Question 1

Which of the following is true of a partner's fiduciary duty?

Accepted Answer

The answer of Which of the following is true of...

Question 2

Which of the following expresses the right one has to choose her partners?

Accepted Answer

Delectus personae is the Latin phrase for "choice of person" and refers to the right of an individual or entity to choose with whom they enter into a contractual or business relationship. This means that a person has the right to choose their own partners based on their own personal preferences, standards, or requirements. This concept is often used in partnership agreements, where the partners have the right to choose who they want to enter into a partnership with.

Question 3

Terry and Ernest agree to become partners in advertising and promoting the Midway Fair to be held three years hence.If they agree orally, will the partnership agreement be enforceable?

Accepted Answer

The partnership agreement cannot be enforced because the venture cannot be performed within one year, which violates the statute of frauds.

Question 4

Marilyn, George, and Christine pool their money to buy land for a vegetable garden.They plan to sell the produce at a roadside stand that summer.Are they partners?

Accepted Answer

The answer of Marilyn, George, and Christine pool their money...

Question 5

Under the RUPA, a partner must manage the partnership affairs without duty of care.

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), a partner must manage the partnership affairs with ordinary care, and is liable for gross negligence or reckless conduct, but not for ordinary negligence.

Question 6

The UPA grants each partner the right to an account whenever:

Accepted Answer

The UPA (Uniform Partnership Act) allows for an accounting in situations where a partner is wrongfully excluded, profits are made in violation of fiduciary duty, or when it is just and reasonable, covering all the options listed.

Question 7

Which of the following would be the most convincing evidence of a partnership?

Accepted Answer

The answer of Which of the following would be the...

Question 8

In deciding whether property owned by a partner before formation of the partnership and used in the business is a capital contribution that belongs to the firm, a court will consider which of the following?

Accepted Answer

In deciding whether property owned by a partner before formation of the partnership and used in the business is a capital contribution that belongs to the firm, a court will consider all of the options listed. They will look at whether the property was improved with partnership funds, whether the property was carried on the books of the partnership as an asset, and any admissions or declarations of the partners. Each of these factors could contribute to the court's decision, so all should be considered.

Question 9

Under the RUPA, a loan from a partner to the partnership is treated the same as loans of a person not a partner, subject to:

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), a loan from a partner to the partnership is treated the same as loans from a person who is not a partner. This means that such loans are subject to fraudulent transfer law, the law of avoidable preferences under the Bankruptcy Act, and general debtor-creditor law, encompassing all of these areas.

Question 10

General Widget partnership assets amount to $34,000 after liquidation.Frank, Gene, and Hank, equal partners, each contributed $3,000 into the capital pool at the inception of the business.Gene later loaned the business $5,000.They owe $23,000 to creditors for inventory.What will Gene get in distribution, assuming there is no agreement on the distribution of profits?

Accepted Answer

The answer of General Widget partnership assets amount to $34,000...

Question 11

The Oak Grove Partnership decided it would buy personal computers for use by each partner.Unknown to the other partners, Cromwell, a partner, had an ownership interest in a computer store and thought he could get the computers for the partnership at the best price because of his inside position.He did, in fact, obtain eight computers at only $150 above the manufacturer's price, which was $250 less than the next lowest bid for each computer.What consequence?

Accepted Answer

Cromwell's failure to disclose his ownership interest in the computer store to his partners constitutes a conflict of interest. Despite obtaining the computers at a lower price, he breached his fiduciary duty to the partnership by not disclosing his personal interest in the transaction. Therefore, any profit or benefit he gained from the transaction should rightfully belong to the partnership.

Question 12

Absent an agreement otherwise, upon dissolution, a partner is entitled to which of the following after payment of partnership creditors?

Accepted Answer

According to the Uniform Partnership Act (UPA), upon dissolution, a partner is entitled to repayment of his or her capital contribution during the winding up of the firm. This applies in the absence of an agreement between partners. Therefore, option C is the correct answer. Option A is incorrect because a partner's entitlement to profits upon dissolution is determined by the partnership agreement or the UPA. Option B is incorrect because a partner's entitlement to profits based on participation in management is determined by the partnership agreement or the UPA, and is not guaranteed upon dissolution. Option D is incorrect because the UPA provides default rules for distributing the remaining assets of a partnership in the absence of an agreement, and partners do not need a court order to do so.

Question 13

Clark and David are partners.Clark has contributed $25,000.David has contributed only his time and skill.On dissolution, after all firm debts are paid, $20,000 in assets remains.Which of the following is NOT correct?

Accepted Answer

The remaining $20,000 is not necessarily profit to be divided equally. It may need to be used to cover any remaining liabilities or losses in the partnership. Therefore, it cannot be assumed that the remaining amount is profit to be divided equally between the partners.

Question 14

In which of the following situations will the inference of the existence of a partnership be drawn from the receipt of profits of a business?

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), merely receiving a share of the profits as payment (such as debt installments, wages, or an annuity) does not by itself establish a partnership. These scenarios are specifically outlined as exceptions to the presumption of partnership based on profit sharing.

Question 15

Which of the following is the correct definition for a partnership?

Accepted Answer

A partnership is an association of two or more persons to carry on as co-owners a business for profit. This definition distinguishes a partnership from a corporation or limited liability company, which are separate legal entities consisting of numerous individuals rather than co-owners. Additionally, unlike a limited partnership which has both general and limited partners, a partnership can consist of only general partners who share unlimited liability for the debts and obligations of the business.

Question 16

White, Gray, and Greene enter into a contract to form a partnership, but the contract says nothing about the sharing of profits and losses.Which of the following will take place?

Accepted Answer

When a contract of partnership is silent about sharing profits and losses, the default rule is that they will be shared equally among the partners. Therefore, in this situation, White, Gray, and Greene will share profits and losses equally unless they specify otherwise in a separate agreement.

Question 17

Sue, Barb, and Carlotta agree to put in $1,000 each to set up a shelter for lost animals.They each work two days a week.Donations fund the day-to-day operations.Do they have a partnership?

Accepted Answer

The key factor that determines a partnership in this context is the intention to form a business for profit. Since the shelter is funded by donations and operates as a service for lost animals rather than a profit-making business, it does not constitute a partnership in the traditional business sense.

Question 18

The principal legal duties imposed upon partners in their relations with one another include:

Accepted Answer

Partners have a fiduciary duty or duty of loyalty to one another, which requires them to act in the best interest of the partnership. The other options are not typically legal duties imposed on partners.

Question 19

Juan, a partner in the Bell Partnership, in violation of a specific term in the partnership agreement restricting the extension of credit of more than $5,000 without the written consent of all the partners, extends credit of $6,500 to Brittany.Juan has violated the duty of:

Accepted Answer

Juan has violated the duty of obedience by acting against a specific term in the partnership agreement. As a result, he can be held personally liable to his partners for any unpaid portion of the $6,500.

Question 20

A distribution in a partnership may be:

Accepted Answer

A distribution in a partnership can include payments for services, division of profits, or repayment of loans, making all options valid.

Quiz 30: Formation and Internal Relations of General Partnerships