Deck 32: Limited Partnerships and Limited Liability Companies

Question 1

Unanimous written consent of all partners is necessary to add new limited partners to a limited partnership.

Answer 1

True

Question 2

Foreign limited partnerships do not have to operate in another country.

Answer 2

True

Question 3

Under all LLC statutes, a unanimous vote of the members must be obtained to approve a merger.

Answer 3

False

Question 4

A "person" for purposes of a limited partnership can be a corporation.

Question 5

A limited partnership is a partnership formed by two or more persons under the laws of a state and having one or more general partners and one or more limited partners.

Question 6

Creation of a limited partnership does not require more formalities than formation of a general partnership.

Question 7

Adrianne may form a limited liability company by filing articles of organization in a designated state office, even if she is the only member of the company.

Question 8

The 2001 revision of the RULPA has been widely adopted.

Question 9

A limited partner will not lose his limited status because of voting on an amendment to the partnership agreement allowing a new business venture.

Question 10

Limited partnerships are the same as limited liability partnerships.

Question 11

Ownership interests in manager-operated LLCs are not considered to be securities.

Question 12

Once a partner becomes entitled to a distribution, he has the status of a creditor with respect to that distribution.

Question 13

The RULPA requires that the limited partnership certificate list the capital contribution of each general and limited partner.

Question 14

A limited partner has limited access to the books and records of the partnership.

Question 15

Under the 1985 Act, the limited partner need not be named in the limited partnership certificate.

Question 16

Statutes or the common law impose duties of good faith and fair dealing on all members of an LLC whether the LLC
is manager managed or member managed.

Question 17

A member of a limited liability company has a property interest in the property owned by the LLC.

Question 18

Upon dissolution, unlike a general partner, a limited partner can get his capital back before general creditors are paid.

Question 19

Under the RULPA, a limited partnership may not use a name that is deceptively similar to that of any corporation or other limited partnership.

Question 20

Like general partnerships, limited partnerships are statutory creations that did not exist at common law.

Question 21

All states except one have adopted either the 1976 or 1985 RULPA.

Question 22

A partner may not receive a distribution from a limited partnership unless the remaining assets are deemed sufficient to pay partnership liabilities other than liabilities to partners on account of their partnership interests.

Question 23

False statements in a certificate of limited partnership or in an amendment to the certificate that cause loss to third parties who rely on the statements may result in liability for the general partners.

Question 24

A limited partnership agreement may not provide that limited partners have the right to vote on matters as a separate class from the general partners.

Question 25

Joe is a limited partner in a limited partnership.Joe does not have the right to dissolve the partnership except by decree of a court.

Question 26

The causes of dissolution and the priorities in the distribution of assets for a limited partnership are not the same as those of a general partnership.

Question 27

Unless otherwise provided in the LLC's operating agreement, a member may assign his financial interest in the LLC
without dissolving the LLC.

Question 28

RULPA requires a lesser duty of care by a general partner to a general partnership than that owed by a general partner to a limited partnership.

Question 29

It remains unclear under the law whether a limited partner has a fiduciary duty to his general partners or to the limited partnership.

Question 30

An oral promise by a limited partner to contribute to the limited partnership is enforceable.

Question 31

The certificate of limited partnership need not be amended if a new general partner is admitted.

Question 32

One of the most appealing features of a limited partnership is the limited personal liability it offers to limited partners.

Question 33

A general partner, but not a limited partner, may be either a secured or unsecured creditor of the partnership with the same rights as a person who is not a partner.

Question 34

If the partnership agreement does not specify when a limited partner may withdraw or specify a definite time for the limited partnership's dissolution, a limited partner may withdraw upon giving at least one month's written notice to each general partner.

Question 35

After the formation of a limited partnership, the admission of additional general partners can only be accomplished with the written consent of all partners.

Question 36

In states where limited liability limited partnerships (LLLPs) are available, a limited partnership may register as an
LLLP without having to form a new organization.

Question 37

A limited liability company is a form of unincorporated business association that blends the advantages of both general and limited partnerships, because all its members may have limited liability and all may participate in management and control without loss of limited liability.

Question 38

The RULPA recognizes the right of a limited partner to bring an action on the behalf of a limited partnership to recover a judgment in its favor if the general partners having authority to do so have refused to bring the action.

Question 39

A creditor of a limited partner may obtain a charging order against the limited partner's interest in the partnership, thereby becoming an assignee of the partnership interest.

Question 40

A limited partner may vote on the sale of all of the assets of the limited partnership or a change in the nature of the business without being deemed to have taken part in control of the business.

Question 41

When were the last revisions made to the RULPA?

A)1970
B)1976
C)1985
D)2001

Question 42

When a limited partnership dissolves and winding up commences:

A)a certificate of cancellation must be filed.
B)the state automatically cancels the certificate of limited partnership.
C)all general and limited partners can be involved in the winding up process.
D)a court must decree that the partnership is terminated.

Question 43

The most popular and widely used unincorporated business form that provides limited liability for its members is the:

A)limited partnership.
B)limited liability partnership.
C)limited liability company.
D)limited liability limited partnership.

Question 44

Which of the following would have priority in distributing limited partnership assets?

A)Return of a general partner's capital contribution
B)Repayment of a loan by a limited partner to the partnership
C)Return of a limited partner's capital contribution
D)Payment of profits of the limited partner

Question 45

Registration of a foreign limited partnership is required in order to:

A)go into business in another country.
B)defend the partnership in court.
C)collect contributions from foreign investors.
D)None of these.

Question 46

Kimberly contributed $50,000 as a limited partner in a limited partnership.Upon dissolution of the partnership, the priorities in distributing the assets are to:

A)creditors of the partnership, partners and ex-partners in satisfaction of liabilities for unpaid distributions, partners for return of contributions, and to partners for their partnership interests in the proportions in which they share in distributions.
B)creditors of the partnership, partners for return of contributions, partners and ex-partners in satisfaction of liabilities for unpaid distributions, and partners for their partnership interests in equal shares.
C)creditors of the partnership, partners for their partnership interests, partners for return of contributions to the partnership, and ex-partners for liability for unpaid distributions.
D)partners for return of contributions, outside creditors of the partnership, partners for their partnership interests, and partners and ex-partners for unpaid distributions.

Question 47

If Jack contributed $1,000 as a limited partner and signed a certificate of limited partnership, but the certificate was filed in the wrong office:

A)Jack may avoid liability as a general partner if he withdraws from the business and quickly renounces future profits.
B)Jack is not a partner at all and may withdraw his contribution.
C)Jack is a general partner for all purposes.
D)Jack may become a limited partner by quickly filing an affidavit stating he was not responsible for the erroneous filing.

Question 48

In which of the following ways is a general partner the same as a limited partner in a limited partnership?

A)Right of management and control
B)Liability to creditors of the partnership
C)Duty of care to the other partners and to the partnership
D)General partners differ from limited partners in all of these ways.

Question 49

Which of the following is true with respect to a defective formation of a limited partnership?

A)The formation is defective if the certificate filed does not substantially meet statutory requirements.
B)It jeopardizes the limited liability of a limited partner.
C)The 1985 RULPA reduces the risk of a limited partner for defective formation.
D)All of these are correct.

Question 50

Which of the following is correct regarding the fiduciary duties in a limited partnership?

A)The general partner has a fiduciary duty to the limited partners.
B)Judicial authority seems to suggest that the limited partner has no fiduciary duty to the partnership.
C)The fiduciary duty of the general partner is extremely important to the interests of the limited partners, because they have no ability to manage or control the partnership business.
D)All of these are correct.

Question 51

Which of the following is true of limited liability companies?

A)Most states limit the duration of LLCs.
B)In most states, LLCs must file annual reports with the state.
C)The contribution of a member to a limited liability company must be cash or property.
D)A written operating agreement governing all of the relations between members is required in all states.

Question 52

Unless otherwise agreed, under RULPA, a limited partner is entitled to repayment of his capital contribution under which of the following conditions?

A)Before general partners are repaid their capital contributions
B)At the same time and on a pro rata basis with the general partners
C)Only after general partners have been repaid their capital contributions
D)None of these.

Question 53

While a limited partnership interest is transferable, the transferee will become a limited partner if:

A)the other members consent.
B)he has paid fair market value.
C)he has also donated services.
D)he has consented to the organizational character.

Question 54

O'Houlihan and seven of his associates decide to form a limited partnership to operate an office complex.This business must be formed in accordance with the:

A)common law of partnerships.
B)Uniform Commercial Code.
C)Federal Partnership Act.
D)None of these.

Question 55

A partnership interest:

A)is personal property that may be assigned without dissolving the limited partnership.
B)may be assigned to a person who then becomes a partner.
C)may not be assigned without dissolving the limited partnership.
D)may not be assigned unless this right is specifically provided for in the partnership agreement.

Question 56

Juan and Barbara form a limited liability company to conduct a particular business activity for profit.Which of the following is not true?

A)The articles of organization must be filed in a designated state office.
B)No particular form of organization is required.
C)The company name must include the words "limited liability company" or "limited company" or the abbreviation "LLC" or "LC."
D)The contribution of a member may be a promissory note.

Question 57

A foreign limited liability company:

A)is governed by the laws of the state in which it is organized.
B)is considered "foreign" in any state other than the one in which it was formed.
C)must register with the Secretary of State before transacting business in that state.
D)All of these are correct.

Question 58

A limited partner's financial obligation to the partnership may be increased if the:

A)limited partner acts as agent for a competing partnership.
B)limited partner takes active part in the management of the partnership.
C)another limited partner is added to the partnership.
D)All of these are true.

Question 59

Which of the following need NOT be included in the certificate filed by a limited partnership under the RULPA?

A)The name of the limited partnership
B)The name and address of the agent for service of process
C)The names of each of the limited partners
D)The name and business address of each general partner

Question 60

Which of the following is untrue of a limited partnership?

A)Limited partnerships must be formed under a state statute.
B)Limited partners cannot ordinarily be named in the partnership business name.
C)Partners in limited partnerships must contribute services to the partnership.
D)Limited partners are generally not responsible for the debts of the partnership beyond their investment.

Question 61

Discuss the duty of general partners to limited partners.

Question 62

With regard to a limited partner's capital contribution to the limited partnership:

A)the limited partner can only contribute cash.
B)a promise by a limited partner to contribute to the limited partnership is not enforceable unless it is in a signed writing.
C)if the partner fails to make a promised capital contribution, the limited partnership has no power to hold the partner liable.
D)All of these.

Question 63

Which of the following is false with respect to the distribution of assets following dissolution of a limited liability company?

A)Most statutes provide default rules for distributing the assets.
B)Generally, assets are distributed first to creditors, including members and managers who are creditors, except with respect to liabilities or distributions.
C)Generally, assets are distributed to members and former members in satisfaction of liabilities for unpaid distributions after distributions are made to creditors, including members and managers who are creditors.
D)Generally, assets are distributed first to creditors who are not members or managers.

Question 64

The new revision of the RULPA provides that, when a limited partnership is a limited liability limited partnership,:

A)a general partner is personally liable for a contractual obligation.
B)a general partner is personally liable for an obligation arising from a tort.
C)a contractual obligation or an obligation arising from a tort is solely the obligation of the limited partnership.
D)a contractual obligation or an obligation arising from a tort is the joint and several obligation of the limited ^{partnership and the general partners.}

Question 65

A general partnership that, by making the statutorily required filing, limits the liability of its partners for some or all of the partnership's obligations is a:

A)limited liability partnership.
B)limited liability company.
C)limited liability limited partnership.
D)limited partnership.

Question 66

The Elm Street Partnership is a limited partnership in which Arlo is the sole general partner and Barbara and Charles are the limited partners.Now the partnership is being dissolved, and Barbara wants her money.The partnership creditors include Charles for a $1,000 loan in addition to his capital contribution.In what order should the partnership assets be distributed?

Question 67

Describe an LLC and the interest or rights of its members.