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Stuart Studio, an art studio, prepared a new catalog for the National School of Heavy Equipment, a school run by Gilbert and Donald Shaw. When the artwork was virtually finished, Gilbert Shaw requested Stuart Studio to purchase and supervise the printing of twenty-five thousand catalogs. Shaw told the art studio that payment of the printing costs would be made within ten days after billing and that if the “National School would not pay the full total that he would stand good for the entire bill.” Shaw was chairman of the board of directors of the school, and he owned 100 percent of its voting stock and 49 percent of its nonvoting stock. The school became bankrupt, and Stuart Studio was unable to recover the sum from the school. Stuart Studio then brought an action against Shaw on the basis of his promise to pay the bill.
Law Of Contract
Length: 1 pages (411 Words)
Law of Contract
What are the Arguments that Shaw is not Liable on His Promise?
All partners in a partnership are agents to each other and the firm. The law of agency governs his/her liability. Section 301 of the UPA(Uniform Partnerships Act) states that unless a partnership files a statement of partnership authority to the contrary, each partner has authority to enter into contracts binding the partnership as long as the contracts are in the ordinary course of the partnership's business or authorized by other partners. Thus, the firm (National School of Heavy Equipment) is liable for the debts arising from the partner’s conduct.