Question

Beierling conceived a plan to develop educational software for teachers. after sharing her idea with Katie Urbain and Maureen Clinesmith, the three women formed a partnership. The partner- ship planned to stream online games into classrooms through paid subscriptions. Clinesmith initially loaned the partnership $10,000 and the three decided to receive equal portions of the profit, after the repayment of Clinesmith’s loan. after several months, the partnership began to have problems. Clinesmith and Beierling told Urbain that she was no longer a partner and blocked her access to the partnership e-mail account. They dissolved the partnership, which never made a profit. while winding up the affairs of the partnership, Clinesmith assessed the value of partnership’s limited assets and assumed ownership of the assets, since they were less than the $10,000 loan she made to the partnership. Urbain sued Clinesmith and Beierling, stating that the partnership was wrongfully dissolved and that she was entitled to damages. was she correct?

Answer 1

No , Urbain was not correct.

EXPLANATION

FACTS OF CASE:

CLINESMITH HAD INITIALLY LOANED TO HER PARTNERSHIP FIRM $10000 BUT DUE TO SOME DISPUTES THE PARTNERSHIP WAS DISSOLVED. EVEN THE PARTNERSHIP FIRM NEVER MADE A PROFIT .

CLINESMITH ASSESSED THE VALUE OF PARTNERSHIP'S LIMITED ASSETS AND ASSUMED OWNERSHIP OF ASSETS,SINCE THEY WERE LESS THAN LOAN VALUE.URBAIN SUED CLINESMITH AND BEIRLING , STATING THAT PARTNERSHIP WAS WRONGFULLY DISSOLVED AND THAT SHE WAS ENTITLED TO DAMAGES.

PROVISO:

ACCORDING TO PARTNERSHIP ACT , 1932 . A PARTNERSHIP FIRM CAN GET DISOLVED -

1. By Agreement

2. Compulsory Dissolution

3. Dissolution on the happening of contingent event

4. Dissolution by notice

HERE PARTNERS HAVE MUTUALLY DECIDED TO DISSOLVE THE PARTNERSHIP FIRM AS IT HAS NOT INCURRED ANY PROFIT AND ALSO DUE TO CONFLICT BETWEEN PARTNER.

THE PARTNERSHIP ACT ALSO PROVIDES THAT WHILE DISSOLVING PREFERENCE IS GIVEN TO PARTNERS LOAN COMPARED TO PARTNERS CAPITAL . SO CLINESMITH WAS RIGHT FOR ACCESSING THE ASSETS.

A PARTNER CAN BE REMOVED MUTUALLY BY CONSENT OF MAJORITY OF PARTNER IN INTEREST OF PARTNERSHIP FIRM. IF URBAIN WAS REMOVED FOR SUCH REASON THEN IT WAS RIGHT.

CONCLUSION:

AS PER THE ABOVE FACTS, URBAIN WAS NOT ENTITLED TO DAMAGES