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27 July, 10:21

Chris and Paul operate a business in which both have contributed $50,000 to the business's capitalization. Chris makes all business decisions and Paul made Chris sign a partnership agreement saying that Paul is only liable for partnership debts up to $50,000.

a. both are general partners

b. Chris is a general partner and Paul is a limited partner

c. Paul is a general partner and Chris is a limited partner

d. both are limited partners

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  1. 27 July, 10:38
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    A. both are general partners

    Explanation:

    Both Chris and Paul are general partners. It is true that Chris makes all business decision and that made Paul irrelevant to the management of the partnership. And he made Chris signed a partnership agreement that he will be liable up to the extent of his capital contribution. Yet that is not a solid evidence towards third party liability in case of solvency. In order for him (Paul) to become a limited partner, he should be registered to the state as "limited partner" during the partnership's registration and that will be recorded into the Articles of Partnership. Otherwise, he is classified as general partner and is liable up to the extent of his personal asset. The contract (partnership agreement) that he and Chris had is valid only up to them but not into third party.
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