Question 1

Under the UPA, neither a partner who causes dissolution by wrongfully withdrawing nor a partner expelled pursuant to the partnership agreement can force liquidation of the partnership.

Accepted Answer

Under the UPA, a partner who wrongfully withdraws or is expelled cannot force liquidation of the partnership. Only the remaining partners or a court can decide on the continuation or dissolution of the partnership.

Question 2

In a partnership of A, B, and C, A commits fraud which creates a liability to the partnership of $9,000.If the three partners share profits and losses equally, A's liability to the partnership for his fraudulent act is $3,000.

Accepted Answer

In a partnership, each partner is jointly and severally liable for the actions of the other partners if those actions are within the scope of the partnership's business. This means that A would be liable for the full $9,000 to the outside party due to his fraudulent act, not just his share of the loss. However, internally, the partnership agreement might require A to compensate B and C for their portions of the loss, but to the external party affected by the fraud, A is liable for the entire amount.

Question 3

The RUPA codifies and thus continues to give effect to the causes of dissociation and dissolution that existed under the common law, such as assignment of a partner's interest.

Accepted Answer

The answer of The RUPA codifies and thus continues to...

Question 4

Under the UPA, submission of a partnership claim to arbitration requires the consent of all the partners.

Accepted Answer

According to Section 21 of the Uniform Partnership Act (UPA), submission of a partnership claim to arbitration requires the consent of all the partners.

Question 5

A person has notice of a fact if the person has reason to know it exists from all of the facts known to the person at the time in question.

Accepted Answer

This is the definition of notice according to legal terms.

Question 6

Under the UPA, dissolution by operation of law occurs:
A)if a partner has been adjudicated mentally incompetent.
B)upon the bankruptcy of a partner.
C)when a partner has engaged in conduct prejudicial to the business.
D)when the business can be carried on only at a loss.

Accepted Answer

Under the UPA, dissolution by operation of law occurs upon the bankruptcy of a partner.

Question 7

The liability of partners for a tort or breach of trust committed by any partner is unlimited, personal liability.

Accepted Answer

Partners in a partnership have unlimited personal liability for any tort or breach of trust committed by any partner. This means that they can be held personally responsible for damages or losses resulting from such actions, even if those actions were taken by another partner.

Question 8

Under the UPA, which of the following liabilities of a partnership has the highest priority for payment out of partnership assets?
A)Amounts owing to partners for profits.
B)Amounts owing to partners for loans or advances.
C)Amounts owing to creditors other than partners.
D)Amounts owing to partners for capital.

Accepted Answer

Under the UPA, liabilities owed to creditors other than partners have the highest priority for payment out of partnership assets. This means that if the partnership assets are insufficient to pay all creditors, non-partner creditors will be paid before any partner receives payment for their share of capital, loans, advances, or profits. Therefore, option C is the correct choice.

Question 9

The withdrawal of a partner in a partnership at will may be either a rightful or wrongful dissociation.

Accepted Answer

The answer of The withdrawal of a partner in a...

Question 10

Dissociation refers to those situations in which the RUPA requires a partnership to wind up and terminate.

Accepted Answer

Dissociation refers to a partner leaving the partnership, which does not necessarily require the partnership to wind up and terminate; the partnership can continue with the remaining partners.

Question 11

A partner has the power to dissociate at any time by expressing the intent to withdraw.

Accepted Answer

According to the Uniform Partnership Act (UPA), a partner has the power to dissociate at any time by expressing the intent to withdraw.

Question 12

Under the RUPA, a partner in a term partnership who wrongfully dissociates before the end of a definite term may receive payment of a portion of the buyout price before the expiration of the term.

Accepted Answer

This is correct under Section 701(b)(4) of the Revised Uniform Partnership Act (RUPA). If a partner wrongfully dissociates from a partnership before the end of a definite term, the remaining partners have the option to continue the partnership and buy out the dissociated partner's interest. The dissociated partner may be entitled to receive payment of their portion of the buyout price before the expiration of the term.

Question 13

Under the RUPA, the partnership is liable for torts where the partner is at fault, such as negligence, trespass, fraud, or defamation, but is not liable for no-fault torts.

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), a partnership can be held liable for torts committed by a partner acting in the ordinary course of business, regardless of fault.

Question 14

A person who represents himself to third persons as being a partner when in fact he is not, may have the liability of a partner.

Accepted Answer

This is known as "holding out" oneself as a partner and can create a situation called "partnership by estoppel" where the falsely represented partner can be held liable for partnership debts and obligations.

Question 15

Winding up involves all but which one of the following?
A)Selling assets for cash.
B)Collecting debts owed to the partnership.
C)Taking orders for business.
D)Paying creditors.

Accepted Answer

Taking orders for business is not part of winding up, which involves the process of settling the business affairs and distributing assets to creditors and partners after dissolution. Selling assets for cash, collecting debts owed to the partnership, and paying creditors are all typical activities involved in winding up a partnership.

Question 16

Under the RUPA, in a term partnership, if within 90 days after any specified cause of dissolution occurs, fewer than half of the remaining partners express their will to wind up the partnership business, the partnership will not dissolve.

Accepted Answer

This is in accordance with Section 701(b)(2) of the Revised Uniform Partnership Act (RUPA).

Question 17

A partner is criminally liable for the crimes of her partners.

Accepted Answer

A partner is not automatically criminally liable for the crimes of her partners unless it can be proven that they were involved in, or had knowledge of, the criminal activity and participated in some way.

Question 18

Jane, Kelly, and Lois are partners in an accounting firm, but Jane intends to retire and withdraw from the partnership at the end of the year.Under the RUPA, Jane:
A)has the power to bind the partnership for a partnership obligation incurred within two years after dissociation if the partnership did not dissolve and if at the time of entering into the transaction the other party reasonably believed Jane was then a partner.
B)is liable only for all debts incurred prior to her retirement.
C)is liable to the firm's creditors until the day of her retirement when she will be absolved of all liability.
D)is liable to the firm's creditors for an amount not to exceed her partnership interest on the day of her retirement.
E)is liable to the firm's creditors for an amount not to exceed her initial capital contribution to the partnership.

Accepted Answer

Under RUPA, a dissociating partner like Jane has the power to bind the partnership for a partnership obligation incurred within two years after dissociation if the partnership did not dissolve, and if at the time of entering into the transaction the other party reasonably believed Jane was then a partner. This is known as the "dissociated partner's apparent authority." Additionally, Jane would still be liable for all partnership obligations incurred before her withdrawal, and her liability would not be absolved until all those debts are paid.

Question 19

Under the RUPA, it is possible to cure an illegality within 90 days after notice to the partnership of the event dissolving the partnership for illegality.

Accepted Answer

Under Section 801(b) of the RUPA, a partnership can cure an illegality within 90 days after receiving notice of the event causing the dissolution for illegality. If the partnership successfully cures the illegality within the 90-day period, the partnership will not be dissolved.

Question 20

If the partnership is bound by a contract, then each individual general partner has unlimited personal liability for that obligation.

Accepted Answer

This is because in a general partnership, partners are jointly and severally liable for the obligations of the partnership. This means that each partner can be held personally responsible for the full amount of the partnership's debts and obligations.

Quiz 32: Operation and Dissolution of General Partnerships