[Fishy Fiasco] James agreed to be a limited partner in Ingrid and Darnell's tropical fish importing business. Ingrid and Darnell were general partners. James contributed $10,000 to the partnership as his capital contribution. The partnership made a profit of $30,000 the first year. James was paid nothing. When he inquired, Ingrid told him that a limited partner was only entitled to a share of profits as approved by the general partners and that perhaps things would be better the next year. The next year, however, importation was banned because of a fish disease, and the partnership lost money and owed debts of $60,000. At the end of the year, Ingrid and Darnell asked James to contribute $20,000 to cover the debts. When James complained about the amount, Darnell told him that he and Ingrid were being overly reasonable and that James actually was legally liable for an even larger percentage. In an attempt to keep the business afloat, James told Ingrid and Darnell that they should consider suing a customer who had not paid a large account. Ingrid and Darnell replied, however, that they were morally opposed to lawsuits and that they had the final say on litigation.
-Which statement is true regarding James's entitlement to sue on behalf of the partnership?
A) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring the suit.
B) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring suit but only after obtaining the permission of all general partners.
C) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring suit but only after obtaining the permission of a majority of the general partners.
D) A limited partner has no rights to bring suit on behalf of the partnership.
E) A limited partner has a right to bring suit on behalf of the partnership only if the litigation is in an amount of over $75,000 and then only with the permission of all general partners.
Correct Answer:
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