Question

Sonya and Davi are going to open a sporting goods store. They sign a written limited partnership agreement naming Davi as a limited partner and Sonya as the general partner. Sonya files a certificate of limited partnership with the state. Sonya contributes $100,000 toward the start-up, while Davi contributes $200,000. They agree to split profits evenly because Sonya will be working in the store and operating the day-to-day business. About a month after they open, the business is not doing well, so Davi starts becoming more involved Soon he is requiring that Sonya approve all purchases with him, and Davi is actively directing Jack, the sole employee. One day, Geoff, a customer, is injured when a bowling ball falls off a shelf and shatters his foot Geoff sues and is awarded a judgment of $1 million.
A) As this was a limited partnership, Sonya is liable for $800,000 and Davi is liable for $200,000.
B) Whoever negligently secured the bowling ball on the shelf is liable for the $1 million liability
C) Sonya and Davi are each liable for up to $500,000.
D) Under the circumstances, Sonya and Davi are both jointly and severally liable for the full S1 million.

Answer 1

Answer:

D. Under the circumstances, Sonya and Davi are both jointly and severally liable for the full $1 million.

Explanation:

Given the agreement signed between Sonya and Davi,  Sonya contributes $100,000 while Davi contributes $200,000, profits are split evenly. Davi can be considered a limited partner because he is only liable for the $200,000 contributed towards the startup.

Now after a month, Davi gets involved in the business and became active in the business activities. Therefore, he is personally liable for the limited partnership debts.

Therefore, Under the circumstances, Sonya and Davi are both jointly and severally liable for the full $1 million.