Alison Told Her Partners in Writing That She Would Be

Alison told her partners in writing that she would be leaving the law partnership at the current partnership year-end, January 31, 2012. At year-end, Alison's partners bought her partnership interest and agreed that she would no longer be liable for any of the prior or subsequent partnership obligations. In February 2012, one of the remaining partners absconded with $2,000,000 held for Mr. Smith, a long-time client, taken in trust in September 2011. Mr. Smith sued the partnership, the partners, and Alison. Based on the foregoing facts, which of the following statements is false?

A) Mr. Smith can recover on his judgment out of the partnership assets.
B) If Alison gave Mr. Smith actual notice of her leaving the partnership, and he agreed that she would no longer be obligated for the partnership's obligations, she will not be liable to Mr. Smith.
C) After the partnership assets are exhausted, Mr. Smith can recover on his judgment from any one of the remaining partners but not Alison.
D) All of the partners, including Alison, have the right to recover anything they have to pay from the absconding partner.
E) She has the right to recover any funds she has to pay from her former partners.

Correct Answer:

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