Question

John, Lesa, and Trevor form a limited liability company. John contributes 60 percent of the capital, and Lesa and Trevor each contribute 20 percent. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60 percent of the profits in accordance with his contribution. Lesa and Trevor, however, assume that the profits will be divided equally. A dispute over the profits arises, and ultimately a court has to decide the issue. What law will the court apply? In most states, what will result? How could this dispute have been avoided in the first place?

Answer 1

Answer:

1: In court, the partners will earn  returns based on the contribution of each partner. In this case in the ratio of 60:20:20

2: In most states the Uniform Partnership Act applies.

3: The problem would have been avoided if all partners came together to prepare a Partnership Deed to bind each.

Explanation:

Partnership deed is an agreement entered into by all partners to guide the operation of the partnership agreement. It also helps in preventing dispute.