Reference - Parent Involvement

question 70

Multiple Choice

Reference - Parent Involvement. Marcy and George, both artists, discussed forming a partnership to paint portraits. George's parents were interested in investing in the partnership, but they wanted to avoid any liability. George suggested forming a limited partnership. He told Marcy and his parents that they could do it very informally, that an oral agreement was sufficient, and that the parents would be protected from liability. Although George protested strongly on the basis that it was a waster of money, Marcy insisted that a certificate of limited partnership be filed with the secretary of state. After a few months, Marcy and George decided that they wanted to add a new partner, Betty, to the partnership as a general partner. Betty had some expertise in the portrait field but, unfortunately, she had also had some scrapes with local law enforcement. George's parents objected strenuously to the admission of Betty. Marcy and George took the position that the parents, as limited parents, had no say in the admission of a new partner. George's father, who had an interest in painting and was concerned that the partnership was not making very much money, decided to start coming to the partnership studio to manage the business and attempt to bring it into profitability. Which of the following is true regarding the issue of George's father deciding to manage the partnership?

• A) Before he can undertake management duties, he must get the approval of at least one half of all general and limited partners.
• B) There is no effect on the partnership agreement.
• C) He may be involved in all matters of management except strategic planning.
• D) He may be involved in management; but, as a limited partner, he may not be paid additional amounts for doing so.
• E) As a limited partner, he may not be involved in management and retain limited liability.

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Definitions:

Complaint

A formal written document that begins a civil lawsuit; contains the plaintiff’s list of allegations against the defendant along with the damages the plaintiff seeks.

Defendant

An entity, whether a person, corporation, or institution, facing legal action in a court.

Plaintiff

The party who initiates a lawsuit by filing a complaint with the court against the defendant, seeking legal remedy for an alleged grievance.

Mediators

Individuals or parties appointed to negotiate or resolve disputes between two other parties in a conflict.