Lucy Vale and Bob Fama, both accountants, have formed a partnership and opened an accounting firm in Calgary and business has been steadily increasing. Since they each have the same number of clients, Lucy and Bob decided to simply split any income equally between them. However, Lucy has recently made a grievous error in the financial statements of one of her clients, and that client is now considering suing Lucy and the firm. If Lucy and Bob had never created a formal partnership agreement since the inception of their firm, should Bob be at all concerned about the potential lawsuit? Choose the best answer from the following:
▸ No. It was Lucy's client and she made the error. Bob was not involved.
▸ Yes. A legal agreement is not always required for someone to be considered a partner of a partnership. Thus, Bob may be held partially responsible for Lucy's error in the event the client sues the firm.
▸ No. Since there was no formal partnership agreement made, Bob cannot be held responsible for Lucy's error.
▸ Yes. Bob has just incurred substantial debt by purchasing a new home which was partially financed by his share of the firm's earnings.
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