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MMLU / Pete Smith is the active partner and Bill Jones is the silent partner in a…

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question

Pete Smith is the active partner and Bill Jones is the silent partner in a general partnership known as "Pete Smith Plumbing." After six years of being uninvolved in the management of the partnership business, Bill purchases 100 toilets for the business. Pete is incensed because it will probably take years to use up the inventory of so many toilets and seeks your advice. The best advice is

choices

  1. Bill can bind the partnership by his act.
  2. silent partners are investors only and cannot bind the partnership.
  3. unless his name is in the partnership name, third persons are "on notice" that he is unauthorized to contract for the partnership.
  4. Bill, as a silent partner, is not authorized to purchase and, therefore, the sale may be set aside.

subject

professional_law

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