Reference no: EM131742742

Read the case below and answer the questions.

Fitzgerald and Kennedy were roommates in college and began to sell custom-designed T-shirts with dormitory logos. On each shirt they put a small logo of their own, which read "Dorm Shirts." They both contributed to the design, production, and marketing of the T-shirts and split any profits. Eventually, the shirts became so popular that the roommates began plans to expand their operations and offer other apparel (such as sweatshirts) with dormitory logos. They ultimately locate Johnson, who agrees to finance the expansion with a $50,000 contribution and to cosign a partnership loan with Big Bank for an additional $50,000. Johnson forms Dorm Apparel L.P. and has his counsel draft a Limited Partnership Agreement that names Fitzgerald and Kennedy as general partners and Johnson as a limited partner. The business expands rapidly and initially sales are so good that Johnson often pitches in by helping with design, production, and marketing. Eventually, however, the partnership's expenses and debt outpace its revenue, and Dorm Apparel defaults on the loan to Big Bank.

Q1. Prior to the formation of the Dorm Apparel L.P., what form of entity did Kennedy and Fitzgerald use to operate the business?

Q2. Assume Big Bank attempts to collect the partnership loan from Johnson. Does Johnson's limited partnership status protect him from Big Bank's attempt to collect the loan? Why or why not?

Q3. What is the legal effect of Johnson's decision to become involved in the day-to-day operations of Dorm Apparel L.P.?