Sheila owned an old roadside building that she believed could
be easily converted into an antique shop. She talked to her
friend Barbara, an antique fancier, and they executed the following written agreement:
a. Sheila would supply the building, all utilities, and $100,000
capital for purchasing antiques.
b. Barbara would supply $30,000 for purchasing antiques,
Sheila to repay her when the business terminated.
c. Barbara would manage the shop, make all purchases, and
receive a salary of $500 per week plus 5 percent of the
gross receipts.
d. Fifty percent of the net profits would go into the purchase
of new stock. The balance of the net profits would go to
Sheila.
e. The business would operate under the name “Roadside
Antiques.”
Business went poorly, and after one year, a debt of
$40,000 is owed to Old Fashioned, Inc., the principal supplier
of antiques purchased by Barbara in the name of Roadside
Antiques. Old Fashioned sues Roadside Antiques, and Sheila
and Barbara as partners. Decision? Explain