Arabella and Mirabella formed a partnership to own and operate a fashion boutiqu

Question

Arabella and Mirabella formed a partnership to own and operate a fashion boutique. They agreed to share profits and losses equally. They also agreed that Arabella's main contribution to the partnership would be $100,000 as a capital contribution to the partnership; and that Mirabella's main contribution would be to manage the business as the managing partner. Unfortunately, after two years of trying to succeed, the business did not do well, and they decided to close the business. After all the outside creditors to the partnership were paid, there was nothing left. What is the legal obligation of the partners to each other?

None, since Arabella lost her money and Mirabella lost her time in managing the business; so they are even.

Mirabella must pay the $100,000 back to Arabella since Arabella is regarded as a creditor.

Mirabella must pay Arabella $50,000.

Arabella must pay Mirabella a fair wage for the two years to be in compliance with federal labor law.

None, since Arabella lost her money and Mirabella lost her time in managing the business; so they are even.

Mirabella must pay the $100,000 back to Arabella since Arabella is regarded as a creditor.

Mirabella must pay Arabella $50,000.

Arabella must pay Mirabella a fair wage for the two years to be in compliance with federal labor law.

Explanation / Answer

None, since Arabella lost her money and Mirabella lost her time in managing the business; so they are even.

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