2. Sally and Tom decide to go into business, which they call “Pelatone,” which manufactures and...

2. Sally and Tom decide to go into business, which they call “Pelatone,” which manufactures and sells exercise bicycles. They sign a partnership agreement that requires Sally to contribute $100,000 and Tom to contribute $140,000 in capital to start the firm. The partnership agreement says nothing about the management of the firm or the division of profits. Without Sally’s knowledge, Tom informs the owner of United Wheel Co, that he represents the Pelatone and signs a large contract with United to buy wheels to be used on Pelatone’s bicycles. In its first year of operations, Pelatone makes a profit of $240,000.

1. What are the Tom’s and Sally’s rights with respect to the management of the firm?

2. Is Pelatone bound to the contract with United? Why or why not?

3. How should Pelatone’s first year’s profits be divided between Tom and Sally? Why?

Expert Solution

1. Since the contract does not specify anything clearly about the the management of firm, hence it is by default assumed that Tom and Sally will be equally responsible and have equal rights for the management of firm. In the absence of any clear specifications mentioned in the contract, equal rights are provided by default to both the partners.

2. In my opinion, Pelatone is not bound by the contract with United since the contract was signed by Tom without any knowledge of Sally. Since both the partners were not aware about such a contract and both the partners have equal rights on the management of firm, hence this contract shall be treated as null and void.

3. Pelatone's first year profits shall be divided in a similar ratio as per the contributions made by both the partners in staring the firm. This is because in the absence of clarity in the contract about division of profits, it is by default assumed that profits are to be divided in the ratio of capital invested in the firm by both the partners. In this case, since Sally has invested $100000, hence she would get $100000 in profits and Tom shall get $140000 in profits as he had invested $140000.

keosha answered 4 months ago

True or false 1. Sally writes a check "Bill and Tom". Both Bill and Tom must...

True or false 1. Sally writes a check "Bill and Tom". Both Bill and Tom must indorse that check for it to be negotiable. 2. ABC, Inc. sues Tess, its tenant, for unpaid rent. Tess withheld rental payments because ABC failed to rid her apartment of cockroaches. Tess cannot countersue ABC because she should have filed a lawsuit againt ABC first. 3. All offers to purchase real estate must be in writing in order to be binding. 4. Instruments that...

QUESTION THREE Sally has decided to go into business to make and sell organic, home-made playdough...

QUESTION THREE Sally has decided to go into business to make and sell organic, home-made playdough that is safe for children if they eat it. Business is going well and she incorporates the business, calling it Funtime Pty Ltd (‘Funtime’). Sally appoints herself as the Managing Director, and her husband Brad as a second director. To ensure her privacy, the registered office of the company is the address of her accountant’s firm (a common service the firm provides for its...

Mike, Matt, Brooke, and Kellie decide to go into business together. The form a limited partnership...

Mike, Matt, Brooke, and Kellie decide to go into business together. The form a limited partnership where Mike, Matt, and Brooke are the limited partners. They contribute the following amounts: Mike - 25,000 Matt - 10,000 Brooke - 10,000 Kellie - 5,000 Additionally, the partnership agreement states that all profits are to be distributed equally. Mike will perform high level management services for the company and will be paid $130,000 a year for those services. The company will be able...

Tailoring experts Frieda Oglesby, Rena Fitts, and Will Bertrand decide to go into business together. Their...

Tailoring experts Frieda Oglesby, Rena Fitts, and Will Bertrand decide to go into business together. Their business, FitzWellby, is a business that provides in-home measuring and fittings and even on-site stitching to busy executives who don't have time to take their clothing to tailor shops. Since all three have the same skills, they plan to share the profits of the business equally. At first, Oglesby believes that their business is unlikely to be sued for any reason—after all, they're just...

Henry and Jacob have been friends for many years and decide to go into business together....

Henry and Jacob have been friends for many years and decide to go into business together. Henry is 25 years old and Jacob has just turned 17 years old two weeks ago. The have now saved up enough money to purchase a Macbook from Simon, their mutual friend, to start a graphic design business. Henry and Jacob approach you to advice on the following: 1.3 Assume the parties go to see Simon and agree that: a) They will purchase the...

Tom Wilson is the operations manager for BiCorp, a real estate investment firm. Tom must decide if...

Tom Wilson is the operations manager for BiCorp, a real estate investment firm. Tom must decide if BiCorp is to invest in a strip mall in a northeast metropolitan area. If the shopping center is highly successful, after tax profits will be $100,000 per year. Moderate success would yield an annual profit of $50,000, while the project will lose $10,000 per year if it is unsuccessful. Past experience suggests that there is a 40% chance that the project will be highly successful, a 40%...

Getting an error: ERROR: is/2: Arguments are not sufficiently instantiated /* Go predicate Call as...

Getting an error: ERROR: is/2: Arguments are not sufficiently instantiated /* *Go predicate * Call as follows: * ?- go(state(3,3,w),state(0,0,e)). */ go(Start,Goal) :- empty_stack(Empty_visited_stack), stack(Start,Empty_visited_stack,Visited_stack), path(Start,Goal,Visited_stack). /* * path predicates */ path(Goal,Goal,Visited_stack) :- write('Solution path is:' ), nl, write(Visited_stack). path(State,Goal,Visited_stack) :- move(State,Next_state), not(member_stack(Next_state,Visited_stack)), stack(Next_state,Visited_stack,New_visited_stack), path(Next_state,Goal,New_visited_stack). safe(M1,C1) :- (M1 =< C1; C1 = 0), M2 is 3-M1, C2 is 3-C1, (M2 =< C2; C2 = 0). /* * move...

Eve and Tom own 40% and 60%, respectively, of the ET Partnership, which manufactures clocks. The...

Eve and Tom own 40% and 60%, respectively, of the ET Partnership, which manufactures clocks. The partnership is a limited partnership, and Eve is the only general partner. She works full-time in the business. Tom essentially is an investor in the firm and works full-time at another job. Tom has no other income except his salary from his full-time employer. During the current year, the partnership reports the following gain and loss: Ordinary loss 140,000 Long-term capital gain 20,000 Before...

1) Paula Corporation owns all of the voting common stock of Sally Company. Sally manufactures toys...

1) Paula Corporation owns all of the voting common stock of Sally Company. Sally manufactures toys and sells them to Paula. In turn, Paula sells them to customers. Neither of these companies do anything else. At the beginning of 2012 neither company had any inventory. During 2012 Sally manufactured 120,000 toys and sold 100,000 of them to Paula for $10 each and Paula sold 90,000 of these toys to customers for $16 each. These toys had cost Sally only $7...

Sally has a call option on one share of Ultra with a strike price of $40...

Sally has a call option on one share of Ultra with a strike price of $40 and a call option on one share of Boone with a strike price of $25. George has a call option on a portfolio that has one share of Ultra and one share of Boone. The strike price on George's call option is $65. These options are all expiring today. a. If Ultra is selling for $50 and Boone for $15, what is the value...

Question