Question: Sally and Tom decide to go into business selling discounted
Sally and Tom decide to go into business, selling discounted merchandise through their website “e-buy.” They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm. The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties, but the agreement says nothing about the management of the firm or a division of profits. Without Sally’s knowledge, Tom tells United Computer Products, Inc. that he represents the firm and signs a contract with United to buy hard drives for resale on e-buy. In the first year, e-buy makes a profit of $50,000. At the end of the year, Tom and Sally have a falling out. At trial there are two main questions; one question is: How will the profits be split between the two? Most importantly, will e-buy be held to the contract with United Computer Products, Inc.?
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