Professor Franks
Final Examination, Fall 2007
| 1. | Carefully analyze the facts and grasp the issues in each question before beginning to write. Spend time reading the question slowly and carefully. |
| 2. | State the issues and answers to each question concisely. Lengthy answers are not necessary. |
| 3. | Do not repeat questions in your answers. Write neatly and legibly on only one side of each page. |
| 4. | Number your answers to correspond with the question, e.g., "III-B." |
| 5. | If you feel it necessary to assume additional facts in any of the questions, give the facts that must be added and state why. |
| 6. | Do not write in the margin of the book. |
| 7. | All major questions are equally weighted unless otherwise indicated. Subparts are approximately equal but may be weighted slightly differently according to the number of issues involved in that subpart. |
| 8. | Write your personal identification number and the name and section number of the course on which you are being examined on the cover of each examination book. |
| 9. | If you use more than one book, indicate "Book One," "Book Two" and so forth on the cover of each book and write your PIN and the name and section number of the course on the cover of each examination book. |
| 10. | A GOOD ANSWER IS NOT NECESSARILY A LONG ANSWER. |
| Smith, Brown and Jones were each working as sales reps for West Publishing. All three had been employed for several years selling the company's products to the legal community in Louisiana. All three sales reps had written contracts. Only Janice Jones's
contract contained any prohibition against competition after termination. Her contract provides: "After termination, the sales representative shall not engage in the
sale of law books for a period of ten years at any location in the continental United
States."
One day following a sales meeting, Sam Smith proposed: "We can go into business ourselves, publish our own law books, and make double what we're making now. Publishing is highly profitable. A book that sells for $200.00 costs just $8.00 to print and bind. We'll have a 1,800 per cent markup, which is sure better than the 10 per cent commission West pays us." The other two thought the idea excellent. |
| Sam Smith has come to your law office, seeking your advice. Please explain to your client in detail the formation and operation of each of the following four types of business organization and the relative advantages and disadvantages of each: |
| I-A. | General partnership. |
| I-B. | Limited partnership. |
| I-C. | Limited liability company. |
| I-D. | Limited liability partnership. |
| Despite your good advice, the trio goes to another lawyer,
Mr. L. S. Yew, where they form a general partnership. Sam Smith, Belinda Brown and Janice Jones are the partners. While still working for
West Publishing, a partnership agreement for American National Law Publishing was
drafted by the other lawyer and signed by the partners, but not filed or recorded.
The three then contracted with a Professor Franks to write a book on Agency & Partnership, as well as with other authors for other books. Only when the first shipment of books arrived from the printer in Taiwan did the three submit their resignations to West. They then hired a sales staff: Michelle Montalbano, Nelson Newsome, and Oscar Orman. Each sales representative was given a written "dealer's contract" as an independent contractor and was required to attend weekly sales meetings and to memorize and use the company sales pitch word for word. The sales pitch was largely copied verbatim from the West Publishing sales handbook. The partnership paid its sales representatives a commission, but did not withhold federal or state income tax or social security. |
| II-A. | West's district manager is disappointed that the company lost its three best salespersons in Louisiana. "They had a duty of loyalty to West until they quit. They breached that duty by organizing a new company while still employed at West. I want to sue." Discuss West's chances of winning. |
| II-B. | West's district manager continues: "They stole our standard sales pitch. Even though it wasn't copyrighted, the idea is a trade secret. I want to sue." Discuss West's remedies, if any, and their chances of winning. |
| II-C. | "They stole our list of customers. That's also a trade secret. I want to sue." Discuss. |
|
Five months after the articles of partnership that the other lawyer drafted were signed, the partners decided to change lawyers. Sam Smith convinced them to come to your law office. |
| III-A. | Assuming they still wish a partnership, are there any steps you should take on their behalf to prepare or file any existing or additional documents? Discuss. |
| III-B. | You learn that Belinda Brown is being sued by her former boyfriend for $50,000 she borrowed from him but never repaid. You also learn that four months ago, a full month after the articles of partnership were written and signed, the partnership bought a small office building in Port Allen, Louisiana. What steps, if any, should you take to protect the office building? Discuss. |
| III-C. | What difference, if any, would it make and and what steps, if any, would you take if the partners had purchased the office building in the partnership name six months ago, one month before they signed their articles of partnership? Discuss. |
| III-D. | Your client tells you they withheld no federal income tax and no social security from the paychecks of Montalbano, Newsome and Orman. Your client further tells you that the IRS is claiming they should have withheld. The IRS is seeking penalties and interest. Discuss the company's chances of prevailing on this point. |
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