Question

Partnership 1 Anthony Baldwin, Reginald Turner, Stephen Hines, and Celeste Richards were all business graduate students at Tennessee State University. They were anxious to start some kind of business venture to make some money while they were still in graduate school. Baldwin came up with the idea that they Could make money with a mobile bar and lounge unit that they could transport to festivals and special events. Turner, Hines, and Richards did not have any money, but Baldwin said that he and his father would provide the down payment on the mobile unit and that they would form a partnership. The graduate students all consented to and formed a partnership called Cash Ville Chillin. Baldwin was to receive 35 % of the profits. Turner 25 % , Hines 20 % and Richards 20 % Hines and Richards did not have any capital to contribute, but would schedule the venues and manage the operations. In July 2016, Baldwin and Turner bought a used mobile bar unit built on a trailer rig from Lawrence Henderson. Baldwin and Turner told Henderson that they were going to set up the bar at different venues all over the country. They told him that they were doing business in the name of Cash Ville Chillin and gave him a check for $24,000 from a bank account opened by the partnership. They signed promissory notes to Henderson for the remaining amount of the purchase price which were $15,000 and $10,000 respectively. The notes were due December 30, 2016 and July 30, 2017. Hines and Richards picked up the unit from Henderson and told him that they were the other two partners. The partnership took the unit to several football games Fall 2016 and the Essence Fest in July 2017, The entire venture was more difficult than any of them realized as they all were trying to finish graduate school. When the 2017 football season arrived they had pretty much abandoned the idea of running a mobile bar and had not paid Henderson any money on the promissory notes Henderson filed a suit against Baldwin, Turner, Hines, and Richards d/b/a Cash Ville Chillin in January 2018. He subsequently dismissed Hines and Richards from the lawsuit, but was forced to formally add the partnership as a defendant. Henderson received a judgment against Cash Ville Chilin for $25,000 plus interest. He has now filed an appeal of the judgment stating that the trial court errored in nat entering personal judgements against Baldwin and Turner. How will the appeals court decide this case? What factors will the court apply? What evidence will the court review in making its decision? (Turn Over) T Y J K L M Ctri 7 T

Answer 1

Since Cash Ville Chillin is a registered partnership firm, the liability will be in line with the percentage as mentioned in the partnership contract. Hence all the four partners are responsible and the court will impose the rules as applicable to any defaulting partnership firm. In addition to this, the court can demand details such as source of capital investment and sales report such as cash flow statements.