Question

4. Robin and Boi, best friends since second grade have begun a newsletter or Palabra for fans of their local poetry scene. Though they have kept their day jobs, they spend most of their free time together producing the Palabra, which they create each week in the garage of the house they rent together. They distribute it for free but earn revenue through sales of advertising, and more often than not break even or even turn a small profit. Their dreams are much bigger though, and plan for it eventually to be their sole employment. The Palabra was initially Robin's idea, and he put the first several issues together by himself in his dorm room while still in college. When he told Boi about it she asked if she could help, and said "Just tell me what to do... I don't know anything about this kind of stuff, so I'll just do whatever you tell me to do. They then bought some printing equipment to do a more professional job deciding between themselves to *go half and half on the cost. They both worked on the actual production of each issue, made sales of advertising space, and made deliveries of the Palabra to newsstands, bars and coffee shops. Robin and Boi don't keep formal books (except for the checkbook of their joint checking account, in which Robin deposits checks from advertising clients, and from which he pays expenses), and they have never written down any sort of agreement between themselves. Boi's uncle Samir, a well-heeled retiree, was sad to hear that money had been tight, and he made two offers to help the Palabra. First, Samir offered to give Boi and Robin the use of $5000 in cash to cover expenses. When Boi insisted that the offer was too generous, Samir said "hey, don't worry mijo. Pay it back when you can. I'm proud of you. Second, he introduced them to a friend named Petral, who runs a local bookstore that has nightly poetry slams. Samir gave Boi Petra's business card and, to make a long story short, Robin and Boi were able to use Samir's name as their introduction and land a lucrative advertising contract for the store. As a down-payment, Petra sent them a check for $1500. For reasons that remain unclear, however and just shortly after striking their deal with Petra, Boi and Robin closed down their business and absconded with Petra's $1500. Samir being the only viable defendant left to sue, Petra sues him. a.) What business model do Robin and Boi have? b.) Does the fact pattern indicate that Boi really anticipated no ownership or managerial responsibility? c.) What liability and decision making powers do each of the parties have?

Business Law Class

Answer 1

Answer A= The business model that was formed in the given case was a Partnership firm as both the friends decided to share 50-50 percent of initial investments. A partnership firm is the business form in which two or more parties come together to start the business or a new venture.

Answer B= being the partner of the partnership firm and also taking part in the normal operations of the small business, it is clear that there was clear indications that Boi will have to participate in the various managerial or ownership related activities. Boi has a joint account with the friend, manages the account and other expenses and shares the profit that is being generated. At the same time, they also share the work of publishing the newsletter.

Answer C= As Boi and Robin are the members of the partnership firm and as Boi depends on the direction of Robin to perform the different activities in the publishing of the newsletter, so Boi is mainly responsible for the work assigned by Robin and as she also contributed 50% of the investment so she has the equal liability as that of Robin.

Robin is the overall in charge of managerial and administrative decision making and he is also liable for 50% of liability.