Case Name:

Issue Statement:

Analysis:

Risk Reduction:

The facts of this case are as follows:

Felicity opened a small water slide park just outside Vancouver in $2020.$ Due to the popularity of the park Felicity realized that she could increase her profits if she added more rides. However, Felicity didn't have access to extra capital. In late $2020$ Felicity met Franz, an investor, who offered to invest in Felicity's business in exchange for a share of the profits. Felicity and Franz went to a lawyer and had a partnership agreement drafted. In the contract, Felicity and Franz agreed that the partnership would be a limited partnership and that Franz's involvement in the business would be limited to providing financing $($in exchange for a share of the profits$).$ However, only a few months later, Franz became increasingly involved in the daily operations of the business. Eventually, Franz took over all the hiring and firing of employees. Unfortunately, one of the employees that Franz hired forgot to turn the water on a slide and a child was badly injured. Since Felicity has no money the child's parents want to sue Franz, but Franz is saying he is only a limited partner and so cannot be sued.

HINT: The issue is whether Franz will be protected as a limited partner.