Question

Harold and Zack have pooled their money together to buy real estate but have filed no formal papers toform a business. Harold, a lawyer, handles all the legal matters and Zack, a real estate broker, finds buyers for the property they have subdivided. Harold and Zack are engaged in a:

a.partnership.
b.close corporation.
c.limited liability company.
d.business trust

Answer 1

Option A is correct.

Because both Harold and Zack are engaged in partnership agreement which means they had an agreement that they will share a percentage of profit or loss with eachother arising from real estate business. They both work with eachother to maximise the profit from their combined investment. Harold is a lawyer and handles the legal matters of land sale and purchase from their both combined investment. On the other hand, Zack is a broker and he delivers his part by finding the buyers for their real estate which benefit both Zack and Harold. At the end of the sale of their real estate, they share the profits with each other.