G is 5. G and H are partners, making equal investments. sick the greater part of the year and H claims pay for the extra work he performed. Discuss rights of partners. 6. I and J are partners in the grain business. I is in the grain country as buyer, shipping the grain to J for sale. I makes a purchase at less than market price, thereby saving $200. This sum he retains, reporting the purchase at market prices. Later, I learns of this. Discuss rights. 7. K and L are partners. They dissolve partnership after paying all known debts. Later a claim against the partnership for $100 is presented to K, who pays on advice of counsel. Discuss rights. 8. M and N are partners who fail with liabilities of $30,000 in excess of resources. Their individual properties and debts are as follows: M $100,000 resources and $20,000 debts; N $5,000 resources and $6,000 debts. The creditors proceed against the partners individually and seize N's resources. Discuss settle ment. 9. O and P are partners, and agree as to the amount of credit several of their customers are to be allowed. Subsequent to this, and unknown to P, O allows several customers to exceed the agreed limit. As a result of this the firm loses $5,000. Discuss the rights. 10. Q and R are partners for an exact term of years. Does the partnership terminate at that time, or must the partners proceed to dissolve? May they continue without regard to the time limit? 11. S, T and U are partners. In the agreement there is a clause stating that on the death of a member the two remaining ones may purchase the deceased interests for $5,000. A death. occurs, and the purchase is made. Is this a new firm, or the old firm as per the agreement? 12. V, W and X are partners, X being a limited partner. The firm fails in business with $8,000 liabilities in excess of resources. Each partner has private resources in excess of the firm liability. Discuss rights of creditors. Draw up the following: Articles of Partnership. 1st. Carrying on business-describe it-term of years-allow for a partner's withdrawal from business. 2nd. The name of the firm shall be location of 3rd. What each shall contribute 4th. Amount that each may withdraw 5th. Gains and losses to be divided. when 6th. What each shall do...... 7th. Agreement in carrying on business. 8th. The keeping of accounts-double entry-statements from time to time-money receipts and payments-how made. 9th. What shall not be done-indorsing paper-guaranteeing accounts -lending money. 10th. At end of each year, inventories-closing accounts-balance sheet-transferring loss and gains share to individual accounts. 11th. How to adjust differences. 12th. Properly signed and attested by three witnesses. 155. SEARCH QUESTIONS Is there a limited partnership act? How many general partners may there be? How many limited partners? What powers have limited partners as to conduct of business with outsiders? How does the limited partner preserve his limited liability? What if he does not observe the regulations as prescribed by statute? Has he the right to demand an accounting? What general provision is there providing for the continuation of the partnership in case of the death of a general partner? May a married woman on her own account enter into a contract of partnership? 156. Introduction. Commodities raised or produced in one community are in part exchanged for different commodities raised or produced in other communities. The producer of grain desires machinery, articles of clothing, and a reserve for a possible failure of crops. The manufacturer desires to exchange his product for food and clothing and a reserve. The exchanging of one commodity for another is called barter. Trade by means of barter is unsatisfactory for many reasons. It is cumbersome, difficult to adjust as to value, and does not offer the best opportunity to store and keep for subsequent use. The exchange of commodities by barter is subject to great fluctuations of exchange values. A medium that is constant in value affords greater and safer opportunities for exchange. The two greatest mediums so far discovered to facilitate exchange, are money and credit. 157. What Money Is. Money is the common denominator of values. It is the one element with which the values of other commodities may be compared and measured. It may be fur ther defined as "any material that by agreement serves as a common medium of exchange and measure of value in trade." Gold and silver, because of great stability in value, have been selected as the best circulating medium of exchange. 158. What Credit Is. Since the money of a country actively engaged in commerce is generally greatly inadequate when compared with the volume of business done, credit comes to the aid of money and assists in the exchange of goods. Credit is based on confidence; and in giving credit to the buyer, several forms of credit promises are given as, for example, notes, drafts, checks, and oral promises, which are spoken of as buying or selling on account. In the case of the promissory note, the confidence of the seller is extended to the buyer, who gives his note payable at a certain time in the future. The seller may in turn discount the note at the bank. Both parties are thereby accommodated the buyer gets time for payment, the seller gets the money or credit with the banker, and the banker receives the discount for his services. The use of the draft may be illustrated by the following: A western merchant ships wheat to the east to be sold, and buys a bill of goods from some eastern manufacturer. Without the aid of the draft, the money would be sent to the West to settle the first sale and would immediately be sent to the East in satisfaction of the eastern purchase. Loss of the use of the money, loss of time, and risk in sending the money would be the result. Instead of doing this, the western merchant draws a draft on the grain account in the East and sends it to the manufacturer, who collects the money from the eastern grain-dealer. These various papers are called commercial or negotiable papers. 159. Assignability. This is a right recognized by the common law; it is the right to transfer or assign a right or claim held against another. For example: A sells and delivers certain chattels to B for $100, for which B is to pay A in 30 days. First, this is a contract partly executed. The payment remains to complete the contract. The law recognizes A's claim as a chose in action; it is a right that may be disposed of by sale or assignment. A sells this claim against B to C for a certain sum. C acquires only the rights possessed by A at the time of the sale. C should now notify B of his acquired rights and direct him to pay to him, C, the amount then due. C has protected his rights, which we will now examine. Suppose that at the time A sold this claim, B held a debt claim against A amounting to $40.00; this is a set-off against the rights of C. The latter can only secure $60.00 from B; he must look to A for the balance. Thus we say that the assignee acquires only the rights possessed by the assignor at the time of transfer and that to keep those rights intact he must notify the debtor of his acquired rights. A payment made by the debtor before notice but after sale, is a good defense against the assignee. The common law recognizes the right of the holder to transfer his choses in action to another, but insists that the buyer shall acquire only the right possessed by his seller. He assumes all the risk of uncertainty in the claim and must sue in the name of his assignor. A set-off may be found to exist in favor of the debtor, and it is good against the new purchaser although he did not know of its existence, or, in fact, have means of knowing. This is the law of assignment. 160. The Law Merchant. This term originated in the usage of the merchants of Europe, and has been gradually extended throughout the commercial world. It recognizes rights not known at the common law, chief among which are grace, negotiability, and presumption of consideration. Grace applies only to negotiable paper, and is additional time granted the payer in which to meet his obligations, generally three days. Days of grace have been abolished in a large number of the states. Negotiability is the element that is in reality the life of negotiable paper; it includes the right whereby the purchaser, under certain conditions, is enabled to collect the amount the instrument calls for, irrespective of defenses between the original parties. A setoff does not follow and attach as in assignment. A presumption |