How should a court analyze whether or not Fink had the authority to bind the MLH partnership to a purchase contract to sell the partnership property under Corporations Code § 16301?

Owens, Fink, and Berinstein were the three partners of MLH Partners, a California general partnership.  MLH owned 57 acres of unimproved land in Palos Verdes.  The MLH partnership agreement provided: “The general character and nature of business of this partnership shall be the holding of the real property  with the view to the appreciation in value thereof and the ultimate sale of said real property in its unimproved state.”  Kajima was a real estate developer that was looking for unimproved land suitable for a development of single-family homes.  Kajima expressed to Owens that Kajima was interested in purchasing the property owned by MLH.  Owens told Kamija that Fink would be handling any purchase negotiations.

Over a period of months, Kajima and Fink negotiated the sale of the property.  Their negotiations finally concluded with an offer from Kajima to purchase the property for $2 million, which Fink accepted on behalf of MLH.  When the closing date approached, Owens told Fink that he did not want to go forward with the sale, and sued Fink, the partnership, and Kajima to prevent the sale from closing.  Kajima filed a counterclaim for specific performance, asking the court to order the partnership to complete the sale.

After reviewing the material in Chapter 37 of the Business Law textbook and the provisions of California Corporations Code §§ 16301-16303 (part of the California Revised Uniform Partnership Act), answer the following questions.

1.  How should a court analyze whether or not Fink had the authority to bind the MLH partnership to a purchase contract to sell the partnership property under Corporations Code § 16301?

2.  How should the court’s analysis change, if at all, if the MLH partnership had recorded a statement of partnership authority that named Owens, Fink and Berinstein as the partners of MLH and stated that the approval of any two partners was required to authorize any instrument transferring real property held in the name of the partnership?

Homework submissions will be graded based upon the degree to which you completely and accurately answer each question, identifying the relevant facts and rules of law and applying those rules of law to the facts, using proper sentence structure, grammar, and spelling.  Question 1 has 10 points possible and question 2 has 5 points possible, for a total of 15 possible points.

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