Professor Franks

Final Examination, Summer 1994

1. Carefully analyze the facts and grasp the issues in each question before beginning to write. Spend time reading the question slowly and carefully.

2. State the issues and answers to each question concisely. Lengthy answers are not necessary.

3. Do not repeat questions in your answers. Write neatly and legibly on only one side of each page.

4. Number your answers to correspond with the question, e.g., "II-3."

5. If you feel it necessary to assume additional facts in any of the questions, give the facts that must be added and state why.

6. Do not write in the margin of the book.

7. All major questions are equally weighted unless otherwise indicated. Subparts are approximately equal but may be weighted slightly differently according to the number of issues involved in that subpart.

8. Write your fictitious name and number and the name and section number of the course on which you are being examined on the cover of each examination book.

9. If you use more than one book, indicate "Book One," "Book Two" and so forth on the cover of each book and write your fictitious name and number and the name and section number of the course on the cover of each examination book.

10. A GOOD ANSWER IS NOT NECESSARILY A LONG ANSWER.

Justin Robichaud, head chef at Earl K. Long Memorial Hospital, is author of the cookbook, Cooking Cajun Without Cholesterol. The book features his favorite recipes: vegetarian gumbo, meatless boudin, carrot sticks étouffé, brussels sprouts in remoulade sauce, and whole-grain bread pudding with sugarless topping.

Mr. Robichaud wishes to open a gourmet cajun restaurant in Baton Rouge featuring his healthy cuisine. The banks have all turned Mr. Robichaud down for a loan, citing the high failure rate of new restaurants. However, Chef Robichaud is fortunate enough to know Tripp L. Bypass, M.D., a wealthy and elderly cardiologist who has agreed to fund the restaurant. Dr. Bypass will provide all the money, and Chef Robichaud will supply the labor and talent for this new culinary venture.

You are the attorney for Dr. Bypass. Please explain to your client the following three types of business organization and the relative advantages and disadvantages to him of each:

Assume for each of the following subparts that your client Dr. Bypass opts for a limited partnership (partnership in commendam), with Dr. Bypass as the limited partner and Chef Robichaud as the general partner.

II-1: What steps must be taken in organizing the business to ensure that Dr. Bypass enjoys limited liability?

II-2: May the business be called "Justin Robichaud's"? May it be called "The Cardiovascular Cajun"? May it be called "The Robichaud-Bypass Café"? Is there a suffix that must be added to the firm name? Discuss.

II-3: If the business opts for the name, "The Cardiovascular Cajun," is there anything you must prepare for your client with respect to this name in addition to preparing and recording the articles of limited partnership? Would this step be necessary if the restaurant were a sole proprietorship?

II-4: Assume articles of limited partnership are prepared and properly recorded, and that the partnership then takes title in the partnership name to a tract of land on which the partners intend to build a restaurant. Assume further that Chef Robichaud owes a large personal debt to Cynthia Creditor. What are Cynthia Creditor's rights to go after the land, and would her rights be any different if the partners had first executed the articles of limited partnership, then bought the land in the partnership name, and then recorded their articles of limited partnership? Discuss.

II-5: The articles of limited partnership provide that the labor contribution of Chef Robichaud is to be capitalized at 40 per cent and the money contribution of Dr. Bypass is to be capitalized at 60 per cent. If the articles of partnership are otherwise silent, how are losses to be divided? Discuss.

II-6: After operating for a year, Dr. Bypass votes to admit a new limited partner and advises Chef Robichaud to raise all menu prices by ten per cent. Is Dr. Bypass now a general partner? Discuss.

Various contracts with suppliers of fixtures and equipment and various purchase orders with institutional grocers are being signed in various ways. Please discuss who is bound. (Assume in each case the partner or employee signing the contract or purchase order does so within the actual or apparent course and scope of partnership business.)

The restaurant's latest healthful offering is creole-style barbecue ribs made with soy cake instead of real pork. Dr. Bypass is so enthused by this that, without the permission of Chef Robichaud who invented this tasty dish, Dr. Bypass sells the recipe to Burger King for a tidy sum and then turns the proceeds of the sale over to the Louisiana Heart Institute for cardiac research. Discuss:

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