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Sam and Olivia decide to go into business, selling discounted merchandise through their Website "e-Buy." They sign a partnership agreement that requires Sam to contribute $12,000 and Olivia to contribute $8,000 in capital to start the firm. The agreement also states that only Sam 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 Sam's knowledge, Olivia tells United Computer Products, Inc., that she 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.
A) What are the partners' rights with respect to the management of the firm? Explain thoroughly.
B) Is the partnership bound to the contract with United? Explain thoroughly.
C) Do the partners split the first year's profits? If so, how much is each entitled to? Explain thoroughly.
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