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Homework answers / question archive / Five years ago, three radiologists—Carol, Jean, and Pat—opened a radiology practice together
Five years ago, three radiologists—Carol, Jean, and Pat—opened a radiology practice together. They agreed to call their business "Radiology Services," to split the profits equally, and to run the practice together in a manner that would be competitive. Toward that end, they purchased state-of-the-art radiology imaging equipment comparable to that of other radiology practices in the community.
Four months ago, Carol suggested to Jean and Pat that the practice replace some of the imaging equipment. Jean was worried about overspending on imaging equipment, but she did not express her concern to Carol and Pat. Three months ago, Carol, without discussing the matter further with either Jean or Pat or obtaining their consent, purchased for the practice a Php 42,000,000 state-of-the-art imaging machine from XYZ Company like those recently acquired by other radiology practices in the community.
After the purchase but prior to delivery, Jean learned what Carol had done and was furious. Jean did not believe the practice could afford such an expensive machine. When Jean confronted Carol, Carol said, "Too bad, it's a done deal—get over it." At that, Jean responded, "That's it. I've had enough. This machine was purchased without my consent. It's a terrible idea. I'm out of here and never coming back. Just give me my share of the value of the practice." Carol responded, "Fine with me." Carol and Pat subsequently agreed to continue their participation in Radiology Services without Jean.
1. Did Carol have the authority to purchase the imaging machine without the consent of Jean and Pat? Explain.
Carol had the power to acquire the imaging machine without Jean and Pat's approval.
A partner is accountable to the degree that these agreements are made on behalf of the partnership; even if the partner may have broken some other duty of good faith by participating without the permission of all the partners. Carol was operating as an agent for the partnership and therefore she was allowed to make judgments based on her understanding of her power.
2. Did Jean's statements to Carol constitute a withdrawal from Radiology Services? Explain.
Since Jean made it clear to Carol that she no longer wanted to be part of the practice, her words were a formal departure from the partnership.
It is possible for a partner to leave the relation for a number of reasons and in a variety of methods. One or more partners may explicitly renounce their interest in the partnership and claim that they no longer want to participate in the arrangement for financial gain under RUPA. Jean made it clear that she did not want to be a member of the partnership anymore and that she did not want to be a member of the partnership.
3. Were Jean's statements sufficient to entitle her to receive a buyout payment from Radiology Services for her interest in the practice? Explain.
Jean was entitled to a buyout payment from Radiology Services for her investment in the business based on her assumptions.
For the most part, the partnership dissolves when one of the partners expresses that they no longer want to be involved or want to continue the partnership. When a partner quits, the partnership may continue without the other member's participation. Only the organization's assets would be sold to guarantee that Jean, or any other partner who may express their willingness to departure, would be able to get what they are entitled to.
4. Can XYZ Company collect the amount of the purchase price from Carol and Pat? Explain.
Yes the XYZ Company can collect the amount of purchase price from Carol and Pat. Carol presented herself as the entire Radiology Services, and even if she did not tell the others of the actions that she was undertaking, the whole Practice was under the agreement with XYZ company. Thus, XYZ Company is eligible to collect the amount and can sue all of them if they do not repay the money.
