Wk2 DQ2

.docx

School

Grand Canyon University *

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Course

825

Subject

Law

Date

Apr 3, 2024

Type

docx

Pages

1

Uploaded by BauerKingston2025 on coursehero.com

Two friends start a business as a partnership with no agreement governing their rights as business partners. What are the implications of this decision if the business is successful? What are the implications of this decision if the business is unsuccessful? Would a written agreement help sustain the business as it develops over time? Explain. Starting a business as a partnership without a written agreement can have significant implications, both in success and failure. If successful, without a written agreement, the default rules of the jurisdiction may apply (Bantekas, 2022). Typically, profits are shared equally among partners in the absence of an agreement stating otherwise (Márta, 2021). Partnerships involve shared decision-making, but without a clear agreement, conflicts may arise regarding major business decisions, investments, or expansions. In a general partnership, each partner is personally liable for the debts and obligations of the business. This means personal assets could be at risk and if one partner wishes to exit or sell their share, the absence of an agreement might complicate the process, potentially leading to disputes. In an unsuccessful venture, partners are collectively responsible for the business debts. Personal assets of each partner could be used to settle business obligations. Without a clear agreement, disagreements over the distribution of losses, debt repayment, and responsibilities can arise, potentially leading to legal disputes. In the absence of an agreement, the process of winding down the business and distributing remaining assets could be complicated and may not align with the partners' expectations (Márta, 2021). Would a written agreement help sustain the business? Yes, a written agreement is crucial for the sustainability of the business, regardless of its success or failure. (Khalf, 2022) A well- drafted partnership agreement can address and clarify roles and responsibilities, profit and loss sharing, capital contributions, exit strategies and a dispute resolution process. A written partnership agreement is essential for providing a clear framework, avoiding potential disputes, and promoting the long-term sustainability of the business, regardless of its success or failure. References: Bantekas, I. (2022). Transnational arbitration agreements as contracts: in search of the parties’ common intention.  Arbitration International ,  38 (3), 169-185. Khalf, F. A. (2022). Legal drafting of administrative contracts.  Webology ,  19 (6). Márta, P. B. (2021). General partnerships and the fiduciary duty in the US legal system.  Pro Futuro ,  10 (4). REFERENCE FOR THIS CLASS: KEEP IN CASE YOU NEED TO USE IT Miller, R. L. (2021).  Business law today: Comprehensive edition  (13th ed.). Boston, MA: Cengage. ISBN-13: 9780357634691
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