Statutory Nuts and Bolts – Partnership, business and finance homework help

Son developed a unique internet marketing strategy (the “Strategy”) that could be worth millions. He asked Dad to “invest” $50,000 to “get the business going.” Dad transferred the $50,000 to Son, and Son insisted that Dad sign a document that simply stated, “I will run the whole show, but we are now partners in the OuterNet Company partnership.” As to this venture:

1. Does Dad have any property rights in Strategy?

2. How will the profits of the enterprise be allocated between Dad and Son?

 3. Will Dad bear the first $50,000 of losses?

4. Does Dad have the power to bind the enterprise to contracts with third parties? Does Son?

5. What duties do Dad and Son owe each other?

 6. What would be the capital accounts of Dad and Son if the partnership loses the $50,000 and then shuts down after six months because future marketing prospects look hopeless and the entity has no assets? At the time of the shut down, would Dad or Son have a financial obligation to the partnership?

 7. Would Dad have any personal liability exposure if Son borrowed $150,000 in the name of OuterNet Company from a local bank, the bank had no knowledge of Dad’s involvement, and Dad did not know of the loan?