Question

Boris, Carina, and Theo have decided to go into business as a limited partnership importing and selling exotic spices. Boris and Carina will manage the business, and Theo will have no role in the day-to-day operations. Boris and Carina have each invested $500,000, and Theo has contributed the building and land that the business will be operated from. Alina, a customer, contracts a rare disease from a contaminated spice sold by the company and sues. Alina is awarded a judgment for $5 million. After she exhausts the assets of the partnership, having the property and building sold, and seizing all other property, $3 million remains unpaid.

Multiple Choice

Boris, Carina, and Theo each owe $1 million, and Alina must sue each for his or her part.

Boris, Carina, and Theo each owe $3 million jointly and severally, so Alina may sue one, two, or all three for the $3 million balance.

Boris and Carina each owe $1.5 million, and Alina must sue each for his or her part; Theo has no additional liability.

Boris and Carina each owe $3 million jointly and severally, so Alina may sue one or both of them; Theo has no additional liability.

Answer 1

Boris, Carina, and Theo each owe $3 million jointly and severally, so Alina may sue one, two, or all three for the $3 million balance.

Step-by-step explanation:

Under a partnership firm, all the partners are held equal in terms of liability, and they are held liable independently and together for the same amount.

Accordingly, it do not matter whether the partner is active or not active in the business.

Therefore, in the given instance also, even though Theo was not an active partner he shall also be held liable for any damage to any third person because of concerned business.

Thus, correct option is:

Statement B