Bob, Carol, and Ted Have Decided to Go into Business

Multiple Choice

Bob, Carol, and Ted have decided to go into business as a limited partnership importing and selling exotic spices. Bob and Carol will manage the business, and Ted will have no role in the day-to-day operations. Bob and Carol have each invested $500,000, and Ted has contributed the building and land that the business will be operated from. Alice, a customer, contracts a rare disease from a contaminated spice sold by the company and sues. Alice is awarded a judgment for $5 million. After she exhausts the assets of the partnership, having the property and building sold and seizing all other property, $3 million remains unpaid.

A) Bob, Carol, and Ted each owe $1 million, and Alice must sue each for his or her part.
B) Bob, Carol, and Ted each owe $3 million jointly and severally, so Alice may sue one, two, or all three for the $3 million balance.
C) Bob and Carol each owe $1.5 million, and Alice must sue each for his or her part; Ted has no additional liability.
D) Bob and Carol each owe $3 million jointly and severally, so Alice may sue one or both of them; Ted has no additional liability.