Jo, Ted and Carol were partners. When Jo retired, Ted and Carol agreed to hold Jo harmless for any past debts of the partnership. No creditor agreed to this. Ted and Carol continued the business. All creditors knew of Jo’s retirement. Don was owed $2,000 for supplies delivered to the partnership when Jo was a partner. After Jo retired, Ted gave Don a promissory note of the partnership for the amount of $2,100 as payment for the $2,000 debt owed for supplies. The partnership never paid the note. Ted and Carol refused to pay the note. May Don collect on either the note or the underlying debt from Jo? Why or why not?
Jo, Ted and Carol were partners. When Jo retired, Ted and Carol agreed to hold Jo harmless for any past debts of the partnership. No creditor agreed to this. Ted and Carol continued the business. All creditors knew of Jo’s retirement. Don was owed $2,000 for supplies delivered to the partnership when Jo was a partner. After Jo retired, Ted gave Don a promissory note of the partnership for the amount of $2,100 as payment for the $2,000 debt owed for supplies. The partnership never paid the note. Ted and Carol refused to pay the note. May Don collect on either the note or the underlying debt from Jo? Why or why not?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jo, Ted and Carol were partners. When Jo retired, Ted and Carol agreed to hold Jo harmless for any past debts of the
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