state laws cannot unduly burden interstate commerce, derived from the Commerce Clause of the U.S. Constitution.