Before beginning the study of these problems the students should study very carefully the chart on pp. 22 and 23.

1. If you alone were about to engage in one of the following businesses, would you form a corporation or conduct the business as an individual proprietorship: the manufacture of automobiles; professional accountancy; local grocery store; mail order business?

2. A partnership does a very successful business and grows rapidly, constantly adding new partners. They desire to organize in the most efficient manner and to delegate certain duties and authorities to certain partners, restricting each partner to the duty and authority delegated. How may they accomplish their purpose?

3. A sells his interest in the partnership A-B to C. What rights has C?

4. Suppose that A and B had an agreement to conduct a partnership for five years, and that at the end of one year A withdrew. First, what would happen? Second, what could B do?

5. A, B and C are partners, investing as follows: A, cash, $30,000; B, property valued at $20,000; C, cash, $10,000. During the first year A withdrew $6,000; B, $4,000; and C, $2,000. At the end of the year, after deducting withdrawals, the partnership has $6,000 to divide as profits among the partners. Nothing was said in the partnership agreement as to the method of dividing the profits'or as to withdrawals. How should the profits be divided?

If the partnership agreement provided that "profits and losses shall be divided in proportion to the contribution of capital,"what division would be made?

6. A, B and C are partners, investing respectively $60,000, $40,-000 and $20,000. B lends the partnership $40,000. The firm owes outside creditors $100,000. The firm dissolves and realizes $200,000 on its assets. How should that amount be divided?

7. X, Y and Z are in partnership and have invested $75,000 in the partnership business in equal shares. Aside from the investment in the business, X has $25,000, Y has $35,000 and Z has $50,000 in cash, marketable stock and bonds not invested in any other business. The partnership owes $99,000 and is about to dissolve. X owes to individual creditors $18,000, Y owes $30,000 and Z owes $25,000. All the creditors demand immediate payment of their debts and an receiver is appointed to take over the assets of the partnership and of all the partners. How should their assets be divided?

8. If, in the above problem, the X, Y, Z firm had been incorporated, would you change your answer?

9. If you were to co-operate with other persons in the conduct of the following enterprises, would you organize as a partnership: a street railway; oil production; retail clothing; investment banking; aeroplane manufacture?

10. A entrusted B with $10,000 for use in the business of heating, ventilating, etc., and for no other use whatever. For this A was to receive 6 per cent and one-half of the net profits of the business. He was also to have a right to require quarterly statements of its transactions and the right to withdraw his money at any time. The business fails. Can the creditors hold A liable as a partner? (See 115 N. Y., 625.)

11. Can you suggest a method by which A's liability (in the above problem) could have been definitely limited to the $10,000 contributed, A still obtaining one-half of the profits, B remaining personally liable to creditors, and the business suffering none of the disadvantages of incorporation?

12. A is a special partner in a limited partnership of A, B and C, which does business and has its certificate filed in New York State. A, B and C open a branch in New Jersey. A lives in New Jersey and owns property in New Jersey. Partnership A, B and C fails. What right has X, a creditor, living in New Jersey?

13. If A, a member of the Pierce-Fordyce Oil Association (p. 6), sells his interest to C, will C have any rights other than those he had in problem 3?

14. Could the members of the partnership, referred to in problem 2, accomplish their purpose by organizing a joint-stock company?

15. (a) Refer to articles of the Pierce-Fordyce Oil Association in Materials. The member's certificate of interest on p. 7 provides that "no member of this association shall be liable for any debts, covenants, damages or torts of this association beyond the limit of his shares."Is this provision in itself binding on third parties who become creditors of the association?

(b) If not, what further steps are necessary?

(c) What additional provision do we find in the articles of association to protect the shareholders and make the above provision binding on third party creditors?

(d) Suppose the board of governors do not refer to the agreement in a contract, and the person with whom they were dealing knew nothing about these articles of association. Could the creditors look to the individual members of the Pierce-Fordyce Oil Association?

(e) What right would the members have if the board of governors neglected to refer to the articles of association in any contract?

16. Suppose that the members of this class were to form a partnership. There are 50 students in the class. How many persons would there be?

17. Suppose that we have formed a corporation and that each one of us is a stockholder in this corporation. How many persons will there now be in the room?

18. A, B and C are members of the X corporation, which owns a block of land under contract of sale to Z. A, B and C sign the deed and deliver it to Z. Does Z get title?

19. X, Y and Z, three persons, sell out their entire partnership to A, with an ancillary promise not to engage in business under the firm name. They incorporate the X-Y-Z Company, in the same line of business. May A restrain the company from doing business on the basis of the contract itself? On any other principle?

20. If in the 3rd problem the business were a corporation and not a partnership, would your answer be different?

21. Draw up a simple form of by-laws for the Hamilton Automobile Co. (p. 82). You may use the United States Steel Corporation's By-Laws, p. 66, as a guide, but they should be simplified.

22. How much would you pay the State of New York for the right to begin business as a corporation with a capitalization of $5,000,000? (See chart, p. 51.)

23. How much would you have to pay the State for the right to begin business as a partnership, investing $5,000,000 in the business? As a joint-stock company? As a Massachusetts Trust?

24. A, B and C are general partners doing a retail dry goods business in New Jersey. They decide to do business in New York. Must they pay any special taxes before they can begin business?

25. Suppose A, B and C were incorporated for $100,000. Would they be required to pay any special tax before they could begin business in New York, assuming that the company owned property worth $1,000 located in New York, and $9,000 of property located elsewhere?

26. Suppose that A, B and C were incorporated. Would they be required to pay any special tax before they could begin business in New York?

27. Would your answer be different if the business were conducted as a joint-stock company? As a trust?

28. All the stockholders of the A company die. The directors are not stockholders, not being required to be stockholders by the by-laws of the corporation. What should the directors do?

29. If the shareholders of the Pierce-Fordyce Oil Association (p. 6) died, would its Board of Governors take action different from that taken by the directors of A company (above)?

30. If the shareholders of the Massachusetts Electric Companies (p. 11) died, what would the Trustees do?

31. All the directors of the X Company die. The by-laws provide that vacancies in the board of directors shall be filled by a special election held by the board of directors. The next annual meeting of the X Company is not scheduled to be held for ten months. What should be done?

32. Who has the title to the property of the Massachusetts Electric Companies?

33. Are the members of this enterprise liable as partners? What changes are necessary to remove this liability?