Kristen and her brothers and sisters decided to form a partnership that specializes in home design of all types. One of their goals is to maintain the loving relationship they currently enjoy, so they are following the Model Business Corporation Act recommendations as they write the partnership agreement. Which of the following is an accurate recommendation of the Act?
A) The business should be actively operating for an extended period before the partners decide who is responsible for what business functions.
B) Family businesses never take on outside partners, so no discussion of this need take place.
C) There should be discussion and well-understood ways that the partners will handle disagreements.
D) Due to the fact that they are all under 40 years old and expect to work until they are 65 there is no need to decide what will happen to the partnership if one decides to leave the business or retire, or dies.

Question

Quizplus · Accepted Answer

The Model Business Corporation Act recommends that partners should discuss and establish well-understood ways of handling disagreements in a partnership agreement to maintain a healthy relationship. Option A is incorrect because partners should assign responsibilities and roles before the business begins operating. Option B is incorrect because family businesses can take on outside partners, and it should be discussed. Option D is incorrect because partners should plan and decide what will happen to the partnership if one partner decides to leave the business or retire or dies regardless of their age or expected working terms.

Kristen and Her Brothers and Sisters Decided to Form a Partnership