Deck 40: Partnerships: General Characteristics and Formation

Question 1

If partners have no partnership, their relations are governed by the UPA or its derivatives.

Answer 1

True

Question 2

According to the Uniform Partnership Act, the various forms of joint ownership by themselves do not establish partnership, whether or not the co-owners share profits made by the use of the property.

Answer 2

True

Question 3

Unlike the Revised Uniform Partnership Act (RUPA), the Uniform Partnership Act (UPA) does not permit partnerships to form among anyone apart from natural persons.

Answer 3

False

Question 4

The existence of an at-will partnership would need to be evidenced by some writing in order to avoid invalidation under the statute of frauds.

Question 5

The mercantile theory of the law merchant held that the partnership is a legal entity that can have rights and duties independent of those of its members.

Question 6

The fictitious names statutes in most states of US require that anyone doing business under a name other than his real name register the name.

Question 7

All states have adopted the Revised UPA.

Question 8

If a person receives a share of the profits of a business, it is assumed she is a partner.

Question 9

No agreement is necessary to form a partnership.

Question 10

The Uniform Partnership Act (UPA) and the Uniform Limited Partnership Act (RUPA) codification and rationalization of the common-law and equitable rules that governed partnerships in the 19th century.

Question 11

Partnerships are not taxable entities and so they do not pay income taxes.

Question 12

It is possible to become someone's partner without intending to or even realizing that partnership has been created.

Question 13

The UPA allows partnerships to own property.

Question 14

A corporation can never be a partner in a partnership.

Question 15

Corporations cannot be partners in partnerships.

Question 16

Partnership law permits an investor to put capital into a general partnership and realize tax benefits without liability for the acts of the other partners.

Question 17

Non-registration of the partnership name will violate the assumed or fictitious name statutes of most states.

Question 18

A partnership may or may not have a partnership agreement as long as the tests of partnership are met.

Question 19

Partnerships "at will" are not covered by the Statute of Frauds.

Question 20

All the states of the U.S. have now adopted the Revised Uniform Partnership Act (RUPA) as promulgated in 1997.

Question 21

Under the common-law theory, a partnership was:

A) a legal entity.
B) a common name for an aggregate of individuals.
C) a group that the law recognized as having legal rights separate from that of the partners.
D) a group that had the right to own and dispose of property independent of its members.
E) an entity that had the right to sue and be sued.

Question 22

Differentiate between the entity theory and the aggregate theory. How did the common law theory and the mercantile theory of law treat partnerships with respect to legal entity?

Question 23

The _____, completed in 1914 and the _____, completed in the 1916 were the basis of partnership law in United States for many decades.

A) Uniform Partnership Act (UPA); Uniform Limited Partnership Act (ULPA)
B) Universal Partnership Act (UPA); Revised Partnership Act (RPA)
C) Uniform Partnership Act (UPA); Revised Uniform Partnership Act (RUPA)
D) United Partners Act (UPA); Uniform Limitation Act (ULA)
E) Partnership Act; Uniform Partnership Act

Question 24

A partnership intentionally created and recognized, orally or in writing is known as a(n) _____ partnership.

A) estoppel
B) agency
C) implied
D) apparent
E) express

Question 25

A _____ is the association of two or more people carrying on a business as co-owners for profit.

A) limited liability company
B) trust
C) partnership
D) proprietorship
E) agency relationship

Question 26

Which of the following is most likely to be considered a partnership?

A) GoodHomes, a charitable organization formed by Ron and Ben, who share ownership.
B) Wyler Corporation, a tinned food manufacturing organization, owned by 40 individuals but managed by Emily and Emma Wyler.
C) Beautiful You, a small cosmetics retail shop, owned and managed by Delores Young.
D) Scissors, a salon for women, co-owned and managed jointly by Wanda and Ginny, who share profits equally.
E) Bright Red, a non-profit organization concerned with helping the elderly.

Question 27

Which of the following is true of express partnerships?

A) They must be created in writing.
B) They are limited to a direct association of human beings.
C) The name must be registered if it is fictitious.
D) They are created unintentionally.
E) A partnership agreement is necessary for creation.

Question 28

The concept of a business firm as a legal person, with existence and accountability separate from its owners stems from _____.

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

Question 29

A partnership by estoppel is a legal finding that a partnership exists even though the "partners" did not want to have a partnership.

Question 30

What are the various terms that a partnership agreement or contract should clearly set forth?

Question 31

Which of the following statements is true of partnerships?

A) Partnership is limited to indirect association between human beings.
B) Family members cannot be partners.
C) Partnership cannot constitute an association between other entities.
D) Partnerships between parents and minor children are lawful.
E) Partnerships must be created by written agreements.

Question 32

If the business cannot be performed within one year from the time that the agreement is entered into, the partnership agreement should be in writing to avoid invalidation under the:

A) Statute of Estoppel.
B) Statute of Frauds.
C) Uniform Partnership Act.
D) Statute of Co-ownership.
E) National Conference of Commissioners and Uniform Laws.

Question 33

RUPA makes partnerships legal entities in which respect? Partnerships have …

A) perpetual existence.
B) responsibility for their own debts.
C) the obligation to pay federal income tax
D) the ability to own property in their own names
E) none of the above

Question 34

Mr. Brown, Mr. Hobbs, and Mr. Young want to enter into a partnership to open a food joint. Which of the following names for their partnership need not be registered under the fictitious names statutes of their state?

A) Yumm-Tumm
B) Good Food Corporation
C) Brown, Hobbs, and Young
D) Farm-Fresh Foods
E) Fill- it-up Inc.

Question 35

_____ is a partnership arising when in fact none exists, where one allows himself or herself to be represented as a partner, thus incurring partnership liability.

A) Partnership by estoppel
B) Implied partnership
C) Express partnership
D) Express agency
E) Implied agency

Question 36

Which of the following is true of partnerships as entities?

A) Partnerships are taxable entities and pay income taxes.
B) A partner can unilaterally dispose of partnership property under both RUPA and UPA.
C) A partnership cannot be involuntarily thrust into a bankruptcy proceeding.
D) A partnership may keep business records as if it were a separate entity.
E) Under RUPA, a partnership does not have entity characteristics.

Question 37

Dubious owned and operated a new- and used-car business, "Dubious' Used (and new!) Cars," or "DUC." He hired Cecilia Seller as a saleswoman and agreed to pay her 20% of the profits of the business. Another of Dubious' employees, Mike Mechanic, performed a diagnosis and repair incorrectly on Mrs. Ace's Cadillac, damaging its electronics; it cost $3500 in repairs. Does Cecilia share in this loss?

Question 38

A The theory that a business firm is a collection of individual owners who bind themselves together to share profits is known as _____

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

Question 39

Which of the following is a necessary condition for a partnership by estoppel?

A) The assent of both parties in the partnership
B) A representation to a third party that there is in fact a partnership
C) The reduction of the partnership agreement in writing
D) The sharing of profits between both partners
E) The sharing of ownership equally among all parties

Question 40

Michelle bakes cakes during her vacations and sells them to people in her neighborhood. Her friend Diana visits her during the vacation and helps her out in baking. Michelle knows that baking is a lot of work, and insists on paying Diana for helping her. Diana picks up the techniques of baking quickly and soon begins visiting Michelle daily, to help her bake. She begins looking for new customers for cakes and, on Michelle's insistence, they start sharing the profits. Under this case, Michelle and Diana have a(n) _____ partnership.

A) express
B) lingering
C) implied
D) willful
E) estoppel