Marcus and Phyllis formed a partnership to sell dog food and pet supplies in a small retail store in Madison, Wisconsin. There was no written partnership agreement. Marcus was responsible for buying the dog food and pet supplies that they sold in their store while Phyllis was responsible for running the store. They each drew a salary of $4,000 per month and equally split all of the partnership’s profits. They each owned 50% of the store as well as the store’s inventory. They worked well together for the first few years of their partnership but after five years they had a falling out and Phyllis stopped working in the store and no longer drew a salary. Phyllis told Marcus that she wanted to terminate the partnership and sell their store, including its inventory. Marcus agreed and worked with a real estate agent to sell the store. Marcus took over Phyllis’ job of running the store for six months until the store was sold and gave himself the $4,000/month salary that Phyllis previously received. As such, Marcus wound up drawing a salary of $8,000/month for six months. After paying the real estate agent’s fee, Marcus and Phyllis netted a profit of $200,000 from the sale of both the store and its contents. Marcus believed that he was entitled to a greater share of the profits from the sale of the store and inventory because of the extra work he did during the last six months. Thus, he took $120,000 and sent Phyllis a check for $80,000. Phyllis sued arguing that she was entitled to half the profits and the extra $4,000/month salary that Marcus drew over the last six months. 

How should this case be decided? 

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Solution Marcus and Phyllis formed a partnership to sell dog food and pet supplies in a As stated ab... View the full answer