Dave and his sister Chris make unusual kites. They both create the designs and Dave makes the patterns. Friends have always wanted to buy their kites. After Chris completes a post-secondary marketing program, she begins to talk to Dave about going into business selling kites. Ed, a friend of Chris, wants to be involved. He says he could buy the supplies and do other odd chores. They decide to try to make a go of it and to share the profits as follows: Dave, 35%; Chris, 35%; and Ed, 30%. Things go well for seven months. They even hire George to deliver kites to the increased number of stores buying them. Unfortunately for the business, Chris and Ed become romantically involved. This is followed by a heated dispute. Ed disappears with $1300 collected from customers and $600 worth of supplies, which he had bought on behalf of the business from its regular supplier. At about the same time, George negligently breaks a customer's $200 lamp while delivering a kite. On these facts, which of the following is true?
◦ Although George broke the lamp while delivering a kite, the partners are not liable because it was George's own fault.
◦ Since Dave, Chris, and Ed did not sign a partnership agreement, they are not considered a general partnership.
◦ Only Chris would be responsible for Ed's misapplication of the customers' money.
◦ If the partnership funds are not sufficient to pay the partnership debts, the creditors can look to the individual partners for payment.
◦ When Ed buys supplies for the business on credit, he is acting as an agent for the business and he alone is liable for those debts.
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