Question 1

A partner who is made to pay more than his or her proportionate share of contract liability may seek indemnification from the partnership and from those partners who have not paid their share of the loss.

Accepted Answer

This is true, as partners are typically jointly and severally liable for partnership debts and obligations, meaning that if one partner pays more than their share, they can seek indemnification from the partnership and any partner who has not paid their share of the debt.

Question 2

The Uniform Partnership Act provides "gap-fillers" for partnership contract terms,should a partnership agreement fail to address a crucial issue.

Accepted Answer

The Uniform Partnership Act does provide "gap-fillers" for partnership contract terms if the agreement does not address a crucial issue. This helps to ensure that the partnership operates smoothly and that partners have a clear understanding of their rights and obligations.

Question 3

General partnerships have been recognized in this country only since the end of the Civil War.

Accepted Answer

General partnerships have been recognized in this country since before the Civil War.

Question 4

A partnership that operates under a fictitious name has no obligation to report the fictitious name to any governmental entity.

Accepted Answer

A partnership that operates under a fictitious name is required to file a "Doing Business As" or "DBA" registration with the appropriate governmental agency, usually the county clerk or state agency responsible for business registrations. Failure to do so can result in fines or penalties.

Question 5

All states have enacted statutes that provide for the creation of limited partnerships.

Accepted Answer

All states have indeed enacted statutes for the creation of limited partnerships.

Question 6

If a partner must pay a third party who was injured due to a tort committed by another party,the partner who had to pay can seek recovery for the full amount from the partner who committed the tort.

Accepted Answer

This is the principle of contribution and indemnity among partners in a partnership. One partner can seek recovery for the full amount from another partner who committed the tort, as they share joint and several liability for the partnership's obligations.

Question 7

The Uniform Partnership Act treats partnerships as separate legal entities.

Accepted Answer

The Uniform Partnership Act (UPA) treats partnerships as separate legal entities, allowing them to own property, enter contracts, and sue or be sued in their own name.

Question 8

Unless the partnership agreement authorizes it,partners are not entitled to receive a salary for service rendered on behalf of the partnership.

Accepted Answer

Unless stated in the partnership agreement, partners are not entitled to receive a salary for their services to the partnership. They only receive a share of the profits according to their percentage of ownership in the partnership.

Question 9

The number of votes that a partner has on partnership issues is directly proportional to the percentage of the partner's capital contribution.

Accepted Answer

The answer of The number of votes that a partner...

Question 10

Partners are jointly and severally liable for the contracts and debts of the partnership.

Accepted Answer

The answer of Partners are jointly and severally liable for...

Question 11

General partners are personally liable for partnership debts in a limited partnership.

Accepted Answer

This is a true statement. General partners have unlimited personal liability for the partnership's debts and obligations, while limited partners have limited liability and are not personally liable for these debts beyond their investment in the partnership.

Question 12

Whenever a person participates in the management of a business,that person will be treated as a general partner.

Accepted Answer

Not all individuals who participate in the management of a business are automatically considered general partners; the specific legal structure and agreements of the business determine the roles and liabilities of individuals involved.

Question 13

A partnership agreement provision that differs from the provisions of the Uniform Partnership Act is automatically void.

Accepted Answer

While the Uniform Partnership Act provides default rules for partnership agreements, partners are allowed to modify these provisions as long as they are not illegal or against public policy. Therefore, a partnership agreement provision that differs from the provisions of the Uniform Partnership Act is not automatically void.

Question 14

When a new partner joins an existing partnership,the new partner has only limited liability for the obligations of the partnership in existence at the time he or she became a partner.

Accepted Answer

A new partner is only liable for debts incurred after they join the partnership.

Question 15

Partnerships can be formed without any formalities,and the presence of the required elements of a partnership can be based on the conduct of those in the business.

Accepted Answer

Partnerships can indeed be formed without any formalities, and the essential elements of a partnership (such as sharing of profits and losses) can be demonstrated through the conduct of the partners involved. However, it's generally advisable to have a written partnership agreement in place to avoid misunderstandings and disputes down the line.

Question 16

Distribution of profits for any purpose is considered to be evidence that a partnership exists.

Accepted Answer

The answer of Distribution of profits for any purpose is...

Question 17

If a partnership agreement specifies how losses are to be divided,but is silent with respect to the division of profits,the profits are to be divided in the same manner as losses.

Accepted Answer

The answer of If a partnership agreement specifies how losses...

Question 18

A partner who supplies sixty percent of the partnership's operating capital is automatically entitled to sixty percent of the partnership's profits,if there is no agreement to the contrary.

Accepted Answer

In a partnership, profit distribution is typically determined by the partnership agreement, not by the proportion of capital contributed, unless explicitly stated in the agreement.

Question 19

In the absence of an agreement to the contrary,partners have equal rights to manage a partnership,regardless of the size of their capital investment.

Accepted Answer

This is based on the principle of equal partnership, where each partner has an equal say in the management of the partnership, regardless of their capital contribution. However, if there is an agreement in place that outlines different management roles and responsibilities or specifies the allocation of decision-making authority based on capital contribution or expertise, then this principle may not apply.

Question 20

Partners are jointly and severally liable for the torts and/or breaches of trust of the partnership.

Accepted Answer

This means that each partner is individually responsible for the full amount of any damages caused by the partnership's torts or breaches of trust, regardless of each partner's specific involvement in the wrongdoing. This is an important aspect of partnerships to consider when entering into such a business arrangement.

Quiz 26: Small Business, Entrepreneurship, and Partnerships