Deck 32: All Forms of Partnerships

Question 1

A corporation can be a partner.

Answer 1

True

Question 2

For most purposes,the law recognizes a partnership as an aggregate of its members.

Answer 2

False

Question 3

A partner may not pursue his or her own interest without violating the fiduciary duties that he or she owes to the firm.

Answer 3

False

Question 4

The extent of implied authority is generally broader for agents than for partners.

Question 5

On a partner's dissociation,his or her interest in the partnership must be purchased.

Question 6

General principles of agency law pertain to a partner's authority to bind a partnership in contract.

Question 7

A partner owes a partnership and its partners a duty of gross negligence and reckless conduct.

Question 8

A partner cannot "wrongfully" dissociate from a partnership.

Question 9

Joint ownership of property in and of itself creates a partnership.

Question 10

The Uniform Partnership Act has done much to reduce controversies in the law relating to partnerships.

Question 11

A sharing of profits from the sale of the goodwill of a business creates a presumption that a partnership exists.

Question 12

An association cannot be a partnership without an express agreement.

Question 13

Any limit on a partner's capacity to act on the partnership's behalf does not affect a third party who does not know about it.

Question 14

In winding up a general partnership,partners receive distributions of profits before non-partner creditors are paid.

Question 15

The Uniform Commercial Code governs the operation of partnerships.

Question 16

A partner may use and possess partnership property for any purpose.

Question 17

A partnership dissolves if any partner ceases to "carry on" partnership business.

Question 18

On a partner's dissociation,his or her right to participate in the management and conduct of the business terminates.

Question 19

A partner's fiduciary duties may be waived or eliminated in the partnership agreement.

Question 20

In most states,a general partner is jointly and severally liable for all partnership obligations.

Question 21

Bo and Clancy decide to do business as Marketing & Promotion Services.To be a partnership,this association can result from an agreement that is

A)express,but not from an agreement that is implied.
B)implied,but not from an agreement that is express.
C)oral,written,or implied by conduct.
D)written,but not from an agreement that is oral or implied.

Question 22

Guy and Hanna do business as G-H Associates.If G-H is a partnership,it is governed by the Uniform Partnership Act

A)in the absence of an express agreement.
B)in the absence of an implied agreement.
C)only in the presence of an express agreement.
D)under all circumstances.

Question 23

A general partner is personally liable for partnership debts if its assets are insufficient to pay its creditors.

Question 24

Only a limited partnership's limited partners have a fiduciary obligation to the other partners.

Question 25

A limited partner who participates in the management of the partnership may be personally liable to the firm's creditors.

Question 26

The maximum amount of money at risk by a limited partner is the amount of his or her investment in the limited partnership.

Question 27

Ben,who runs a livestock breeding business,owes the Circle C Ranch $40,000.Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid.Because of this agreement,the Circle C is

A)Ben's creditor and partner.
B)Ben's creditor only.
C)Ben's partner only.
D)neither Ben's creditor nor his partner.

Question 28

With a few exceptions,all of the rules that govern partnerships apply to limited liability partnerships.

Question 29

A limited partner who gives a general partner advice on matters relating to the management of the partnership cannot be liable as a general partner.

Question 30

In a family limited liability partnership,only persons related to each other may be partners.

Question 31

A general partner has the power to dissociate from a limited partnership regardless of what the partnership agreement specifies.

Question 32

The death of a limited partner dissolves a limited partnership.

Question 33

In a limited liability limited partnership,the liability of a general partner is the same as the liability of a limited partner.

Question 34

In a limited partnership,the liability of a general partner is limited to the amount of capital he or she has invested in the partnership.

Question 35

Noah and Orin do business as Personnel Partners.In most states,for purposes of suing and being sued,Personnel Partners would be treated as

A)an aggregate of the individual partners.
B)a natural person.
C)an entity.
D)a non-existent party.

Question 36

In a limited liability partnership,a partner can be exempt from personal liability for partnership obligations.

Question 37

A limited liability partnership must be formed in compliance with state law.

Question 38

In winding up a general partnership,creditors are paid before partners receive their capital contributions.

Question 39

A limited liability partnership can be formed in virtually any state.

Question 40

Grady and Hedy do business as Island Tours.For federal income tax purposes,Island Tours would be treated as

A)an aggregate of the individual partners.
B)a natural person.
C)an entity.
D)a non-existent party.

Question 41

Pat and Quint sign a five-year partnership agreement to do business as "Pat's Landscaping Service." At the end of the fifth year,they decide to continue without specifying a new term.This partnership is terminable

A)at any time by either partner.
B)only after an additional five-year term.
C)only if Pat dissociates from the firm.
D)only if Quint dissociates from the firm.

Question 42

Jack and Kyra are partners in Law Firm,LLP,a limited liability partnership.Jack supervises Kyra,who negligently fails to appear in court on behalf of Milo,a client.Liability to Milo rests with

A)Jack and Kyra.
B)Jack only.
C)Kyra only.
D)neither Jack nor Kyra.

Question 43

Fern and Gray want to form a limited partnership to manage two restaurants: Café Latte and Deli Delite.In most states,a limited partnership will be created when

A)a certificate of limited partnership is filed.
B)a partnership agreement is executed.
C)the business for which the firm is formed actually begins.
D)the partners make their capital contributions.

Question 44

Mabel and Nicol do business as One World Realty.In acting on the firm's behalf in a deal with Property Acquisition Company,Mabel fails to account for the profit.To her firm,Mabel is

A)liable for breach of the duty of care.
B)liable for breach of the duty of economic sense.
C)liable for breach of the duty of loyalty.
D)not liable.

Question 45

Kelly,Lars,and Mona agree to be partners in Neighborhood Delivery Service (NDS),splitting the profits equally.Kelly contributes 67 percent of the capital.When NDS is dissolved,its liabilities are greater than its assets.The losses are paid by

A)all of the partners in proportion to their capital contributions.
B)all of the partners in proportion to their shares of the profits.
C)Kelly because she contributed most of the capital.
D)Lars and Mona because they contributed the least of the capital.

Question 46

Fay is admitted to Global Associates,an existing partnership.A partnership debt incurred before the date of her admission comes due.Fay is

A)not liable for the debt.
B)only liable for the debt up to the amount of his capital contribution.
C)personally liable only to the extent the other partners do not pay.
D)personally liable to the full extent of the debt.

Question 47

Jay is considering forms of business organization for Jay's Designs,an architectural firm.An advantage of a limited liability partnership is that partners can avoid personal liability for

A)any partnership obligation.
B)only other partners' wrongdoing.
C)only partnership obligations that exceed capital contributions.
D)only partnership obligations that fall within capital contributions.

Question 48

Jim and Kyle are partners in J&K Sales,which exports technical equipment under a three-year partnership agreement.The U.S.government declares that the equipment can no longer be exported.J&K

A)dissolves as soon as the stated term expires.
B)dissolves as soon as the partners agree to dissolve it.
C)dissolves immediately unless the partners change its business.
D)does not dissolve.

Question 49

Tundi is a partner in YooHoo! Amusement,a new partnership.A YooHoo! debt comes due.Tundi is

A)not liable for the debt.
B)only liable for the debt up to the amount of his capital contribution.
C)personally liable only to the extent the other partners do not pay.
D)personally liable to the full extent of the debt.

Question 50

Clu,Dolf,and Elton do business as Fertile Valley Farm.Clu's relationship to the firm ends,but it continues to do business.This is

A)dissociation.
B)dissolution.
C)winding up.
D)wrongful.

Question 51

Erte,a partner in Fluoride Dental Associates,applies for a loan with Great State Bank allegedly on Fluoride's behalf but without the authorization of the other partners.Great State knows that Erte is not authorized to take out the loan.Erte's default on the loan results in

A)Erte and Fluoride's joint liability for the amount.
B)Erte's sole liability for the amount.
C)Fluoride's sole liability for the amount.
D)neither Erte's nor Fluoride's liability.

Question 52

Mead,Nero,and Olen do business as Pipe & Plumbing Services.After Mead's relationship to the firm ends,Nero and Olen agree to discontinue the business.This is

A)dissociation.
B)dissolution.
C)gross negligence.
D)simple misconduct.

Question 53

Cody is a partner in Delta Accounting Service.Cody can inspect

A)all of Delta's books and records.
B)Delta's books and records only as the firm's management permits.
C)Delta's books and records only for a reasonable purpose.
D)Delta's books and records relating to Cody's capital contribution only.

Question 54

Dave and Eiger are partners in First-Place Athletic Supplies,which sells sports equipment.Dave manages the business.Unless the partnership agreement states otherwise,Dave is

A)entitled to compensation in proportion to its effect on the business.
B)entitled to compensation in proportion to the effort expended.
C)entitled to compensation in proportion to the effort required.
D)not entitled to compensation for his effort.

Question 55

Gallop Western Ranch is a family limited liability partnership (FLLP).In an FLLP,all of the partners must be

A)natural persons only.
B)natural persons or persons acting as fiduciaries for natural persons.
C)persons acting as fiduciaries for natural persons only.
D)related.

Question 56

Rick and Sandy are limited partners in Total Profit Enterprises,a limited partnership.To avoid personal liability for partnership obligations,they must not

A)acquire an interest in the firm.
B)contribute property to the firm.
C)engage in activities independent of the firm's business.
D)participate in the firm's management.

Question 57

Lucy is a limited partner in Metro Contractors,a limited partnership,which cannot pay its debts.Lucy is personally liable for the debts

A)in proportion to the number of partners in the firm.
B)to no extent.
C)to the extent of her capital contribution.
D)to the full extent.

Question 58

Sabin and Tyler agree while talking on the phone to form a partnership.Their partnership agreement is legally binding

A)only if a third person knows of the agreement.
B)only if the agreement is reduced to writing.
C)only if the parties exchange valid consideration.
D)without more.

Question 59

Denise and Elke do business as Final Curtain Decorators.In most states,for purposes of holding title to property,this partnership would be treated as

A)an aggregate of the individual partners.
B)a natural person.
C)an entity.
D)a non-existent party.

Question 60

Rona and Stiv do business as Treasure Island Traders.In acting on the firm's behalf in a deal with Unlimited Potential,Inc.,Rona makes an honest error in overestimating the profit.To her firm,Rona is

A)liable for breach of the duty of care.
B)liable for breach of the duty of economic sense.
C)liable for breach of the duty of loyalty.
D)not liable.

Question 61

Connie,Drew,and Ellen are the general partners of Foreign Auto Repair,a limited partnership.Connie dies.The partnership can

A)continue only after a distribution of its assets.
B)continue only as a general partnership.
C)continue only if Drew and Ellen consent.
D)not continue because Connie's death dissolves the firm.

Question 62

Venture Capital,LP,is a limited partnership.A Venture limited partner loses his or her limited liability if he or she

A)acts as the firm's manager.
B)has full awareness of the firm's business activities.
C)invests in the firm's competitor.
D)votes on the firm's sale or dissolution.

Question 63

Dunn and Etta are limited partners in Fancee Fashion Stores,a limited partnership.In terms of the firm's books,Dunn and Etta are entitled to

A)access in proportion to their participation in management of the firm.
B)access to the parts that directly relate to their capital contributions.
C)no access.
D)total access.

Question 64

International Exports,L.P.,is a limited partnership,with $100,000 in declared but unpaid profits.International's creditors include Friendly Credit Corporation for $5,000 and Gwen,one of International's limited partners,also for $5,000.When Harry,one of International's general partners,decides to retire,the other general partners vote to liquidate and dissolve the firm.The limited partners,who are not asked their opinions,want International to continue in business and file a suit against the general partners to compel this result.Can the court order International to continue If not,what is the priority of the distribution of International's assets on its dissolution

Question 65

Energy Unlimited,LP,is a limited partnership to which its partners,including Fink,have contributed capital.Energy's creditors include Graves Engineering,Inc.On Energy's dissolution,its assets will be distributed to pay

A)Fink and Graves proportionately.
B)Fink first.
C)Graves first.
D)neither Fink nor Graves.

Question 66

Bret is a general partner in Capitol Realty,LLLP,a limited liability limited partnership,which cannot pay its debts.Bret is personally liable for the debts

A)in proportion to the number of partners in the firm.
B)to no extent.
C)to the extent of his capital contribution.
D)to the full extent.

Question 67

Sally and Tom decide to go into business,selling discounted merchandise through their Web site "e-Buy." They sign a partnership agreement that requires Sally to contribute $12,000 and Tom to contribute $8,000 in capital to start the firm.The agreement also states that only Sally will have the authority to bind the partnership in deals with third parties,but the agreement says nothing about the management of the firm or a division of profits.Without Sally's knowledge,Tom tells United Computer Products,Inc.,that he represents the firm and signs a contract with United to buy hard drives for resale on e-Buy.In the first year,e-Buy makes a profit of $50,000.What are the partners' rights with respect to the management of the firm Is the partnership bound to the contract with United Do the partners split the first year's profits If so,how much is each entitled to