Question 1

Which of the following describes the imposing of partnership duties and liabilities upon a person who is not a partner in an existing partnership by reason of his consenting to representation that he is a partner?

Accepted Answer

This is a classic example of partnership by estoppel, where a person is held liable as a partner in a partnership because they represented themselves as a partner, even though they may not have been one officially. This concept is also known as "holding out."

Question 2

A partner has implied authority to:

Accepted Answer

A partner with implied authority can perform all of the actions listed, as they are necessary for the regular operation and functioning of the partnership. This includes hiring and firing employees, making necessary purchases, receiving performance of obligations, and bringing legal actions to enforce claims.

Question 3

The best and most reliable tool for preserving a partnership business after dissolution is:

Accepted Answer

A continuation agreement is a legal document that allows a partnership business to continue operating after the dissolution of the original partnership. This agreement specifies the terms and conditions under which the new partnership will operate and is signed by all partners involved. It is the best and most reliable tool for preserving a partnership business after dissolution. A court order may be necessary in some situations but cannot be the primary tool, and there is no need to file a request with the secretary of state's office in most cases. A new partnership can only be formed after distributing all partnership property from the original partnership, and it may not be desirable or feasible in all situations.

Question 4

Paul is driving a truck delivering goods for his partnership when he negligently backs into a customer's new car.The customer sues the partnership and recovers $8,000 in damages.Under the RUPA:

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), the partnership is liable for the wrongful acts of a partner acting in the ordinary course of business, under the doctrine of respondeat superior.

Question 5

__________ is available to a third person to whom a representation is made and who justifiably relies on the representation.

Accepted Answer

Partnership by estoppel occurs when a third party reasonably believes that a partnership exists based on the actions or representations of the partners, even if no formal partnership agreement has been established. This third party may hold the partners liable for any actions or representations made in reliance on the belief of a partnership. This principle applies to any representation made by the partners, including those made in the course of business.

Question 6

General Widget's 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.The partnership owes $23,000 to creditors for inventory.What will Gene get in distribution under the UPA, assuming there is no agreement on the distribution of profits?

Accepted Answer

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

Question 7

David, Ed, and Fred are partners in the DEF partnership.The partnership is being dissolved, having $200,000 in assets and owing $410,000 to creditors.David contributed $100,000 in capital; Ed contributed $50,000 in capital; and Fred contributed $25,000 in capital.Profits are shared equally.Which of the following is correct with regard to the responsibility of each partner under the UPA?

Accepted Answer

The answer of David, Ed, and Fred are partners in...

Question 8

Smarth, King, and Finkel have been partners for years, but a court of equity is now segregating and considering separately the assets and liabilities of the partnership and the respective assets and liabilities of the individual partners.This process is called:

Accepted Answer

The process being described is marshaling of assets. This involves separating and sorting the assets and liabilities of a partnership and of the individual partners in order to determine each party's individual claims to those assets and liabilities. Liquidation, dissolution, and winding up are related processes, but they involve a more complete termination of the partnership and distribution of assets.

Question 9

Authority that a third person, in view of the circumstances, the conduct of the parties, and a lack of notice or knowledge to the contrary, may reasonably consider to exist is known as:

Accepted Answer

Apparent authority refers to the authority that a third party believes an agent has due to the actions or words of the principal. This belief is reasonable based on the circumstances and conduct of the parties, and the lack of notice or knowledge to the contrary. Actual implied authority refers to the authority that the agent actually has, but is not expressly stated. Actual express authority refers to the authority that is expressly stated by the principal.

Question 10

The UPA provides that partners are __________ liable on all debts and contract obligations of the partnership.

Accepted Answer

The answer of The UPA provides that partners are __________...

Question 11

Actual authority terminates upon:

Accepted Answer

Actual authority terminates upon dissolution of the partnership, which means the partnership no longer exists. The illness of one partner or physical destruction of partnership papers may affect the partnership's operations, but it does not terminate actual authority.

Question 12

Under the UPA, after dissolution:

Accepted Answer

The answer of Under the UPA, after dissolution:
...

Question 13

Roberts, Smith, and Thomas have been partners for twenty years.The partners, however, are now collecting debts, converting assets to cash, paying creditors, and distributing remaining assets to each partner.Roberts, Smith, and Thomas are engaged in:

Accepted Answer

The situation described in the scenario is that of winding up, which involves the collection of debts, conversion of assets to cash, payment of creditors, and distribution of remaining assets among the partners. Dissolution refers to the process of ending a partnership, while marshaling assets involves identifying and organizing assets for distribution. Reformation refers to the process of making changes or modifications to a partnership agreement.

Question 14

Which of the following can be done with the consent of only a majority of the partners in a partnership?

Accepted Answer

The sale of an office computer is a routine business decision that typically requires only a majority of the partners' consent, unlike more significant decisions like arbitration or confession of judgment.

Question 15

A partner may bind the partnership by her act if she has:

Accepted Answer

A partner can bind the partnership by her act if she has actual or apparent authority to perform the act. Actual authority can be either express or implied, while apparent authority arises when a third party reasonably believes that the partner has authority to act on behalf of the partnership based on the partner's conduct or representations.

Question 16

Which of the following is NOT considered to be dissolution by operation of law under the UPA?

Accepted Answer

Expulsion of a partner according to the partnership agreement is not considered dissolution by operation of law under the UPA. Instead, it is considered to be a voluntary withdrawal of a partner. The other listed options (bankruptcy of a partner, subsequent illegality of the partnership, and death of a partner) are all events that trigger dissolution by operation of law.

Question 17

Under the RUPA, the partners have what type of liability for all contract obligations of the partnership?

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), partners have joint and several liability for all contract obligations of the partnership. This means that each partner is individually liable for the full amount of the obligation, and all partners together are also liable for the full amount.

Question 18

Chuck, Betty, and Bert form CB&B Partnership to run a specialty grocery store.Bert is the day-to-day manager of the store, Betty buys the groceries, and Chuck does all the administrative work.Betty decides she would like a new car to go around and visit prospective wholesalers.She makes a contract with Big Ben Motors in the name of CB&B without consulting Chuck and Bert.CB&B and the individual partners are:

Accepted Answer

The answer of Chuck, Betty, and Bert form CB&B Partnership...

Question 19

ABC Partnership agrees to hire an "errand runner" 20 hours per week for the summer.Alan, a partner, interviews a college student and decides to offer her the job.But she says she needs a 40-hour-a-week job, so Alan agrees to make it 40 hours.What result?

Accepted Answer

The answer of ABC Partnership agrees to hire an "errand...

Question 20

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

Accepted Answer

Under the UPA, upon dissolution, a partner is entitled to repayment of his loans to the partnership, capital contribution, and a share of the profits. This is after payment of partnership creditors. The partner's share of profits is typically equal to their percentage of ownership in the partnership, unless there is an agreement stating otherwise.

Quiz 32: Operation and Dissolution of General Partnerships