Ross, Molly, and Dave had opened a partnership firm. Dave mortgaged his interest in the partnership in return for a $10,000 loan from the bank. Under this circumstance, which of the following will hold true as per the RUPA?
A) It would cause dissolution of partnership.
B) It would entitle the bank to access the firm's information.
C) The bank would be entitled to participate in running the firm.
D) The bank would be entitled to receive whatever profits Dave would have received.
E) The bank would be entitled to inspect the books of accounts of the partnership firm.

Question

Quizplus · Accepted Answer

When a partner mortgages his interest, it means that the partner has pledged his share of profits and losses to the creditor. However, this does not entitle the creditor to become a partner or participate in the management of the firm. The creditor, in this case, the bank, would only be entitled to receive whatever profits Dave would have received. This means that the bank would be entitled to receive a share of the profits, but not participate in the management or inspection of the firm's books of accounts. It would not cause dissolution of the partnership and would not entitle the bank to access the firm's information.

Ross, Molly, and Dave Had Opened a Partnership Firm