Reference - Fish Fiasco

question 98

Multiple Choice

Reference - Fish Fiasco. Matt agreed to be a limited partner in Susie and Bill's business of importing tropical fish. Matt contributed $10,000 to the partnership as his capital contribution. The partnership made a profit of $30,000 the first year. Matt was paid nothing. When he inquired, Susie told him that a limited partner was only entitled to a share of profits as approved by the general partners and that perhaps things would be better the next year. The next year, however, importation was banned because of a fish disease, and the partnership lost money and owed debts of $60,000. At the end of the year, Susie and Bill asked Matt to contribute $20,000 to cover the debts. When Matt complained about the amount, Bill told him that he and Susie were being overly reasonable and that he was legally liable for an even larger percentage. In an attempt to keep the business afloat, Matt told Susie and Bill that they should consider suing a customer who had not paid a large account. Susie and Bill replied, however, that they were morally opposed to lawsuits and that they had the final say on litigation. Assume that legally Matt has the rights and liabilities of a limited partner. Which of the following is true regarding Matt's entitlement to sue on behalf of the partnership?

• A) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring the suit.
• B) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring suit but only after obtaining the permission of all general partners.
• C) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring suit but only after obtaining the permission of a majority of the general partners.
• D) A limited partner has no rights to bring suit on behalf of the partnership.
• E) A limited partner has a right to bring suit on behalf of the partnership only if the litigation is in an amount of over $75,000 and then only with the permission of all general partners.

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Definitions:

Wage

The fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to a manual or unskilled worker.

Rent

The price paid for the use of property or land, typically agreed upon between the owner and the user for a specified period.

Net Wealth

The total value of all financial and non-financial assets owned by an individual or company minus the total of all its outstanding liabilities.

Consumption

The process by which goods and services are used up or utilized, reflecting household spending.