Question 1

To be partnership property,title to real estate bought with partnership assets and used by the partnership may be put in the name of:

Accepted Answer

Title to real estate bought with partnership assets and used by the partnership may be put in the name of the partnership in its name or one or more partners in their capacity as partners in the partnership if the name of the partnership is indicated in the instrument transferring title. This allows for clear ownership and avoids confusion in the event of a dispute or dissolution of the partnership. Option A would only give ownership to one partner, while option B would not specify individual ownership within the partnership. Option D is not a valid choice as there must be clear ownership established for partnership property.

Question 2

A partner's transferable interest is subject to the claims of that partner's creditors who may obtain a judicial lien known as a(n)__________ against the partner's transferable interest.

Accepted Answer

A creditor can obtain a judicial lien known as a charging order against a partner's transferable interest. This allows the creditor to receive any distributions that the partner would have received from the partnership until the debt is paid off, but does not give the creditor any management or voting rights in the partnership. Foreclosure and redemption are not applicable in this context.

Question 3

The RUPA treats a partnership as a legal entity in which one of the following respects?

Accepted Answer

The RUPA treats a partnership as a legal entity for the purpose of suing or being sued. This means that the partnership can be sued as a single entity, rather than each partner being sued individually. However, the partnership is not treated as a legal entity for all purposes, such as taxation, and the liability of partners for partnership obligations still remains. Assignment of a partner's interest is also addressed under the RUPA, but it is not the primary way in which a partnership is treated as a legal entity.

Question 4

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 accurately describes the main characteristic of a partnership, which is that it involves a shared ownership and management of a business between two or more individuals.

Question 5

Which of the following is the most convincing evidence of a partnership arrangement?

Accepted Answer

The most convincing evidence of a partnership arrangement is when two or more persons carry on a business for profit, even if there is no formal agreement. This aligns with the definition of a partnership in many legal jurisdictions, where the intent to make a profit together is a key criterion.

Question 6

The law establishes a test for determining whether a partnership has been formed.The test includes which of the following?

Accepted Answer

A partnership is generally defined as an association of two or more persons who carry on as co-owners of a business for profit. The other options are not required elements for the formation of a partnership.

Question 7

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 8

Under the UPA,a partner's ownership interest in any specific item of partnership property is that of a:

Accepted Answer

Under the Uniform Partnership Act (UPA), a partner's ownership interest in partnership property is considered a "tenant in partnership." This means that each partner has an equal right to possess the property for partnership purposes, but does not have a direct ownership interest in the property that can be transferred independently of the partnership.

Question 9

Which of the following would lack the capacity to become a partner?

Accepted Answer

An adjudicated incompetent, or someone who has been declared legally incapable of making decisions, lacks the legal capacity to enter into a partnership agreement. A trust and a corporation, on the other hand, can potentially become partners depending on the laws and regulations governing partnerships in their jurisdiction.

Question 10

Which of the following is correct with regard to partnership property?

Accepted Answer

Under the RUPA, there is a rebuttable presumption that unless a contrary intention appears, property acquired with partnership funds is partnership property. The other choices are incorrect. A is incorrect because partnership property can change over time depending on additions or subtractions from the partnership. C is incorrect because the RUPA actually sets forth one irrebuttable presumption, not two, and it applies to property acquired in the name of one of the partners with an indication of their capacity as a partner. D is incorrect because in the absence of an express agreement, property owned by a partner before the formation of the partnership is the partner's separate property, regardless of taxes, liens, and expenses paid by the partnership.

Question 11

A partnership agreement should include all but which one of the following?

Accepted Answer

A partnership agreement should include the duties of the partners, the capital contribution of the partners, and the division of profits and losses. However, the agreement for dividing tax liability of the partnership is not necessary for the partnership agreement, as tax liability is typically divided based on the profits and losses division.

Question 12

Andre invested $100,000 in a partnership with Erik and Louis.Andre's contract with the partnership states he will receive a portion of partnership profits,but he will be liable for partnership's debts only to the extent of the $100,000 he invested.Andre is:

Accepted Answer

Andre is a limited partner because he is liable for the partnership's debts only to the extent of the $100,000 he invested. This means that his liability is limited and he cannot be held responsible for debts beyond his initial investment.

Question 13

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

Accepted Answer

An agreement to share profits and losses is the most convincing evidence of a partnership. This suggests that the parties involved are sharing in the risks and rewards of the business, and not just receiving a salary or sharing in gross returns. Additionally, sharing in the management of a business could apply to various types of business relationships (such as a joint venture), and paying a manager a percentage of profits does not necessarily imply a partnership.

Question 14

A __________ is an unincorporated business association consisting of at least one general partner and at least one limited partner.

Accepted Answer

A limited partnership is the only option that specifically includes at least one general partner and at least one limited partner. A joint venture is a temporary partnership between two or more businesses, a limited liability company can have multiple members but doesn't require a general partner, and a limited liability partnership requires all partners to have limited liability.

Question 15

Co-ownership of the means or instrumentality of accomplishing a single business transaction or a limited series of transactions ordinarily results in a:

Accepted Answer

Co-ownership of the means or instrumentality of accomplishing a single business transaction or a limited series of transactions typically results in a joint venture. A partnership involves more ongoing collaboration and shared ownership of a business, while a corporation is a separate legal entity owned by shareholders. R&D partnership typically focuses on research and development activities, which may not involve joint ownership of specific assets or transactions.

Question 16

In the case of In Re KeyTronics,the court held that:

Accepted Answer

The court held in In Re KeyTronics that the intent of the parties to form a partnership will be ascertained objectively from all the evidence and circumstances. The court rejected the argument that there is a requirement for a specific agreement in order to form a partnership. Additionally, the court noted that the intent necessary to form an association under Section 202(a) of the RUPA refers to the intent to form a partnership per se. However, this was not the primary holding of the case.

Question 17

Which of the following is NOT an advantage of a partnership?

Accepted Answer

Partners in a partnership do not have limited liability, which means they are personally responsible for any debts or legal obligations of the partnership. This is a disadvantage of a partnership. Choices A, C, and D are all advantages of a partnership.

Question 18

In the case of Thomas v.Lloyd,the court held:

Accepted Answer

The court held that the ownership of real estate titled in the names of individual partners is a question of fact, and the burden of proof is on the one alleging that the actual ownership does not match the names on the legal title. Therefore, option B is the best choice. Options A, C and D are incorrect as the payment of real estate taxes or promissory note payments out of partnership funds is not determinative of ownership.

Question 19

Marilyn,George,and Christine pool their money to buy land to operate a vegetable farm from which they plan to sell the produce and share the profits or losses.Are they partners?

Accepted Answer

Marilyn, George, and Christine are pooling their money to buy land to operate a vegetable farm, which they plan to sell and share profits or losses. This indicates that they are associating to carry on a for-profit business, which they co-own, making them partners. Joint ventures involve two or more parties who work together on a particular business transaction or project, but in this case, they intend to operate a business together, making them partners. The fact that they will share losses incurred by the business also supports the conclusion that they are partners.

Question 20

Arthur,Betty,and Clara each inherit an undivided one-third interest in an apartment complex.Instead of selling it,they decide to continue to operate it for the next few years as a sideline to their other occupations just to see if they can earn some extra money.What are they?

Accepted Answer

Since Arthur, Betty, and Clara have decided to operate the apartment complex together in order to earn some extra money, they are functioning as a partnership. While they are co-owners of the complex, the fact that they are actively working together to make decisions and generate income places them firmly in the category of a partnership.

Quiz 30: Formation and Internal Relations of General Partnerships