Case Problem:
Haile owned an old roadside building that she believed could easily be converted into an antique shop. She talked to her friend Ann Marie, an antique fancier, and they executed the following written agreement: (1) Haile would supply the building, all utilities, and $100,000 capital for purchasing antiques. (2) Ann Marie would supply $30,000 for purchasing antiques, which Haile would repay to her when the business terminated. (3) Ann Marie would manage the shop, make all purchases, and receive a salary of $500 per week plus 5 percent of the gross receipts. (4) Fifty percent of the net profits would go into the purchase of new stock. The balance of the net profits would go to Haile. (5) The business would operate under the name “Roadside Antiques.”
Business went poorly, and after one year a debt of $40,000 is owed to Old Fashioned, Inc., the principal supplier of antiques purchased by Ann Marie in the name of Roadside Antiques. Old Fashioned sues Roadside Antiques, and Ann Marie and Haile as partners. What was the decision? Explain.
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.