1. What kind of business organization are Caleb and Anna operating under now?
A sole proprietorship.
A general partnership.
A limited partnership.
A corporation.
2. Suppose the agreement that was written does not say anything about how the partnership was to be run, how would the courts determine how the business is controlled?
Each partner would have equal votes as to the operation of the partnership.
Voting would be apportioned to the amount of capital each had invested.
Voting would be apportioned to the amount of time that each has spent running the partnership.
Control would be solely in the hands of the partner the court determined was the "principal partner."
3. If Anna originally invested $5,000 and Caleb invested $1,000 in the business, and the business made a profit of $60,000, how would the profit be split?
If the partnership agreement tells how the profits will be split, then they will be split using the terms of the agreement.
If the partnership agreement does not tell how the profits will be split, then they will be split evenly ($30,000 to both).
Regardless of what is in the partnership agreement, Anna will get $50,000 of the profit and Caleb will get $10,000.
Both "If the partnership agreement tells how the profits will be split, then they will be split using the terms of the agreement" & "If the partnership agreement does not tell how the profits will be split, then they will be split evenly ($30,000 to both)" are correct.
4. Assume that Wizard Internet is operating as a general partnership, what is Caleb's personal tort liability for Anna's actions within the scope of the business?
Caleb is personally jointly and severally liable along with Anna.
Caleb is personally liable only to the point where Anna could not pay damages.
Caleb would only be personally responsible for his own actions, not those of Anna.
Since it is a partnership, neither would have personal liability. Only the business itself would have liability.
5. Assume that Wizard Internet is allowed by state law to form a Limited Liability Partnership. If Anna and Caleb were to do so which of the following is incorrect?
The profits from Wizard Internet would pass through to the partners.
If Anna were to commit an act of malpractice, Caleb would be liable as well.
The operation would be similar to that of a general partnership.
The company must be formed through compliance with state statutes.