Deck 41: Partnership Operation and Termination

Question 1

The Uniform Partnership Act and the Revised Uniform Partnership Act do not dictate what relations among partners must be.

Answer 1

True

Question 2

According to the Uniform Partnership Act, creditors of the old partnership do remain as creditors of the new partnership.

Answer 2

True

Question 3

In the course of the partnership business, partners are not entitled to a wage.

Answer 3

True

Question 4

If no provision relating to the distribution of profits and losses is stated in the partnership agreement, then under RUPA Section 401(b), "each partner is entitled to an equal share of the partnership profits and is chargeable with a share of the partnership losses in proportion to the partner's share of profits."

Question 5

The partnership firm is not liable if a single partner disposes of the firm's goodwill.

Question 6

As per the Revised Uniform Partnership Act (RUPA), a partnership agreement may eliminate the duty of loyalty so as long as that is not manifestly unreasonable.

Question 7

RUPA generally requires the judgment creditor to exhaust the partnership's assets before going after the separate assets of a partner.

Question 8

A judgement creditor has the right to obtain a charging order.

Question 9

A partner's liability for firm debts is limited to his capital contribution.

Question 10

Under both Uniform Partnership Act (UPA) and Revised Uniform Partnership Act (RUPA), contract liability of the partners is joint and several.

Question 11

As per the Uniform Partnership Act, a partnership is terminated on dissolution.

Question 12

All profits and losses are divided equally unless otherwise agreed among the partners.

Question 13

A person working for a partnership firm who is not a partner is an associate and usually gets only a salary.

Question 14

The freedom to select new partners is absolute.

Question 15

Specific property interest of a tenant in partnership vests in the surviving partners, not in the heirs.

Question 16

Under the Revised Uniform Partnership Act (RUPA), a partner is entitled to remuneration for all the services performed by him for the partnership.

Question 17

Under Revised Uniform Partnership Act (RUPA), dissolution happens when RUPA requires the partnership to wind up and terminate.

Question 18

The duty owed by a partner to her co-partners is the same as the duty owed by an agent to a principal.

Question 19

A majority of partners may choose to admit a new person as partner.

Question 20

For tortuous acts, the partners are said to be jointly and severally liable under both Uniform Partnership Act (UPA) and Revised Uniform Partnership Act (RUPA), and the plaintiff may separately sue one or more partners.

Question 21

Under UPA, "dissolution" means the termination of the partnership.

Question 22

Under both UPA and RUPA the assignment by a partner of all or part of his interest works only to grant the assignee whatever profits the assignor would have received.

Question 23

In the normal course of partnership business, majority rules.

Question 24

Debtor, a partner in the firm D, E, and F, becomes personally indebted to Creditor; Creditor obtains a judgment against Debtor. In satisfying the judgment, Creditor may take claim to specific partnership property.

Question 25

Under UPA, the partnership dissolves upon the withdrawal of any partner.

Question 26

Which of the following duties of the partners, that they owe each other, relates to the duty to act within the bounds of the authority or trust that has been extended?

A) Duty of embezzlement
B) Duty of obedience
C) Duty of derivative action
D) Duty of replevin
E) Duty to lost volume

Question 27

Darlene Dodson represents to Perez that she-Dodson-is a partner in the firm A, B, and C, though she is not. Dodson may become liable as a partner.

Question 28

The "duty to account" and a formal "accounting" are the same in partnerships.

Question 29

A former partner cannot escape liability from obligations incurred while she was a partner.

Question 30

Ross, Molly, and Dave had opened a partnership firm. Dave mortgaged his interest in the partnership in return for a $10,000 loan from the bank. Under this circumstance, which of the following will hold true as per the RUPA?

A) It would cause dissolution of partnership.
B) It would entitle the bank to access the firm's information.
C) The bank would be entitled to participate in running the firm.
D) The bank would be entitled to receive whatever profits Dave would have received.
E) The bank would be entitled to inspect the books of accounts of the partnership firm.

Question 31

Partnerships may be dissolved only by unanimous agreement among the partners.

Question 32

After the partnership's creditors are satisfied, each partner is entitled to reimbursement of his or her capital contribution when the business is terminated.

Question 33

_____ is the highest duty of good faith and trust, imposed on partners as to each other and the firm.

A) Embezzlement duty
B) Larceny duty
C) Escrow duty
D) Escheat duty
E) Fiduciary duty

Question 34

Ralph, a partner, doing partnership along with Gilbert and Vicky, during course of the partnership, pays a sum of $4,000 to one of the suppliers out of his personal account. The partnership firm will have to pay back this amount to Ralph as per the partner's right to _____.

A) profits and losses
B) indemnification
C) compensation
D) management
E) derivative action

Question 35

Able, Baker, and Carr run an auto-repair business as partners. Carr, needing a little extra income, begins to repair some customer's cars on weekends in his home garage. Able and Baker have no right to any interest in this activity.

Question 36

An old partner cannot be liable for partnership obligations incurred after she left the partnership.

Question 37

Under RUPA, the partnership need not "dissolve" upon the withdrawal of any partner.

Question 38

Under RUPA, "dissociation" is caused by a partner's withdrawal from the firm's business.

Question 39

_____ is the theory that a new partner can only be admitted to a firm with the unanimous consent of all.

A) corporation by estoppel
B) employment-at-will
C) family purpose
D) delectus personae
E) tenants in partnership

Question 40

Timothy, Reuben, and John, three brothers, work in a partnership firm that specializes in organizing events for people. John's friend Sam visited their place of business and made some suggestions to John for the next event that he was handling. Timothy and Reuben were however, out on a business trip when Sam visited their place. John out of gratuity got Sam a gift out of the business account and asked him to join the partnership. This, at present, could not be possible because of the doctrine of _____.

A) delectus personae
B) corporation by estoppel
C) employment-at-will
D) family purpose
E) tenants in partnership

Question 41

Under the Uniform Partnership Act, what are the five actions that no single partner has implied or apparent authority to do and hence cannot hold the firm liable?

Question 42

The purpose of filing "statements" under RUPA is

A) to satisfy the requirement that all partners have access to the firm's books and records.
B) to report income to the IRS.
C) to establish or deny authority of partners.
D) to announce the arrival or departure of new partners.
E) to eliminate joint and several liability.

Question 43

Under the Uniform Partnership Act (UPA), dissolution of a partnership is said to be by the operation of law when:

A) the partnership is at will and a partner wants to leave the organization.
B) the entire partnership becomes bankrupt.
C) the term of the partnership agreement has expired.
D) all the partners decide that it is preferable to dissolve than to continue.
E) the partners decide to discharge a partner though no provision permits them to do so.

Question 44

Abby, Igor, Ted, and Tim operated a restaurant in partnership. Ted received a letter from his alma mater university offering him an opportunity to teach hospitality courses there. Ted always wanted to teach; he left the partnership. The firm wanted to announce that Ted was no longer their partner since Ted had been handling a lot of purchases and dealing with some big customers. Which of the following statements could they file in order to do so?

A) Statement of partnership authority
B) Statement of dissolution
C) Statement of dissociation
D) Statement of denial
E) Statement of liquidation

Question 45

A general partner may do which of the following without the consent or ratification of the other partners?

A) Admit another person as a partner.
B) Sell significant assets of the partnership.
C) Make a reasonable contract for an advertising campaign.
D) Hire a person to act as general manager of the firm.
E) Admit liability in a claim against the firm.

Question 46

Jack later regained solvency. Decide what, if anything, Charlyn gets in an action against Jack for:
(a) one-half of the $500,000 she had paid to partnership creditors, and
(b) one-half of $80,000, the reasonable value of Charlyn's services during the operation of the part-nership.

Question 47

Under the Uniform Partnership Act, in which of the following cases would a dissolution occur?

A) When two partners get married.
B) When a case has been filed against one or more partners.
C) When a partner wants to leave the firm.
D) When a partner goes for a vacation of 15 days or more.
E) When a partner has mortgaged his interest against a loan from the bank.

Question 48

a. Dubious brought an action against Brown as co-partner. Who wins?
b. George brought an action against Brown as co-partner. Who wins?

Question 49

Francis, Ricky, and Andrew had opened a bakery in partnership. During the course of their partnership, Ricky had taken a loan of $25,000 from Ryan for personal purposes which he defaulted. Ryan could obtain a(n) _____ from the court to secure his loan, directing the partnership to pay Ryan the distribution that Ricky would normally receive.

A) doctrine of estoppel
B) charging order
C) order of relief
D) proof of claim
E) performance bond

Question 50

Creditor obtained a personal judgment against Debtor, a member of a partnership. Creditor will satisfy the judgment by getting a .

A) confession of judgment from Debtor.
B) judicial order of distribution.
C) charging order.
D) writ of restitution.
E) declaration of dissolution.

Question 51

Roswell is a partner in the ABC Auto Repair business. Which of the following is correct regarding partnership property?

A) Upon Roswell's death, his share of the property devolves to his spouse or heirs.
B) Roswell may take tools home to work on his own car in his personal garage.
C) Roswell may invite a friend to use the tools located at his work station off-hours.
D) Upon his personal bankruptcy, Roswell's creditors may attach one-third of the firm's property.
E) none of these is correct.

Question 52

The worst aspect of partnerships is

A) the difficulty in forming them.
B) the decisions about control and compensation.
C) the possibility that a partner might be personally liable for firm obligations.
D) that the firm's books and records must be made publicly available annually.
E) that firm profits are taxed twice: once to the firm, and again to the partners when they get distributions.

Question 53

State the ten different causes of dissociation.

Question 54

Dubious and Able were partners in DUC (Dubious Used Cars). Dubious, the managing partner, signed a contract with Buyer for the sale to Buyer of a small parcel of land belonging to the partnership. Except for the last twenty feet, which was necessary for the driveway, the parcel was not used by the partnership. The agreement stated that it was between Buyer and DUC, with Dubious signing for the partnership. Dubious claimed that he told Buyer before signing that a plat plan would have to be approved by Able before the sale. Buyer denied this and sued for specific performance.

Question 55

"Joint and several" liability for partnership obligations under RUPA means

A) all partners are equally liable.
B) the partnership as an entity is liable.
C) personal liability only arises by judicial order.
D) all partners are liable, and also each one of them is liable.
E) liability on any partner only arises as a condition subsequent to joint liability.

Question 56

The _____ states that a business entity does not itself owe taxes on income; it only acts as a pass-through for its members to receive income.

A) conduit theory
B) estoppel theory
C) entity theory
D) concession theory
E) aggregate theory

Question 57

The Revised Uniform Partnership Act (RUPA) uses the term _____ in lieu of the Uniform Partnership Act (UPA) term "dissolution."

A) winding up
B) liquidation
C) termination
D) dissociation
E) dilution

Question 58

A court order that directs a partnership to pay a partner's judgment creditor the distribution that the partner would normally receive is called _____.

A) doctrine of estoppel
B) order of relief
C) proof of claim
D) performance bond
E) charging order

Question 59

State at least five duties that partners owe each other and five rights that each partner possesses.

Question 60

In the case of a partnership, _____ refers to finishing the business at hand, settling accounts, and terminating the firm.

A) dissociation
B) dissolution
C) dilution
D) renunciation
E) winding up