Deck 33: Limited Partnerships and Limited Liability Companies

Question 1

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

Answer 1

True

Question 2

A general partner may also be a limited partner and thereby share in profits, losses, and distributions as a limited partner.

Answer 2

True

Question 3

A limited partner owes a duty of care to the partnership similar to that of a general partner.

Answer 3

False

Question 4

The laws of the state in which a foreign limited partnership is organized govern its organization, its internal affairs, and the liability of its limited partners.

Question 5

A limited partnership must continuously maintain within the state in which they do business, an office at which basic organizational and financial records are kept.

Question 6

The RULPA and the 1985 RULPA are supplemented by the Uniform Partnership Act, which applies to limited partnerships in any case for which the Limited Partnership Act does not provide.

Question 7

Written consent of all partners is required for the addition of a general partner only if the partnership agreement fails to deal with this issue.

Question 8

Limited partners have limited personal liability for partnership obligations.

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

Only the general partners have access to the books and records of the partnership.

Question 11

A limited partner who participates in the control of the business has broad liability to third persons regardless of whether they have transacted business with the partnership.

Question 12

Foreign limited partnerships do not have to operate in another country to be identified as "foreign."

Question 13

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

Question 14

A "person" for purposes of a member of a partnership includes a natural person, a partnership, a limited partnership, a trust, or an association, but not a corporation or an estate.

Question 15

Unlike general partnerships, limited partnerships are statutory creations.

Question 16

Unanimous written consent of all partners is required to add new limited partners to a limited partnership, unless the partnership agreement provides otherwise.

Question 17

The certificate of a limited partnership must be amended if a new general partner is admitted.

Question 18

In Alzado v.Blinder, Robinson & Company, Inc., Blinder, Robinson & Co.was found liable to partnership creditors as a general partner because it assumed control of the business and thus lost its limited partnership status.

Question 19

The majority of states have adopted the 2001 revision of the Revised Uniform Limited Partnership Act (ReRULPA), which reflects that LLPs and LLCs can meet many of the needs formerly met by limited partnerships.

Question 20

Members of an LLC share profits and losses equally.

Question 21

Joe Stewart 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 22

About half of state statutes and the amended ULLCA have eliminated a member's dissociation as a mandatory cause of dissolution of an LLC.

Question 23

A limited liability company is a relatively new 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 24

The death or bankruptcy of a limited partner will dissolve the partnership.

Question 25

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

Question 26

An operating agreement is adopted by members of most limited liability companies.

Question 27

RULPA does not distinguish between the duty of care owed by a general partner to a general partnership and that owed by a general partner to a limited partnership.

Question 28

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

Question 29

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 30

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

Question 31

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

Question 32

Some statutes permit the operating agreement of a limited liability company to deny members the right to withdraw from the company.

Question 33

The causes of dissolution and the priorities in the distribution of assets for a limited partnership are the same as those of a general partnership.

Question 34

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

Question 35

Ordinarily, members of manager-managed LLCs have duties to the LLC and its members by reason of being members.

Question 36

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

Question 37

Not all of the states have enacted statutes enabling the formation of limited liability partnerships (LLPs).

Question 38

The general partners of a limited partnership have almost exclusive control and management of the limited partnership.

Question 39

A partner may not receive a distribution from a limited partnership unless the partnership's assets after the distribution would be sufficient to pay all of the partnership's liabilities, including those to other partners on account of their partnership interests.

Question 40

A general partner, but not a limited partner, is liable to pay to the limited partnership the cash value of an unpaid capital contribution described in a signed writing.

Question 41

Daniel is a general partner in a real estate investment firm.Hank and Barry are limited partners.Daniel, without the consent or ratification of Hank and Barry, can:

A)admit another limited partner.
B)act as an agent of the partnership.
C)rename the partnership using Hank's last name.
D)not have almost exclusive managerial control of the business.

Question 42

Extinguishing a limited partnership involves:

A)dissolution.
B)winding up or liquidation.
C)termination.
D)All of the above.
E)Only (a) and (b).

Question 43

If Jack contributed $1000 as a limited partner and signed a certificate, but the certificate was filed in the wrong office, Jack:

A)will not be liable as a general partner if he quickly withdraws from the business and renounces future profits.
B)is not a partner at all and may withdraw his contribution.
C)cannot avoid liability as a general partner under any circumstances.
D)may become a limited partner by giving constructive notice of the defective filing to all potential business contacts by an advertisement in a publication of general circulation.

Question 44

An LLC's limitation on liability will not affect the liability of a member who:

A)committed the wrongful act giving rise to the liability.
B)guaranteed the obligation.
C)Both of the above.
D)None of the above.

Question 45

A __________ is a partnership in which the liability of the general partners has been limited to the same extent as in a limited liability partnership.

A)limited partnership
B)limited liability company
C)limited liability limited partnership
D)None of the above are correct.

Question 46

All statutes require LLPs to:

A)designate themselves as LLPs.
B)register or obtain a certificate of authenticity if they are foreign LLPs.
C)make a new filing with the secretary of state after any change in membership.
D)follow the laws of the jurisdiction under which they are registered regarding internal affairs and organization.

Question 47

Any partner, in a limited partnership, to whom any part of her contribution has been returned:

A)without violation of the partnership agreement or statute is not liable to the partnership to the extent necessary to pay creditors who extended credit during the time the partnership held the contribution.
B)in violation of the partnership agreement or statute is liable to the partnership for no more than one year for the amount wrongfully returned.
C)in violation of the partnership agreement or statute is liable to the partnership for six years for the amount wrongfully returned.
D)in violation of the partnership agreement or statute has liability for an unlimited time period for the amount wrongfully received.

Question 48

The __________ of a partner may be cash, property, services rendered, a promissory note, or an obligation to contribute cash or property or to perform services.

A)contribution
B)capital
C)assets
D)None of the above.

Question 49

The RULPA specifies the events that will trigger a dissolution, after which the limited partnership's affairs must be liquidated.These events include which of the following?

A)The expiration of the time period specified in the certificate.
B)The unanimous written consent of all the partners.
C)A limited partner's withdrawal from the partnership.
D)Both (a) and (b) are correct.

Question 50

The definition of a limited liability company includes that:

A)it is a noncorporate business.
B)it limits liability for all its owners.
C)all members may participate in management of the business.
D)All of the above.
E)None of the above.

Question 51

Which of the following is NOT true about a limited liability company?

A)It is a noncorporate business organization.
B)In most states, an LLC must have at least two members.
C)It may elect not to be a separate taxable entity.
D)An ownership interest may be considered a security.

Question 52

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

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

Question 53

When were the last amendments made to the RULPA?

A)1976
B)1985
C)2001
D)2003

Question 54

Members of member-managed LLCs and manager-managed LLCs are the same in which of the following aspects?

A)Control.
B)Who has fiduciary duties.
C)Liability.
D)Whether the member is an agent of the LLC.

Question 55

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

A)A general partner has a fiduciary relationship to the limited partners, but not to any other general 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 has little effect upon the interests of the limited partners, because they have no ability to manage or control the partnership.
D)All of the above are correct.

Question 56

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)certificate of limited partnership is incorrect or incomplete.
D)Both (b) and (c) are correct.

Question 57

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 known as a:

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

Question 58

Typically, members of a limited liability company have the right to vote on proposals to:

A)adopt or amend the operating agreement.
B)admit any person as a member.
C)sell all or substantially all of the limited liability company's assets prior to dissolution.
D)merge the limited liability company with another limited liability company.
E)All of the above.

Question 59

Which of the following is untrue of a limited partnership?

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

Question 60

Which of the following is NOT correct regarding a limited liability partnership?

A)All of the states authorize them.
B)It is the same as a limited partnership.
C)A registered limited liability partnership is a general partnership that makes a statutorily required filing.
D)All of the above.

Question 61

A general partner of a limited partnership has a __________ relationship to the general and limited partners.

A)limited
B)fiduciary
C)foreign
D)None of the above.

Question 62

Describe an LLC and the rights of its members.

Question 63

What is the effect on liability of a limited partner who participates in the management of the partnership? What activities may a limited partner perform without affecting liability?

Question 64

Discuss the duties of general partners to limited partners and the standard used in the Wyler case.

Question 65

The court in Wyler v.Feuer stated that:

A)the general partner owes the limited partners a duty of reasonable care in the management of the business.
B)the general partner may be held liable to the limited partner for any mistakes made or losses incurred in management of the business.
C)a limited partner has a limited right to manage and control the partnership business.
D)Two of the above, both (a) and (b).

Question 66

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)a limited partner is liable to the partnership for the difference between the contribution actually made and that which is stated in a signed writing promising a certain contribution.
D)Two of the above, (b) and (c).

Question 67

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 68

Which of the following is correct regarding a limited partnership?

A)The general partner must make a capital contribution.
B)It can be created in such a way that the general partner has limited liability.
C)It can only be created pursuant to statutory provisions.
D)Limited partners are unable to vote on the incurrence of debt other than in the ordinary course of business under the safe harbor provisions of the RULPA.

Question 69

What are the liabilities of a limited partner in a limited partnership?

Question 70

Which of the following is true with respect to the distribution of assets following dissolution of a limited partnership?

A)Partners are paid before ex-partners for unpaid distributions.
B)Limited partners who are creditors are paid at the same priority as third-party creditors of the partnership.
C)The amount limited partners are paid on dissolution has no relation to the proportion in which they share in distribution of profits.
D)Capital contributions are paid before unpaid distributions.