Question

Goofus and Gallant formed a general partnership pursuant to a written agreement. Goofus contributed 10%

of the startup capital, and Gallant contributed 90% of the startup capital. The agreement failed to contain
provisions regarding management and the division of profits. A court will most likely resolve a claim by
Goofus to have an equal right to make decisions and split profits with Gallant as follows:

A. Rule that management and profits are divided equally between Goofus and Gallant pursuant to the
Uniform Partnership Act

B. Rule that management and profits are divided 10-90 between Goofus and Gallant pursuant to the Uniform Partnership Act

C. Rule that management is divided 10-90 between Goofus and Gallant but profits are to be equally shared pursuant to the Uniform Partnership Act

D. Rule that profits are divided 10-90 between Goofus and Gallant but management is equally shared pursuant to the Uniform Partnership Act

Answer 1

In a general partnership without an agreement on management and division of profits, the Uniform Partnership Act determines that management is divided equally and profits are divided in proportion to capital contributions. Option number a is correct.

Step-by-step explanation:

In this scenario, since the agreement failed to contain provisions regarding management and the division of profits, the court will most likely resolve the claim in accordance with the Uniform Partnership Act. Under the Uniform Partnership Act, if there is no agreement, decisions regarding management are shared equally between partners while profits are divided in proportion to each partner's capital contribution.

In this case, Goofus contributed 10% of the startup capital, and Gallant contributed 90% of the startup capital. Therefore, management would likely be divided equally between Goofus and Gallant, while Gallant would be entitled to 90% of the profits and Goofus would receive 10%.

This resolution aligns with the principles of equity, as Gallant contributed a significantly larger portion of the startup capital and therefore, he is entitled to a larger share of the profits.