Thursday, April 22, 2010

Here is a Hypo you may find useful...

In 1996, Abe and Bess formed by oral agreement a real estate investment partnership. Their agreement was so informal that it amounted to little more than a mutual promise to carry on the business as co-owners for five years.

Abe was by his own account "independent minded and strong willed." Bess styled herself "sensitive and refined." Because the partners shared a small office, they became acutely aware of these character differences. Matters came to a head in 1999 when Bess demanded that Abe stop listening to talk-radio shows at the office. "That inane drivel drives me to distraction!" she complained. Abe tossed her ear-plugs. "How about some nose plugs, too?" said Bess sarcastically, "Your cologne makes me sick." Abe offered Bess another set of earplugs. "I think you know where you can put these," he grinned.

Bess snapped. "I cannot work with such a pig-headed pile of, of . . . hot air!" she shrieked, and stormed out of the office. She left for an extended vacation. A month passed, and still Bess had not informed Abe where she had gone or when she would return.

A. Characterize the relationship between Abe and Bess at this point.

Another month passed. Abe, overwhelmed by a double workload and worried about Bess, suffered a fatal heart attack. Bess returned the next day.

B. Building on your response to sub-question A, above, characterize the relationship between Abe's estate and Bess at this point.

To help get their business started, Abe had contributed 1,000 shares of Yowza, Inc. to the partnership and Bess had contributed 1,000 shares of Zydex, Inc. These contributions had had roughly equal value in 1996. Abe and Bess had placed these contributions in the partnership's name to serve as collateral for loans taken out to start the business. None of the shares were sold. By 1999, the Yowza shares had tripled in value whereas the Zydex shares had declined 30% in value. Abe's estate wants his stock back, whereas Bess wants all the stock sold and the proceeds divided equally.

C. Who should prevail and why?

No comments:

Post a Comment