Harry, Clyde, and Pete carried on business in partnership as hardware merchants. Clyde, who did most of the purchasing of stock for the partnership, would occasionally purchase (using his own money) an extra quantity of some items that could readily be sold to consumers. He would use the truck owned by the business on the weekends to travel to his cottage where he would sell the items to cottage owners in the area of his own cottage. Harry and Pete were unaware of Clyde's actions, as Clyde had not revealed his weekend business activity to either Harry or Pete. Harry and Pete are entitled to claim their share of the profits earned by Clyde from his weekend selling activity.

Question

Quizplus · Accepted Answer

Under partnership law, profits made by a partner arising from the use of partnership property or business must be accounted for to the partnership. Since Clyde used the partnership's truck and possibly leveraged the goodwill of the partnership to sell items, Harry and Pete are entitled to their share of the profits from Clyde's weekend selling activity.

Harry, Clyde, and Pete Carried on Business in Partnership as Hardware