Question

Robbie McMillian and his cousin Bruce McMillian were partners in a bulk-mail services business, Corporate Mail Management. Bruce funded the partnership’s operations, pledging his personal residence as collateral to secure a business loan and to purchase equipment for the partnership. Robbie marketed its services and managed its business operations, holding himself out as the president of Corporate Mail. Despite their efforts, the partnership never made much money. Over time, Robbie met other people who had an interest in entering the bulk-mail services business. In August 2002, Robbie met with two of these people and formed a new company with them. The new company offered the same kinds of services as Corporate Mail and, in fact, directly competed with it. At some point in 2002, Robbie told Bruce that he planned to withdraw from their partnership, ostensibly because he was tired of the bulk-mail services business and wanted to do something else altogether. Robbie never told Bruce about his new company or that it competed with Corporate Mail. The new company, Mail Source, was formed in January 2003. Between January and April 2003, Robbie still was managing Corporate Mail and at the same time working for Mail Source, diverting to Mail Source the business opportunities that were presented to Corporate Mail. In April 2003, Robbie shut down Corporate Mail, taking all its assets and business opportunities with him to Mail Source. In its first year alone, Mail Source earned more than $245,000 from customers that previously had been customers or prospective customers of Corporate Mail. Left with nothing but the debts of Corporate Mail, Bruce sued Robbie and Mail Source.

1. Robbie and Bruce have formed, and conducted their business as, a limited partnership; hence, in the absence of an agreement to the contrary, each general partner has unlimited personal liability for the debts of the business and equal voice in managing the business.	T
2. Unless they agreed to the contrary, Robbie and Bruce share Corporate Mail Management profits equally, provided the amount of capital they invested in Corporate Mail Management was substantially equal.	T
3. Both Robbie and Bruce owe each other and their company fiduciary duties, have a right to access the company’s books and records, are required to render an accounting of the partnership’s assets and profits, and own the assets remaining in Corporate Mail Management.	F
4. If Robbie had dissociated from Corporate Mail Management before going into a competing business, Mail Source, with two other people, Robbie would not have breached his fiduciary duties to Bruce and would be entitled to receive the value of his partnership interest within 120 days from giving written demand.
5. Robbie is liable to Bruce for damages arising from his diverting business opportunities to Mail Source and measured by the profits earned by Mail Source on the opportunities diverted. Robbie’s partnership interest in Mail Source will be held in trust to insure Bruce is compensated for those profits going forward.

Answer 1

	True /False	Explanation
. Robbie and Bruce have formed, and conducted their business as, a limited partnership; hence, in the absence of an agreement to the contrary, each general partner has unlimited personal liability for the debts of the business and equal voice in managing the business.	F	In a limited partnership at least one of the business partner makes business decisions and is personally liable for business debts except if an agreement mentions otherwise.
2. Unless they agreed to the contrary, Robbie and Bruce share Corporate Mail Management profits equally, provided the amount of capital they invested in Corporate Mail Management was substantially equal.	T	As it’s an equal partnership whereby all partners have an equal share in profits.
3. Both Robbie and Bruce owe each other and their company fiduciary duties, have a right to access the company’s books and records, are required to render an accounting of the partnership’s assets and profits, and own the assets remaining in Corporate Mail Management.	F	Nonmanaging partners, in this case, Bruce has no fiduciary duties to the limited partnership. The limited partners who manage the running and operations of the company has fiduciary duties.
4. If Robbie had dissociated from Corporate Mail Management before going into a competing business, Mail Source, with two other people, Robbie would not have breached his fiduciary duties to Bruce and would be entitled to receive the value of his partnership interest within 120 days from giving written demand.	T	As a part of his fiduciary duty of disclosure. He should have informed of the conflict of interest when he was starting his business association with Mail source. The dissociated partner must get his dues within 120 days.
5. Robbie is liable to Bruce for damages arising from his diverting business opportunities to Mail Source and measured by the profits earned by Mail Source on the opportunities diverted. Robbie’s partnership interest in Mail Source will be held in trust to ensure Bruce is compensated for those profits going forward.	T	Robbie has entitled to loss of business opportunity and what corporate mail lost as a result of Bruce diverting the business to Mail source.