Deck 36: Partnerships: Nature, Formation, and Operation

Question 1

No partnership is created based upon an employer sharing profits with an employee as payment for work.

Answer 1

True

Question 2

Under joint and several liability, partners must be sued jointly.

Answer 2

False

Question 3

Each partner has unlimited personal liability for the obligation, if a partner has authority to act and the partnership is bound by the act giving rise to the obligation.

Answer 3

True

Question 4

Each partner has unlimited personal liability for all acts of the partnership's partners.

Question 5

Unless otherwise stated in the partnership agreement, each partner will have one vote in determining how the partnership is managed, even if one partner has an unusually large proportion of management duties.

Question 6

A partner who refuses to obey the articles of partnership may be held liable for any losses that the partnership incurs.

Question 7

Partnership by estoppel applies only when there is no partnership agreement in place; when there is a written partnership agreement, partners not named in the agreement can deny they are partners.

Question 8

If an entire judgment for a tort for which the partnership is liable is paid by one partner, other partners have no legal obligation to indemnify that partner.

Question 9

________ is an association of two or more persons to carry on as co-owners of a business for profit.

A) A joint operation
B) A combined partnership
C) A partnership
D) A joint business arrangement
E) A primary partnership

Question 10

The fiduciary duty includes the duty to be loyal.

Question 11

The partnership is not taxed as a legal entity, thus the partners are taxed on the income generated by the partnership.

Question 12

Which of the following is the main statute governing partnership law?

A) The Partnership Act of America
B) The General Partnership Act
C) Partnerships and Joint-Venture's Act
D) The Uniform Partnership Act
E) The Partnership Governance Act

Question 13

In a partnership, a minimum of one of the partners must be an agent while the others are considered employees of the partnership.

Question 14

What was the result in Leoff v. S&J Land Co., the case in the text involving a land dispute and whether a partnership existed?

A) The appellate court upheld the lower court's decision that a partnership between the parties existed because the agreement between the parties provided for the sharing of profits and losses.
B) The appellate court upheld the lower court's decision that no partnership existed because, while the parties had an agreement regarding management, no partnership agreement existed.
C) The appellate court upheld the lower court's decision that a partnership existed because the parties were involved in a type of joint venture.
D) The appellate court reversed the lower court's decision that a partnership existed because the plaintiff had never judicially admitted the existence of a partnership.
E) The appellate court reversed the lower court's decision that no partnership existed because by completing a dissociation, the defendant admitted the existence of a partnership.

Question 15

Partnership by estoppel is not recognized by most states.

Question 16

Where no partnership agreement exists, will a court dismiss a suit concerning the existence or terms of the partnership?

A) No, informal documentation, such as e-mails, notes, and memos may be used to identify the existence of a partnership and/or the terms of a partnership.
B) No, under federal law, oral testimony is sufficient to set forth the existence and terms of the partnership.
C) Yes, because of the statute of frauds.
D) Informal documentation is sufficient to set forth the existence of the partnership, but not sufficient to set forth the terms of the partnership.
E) Yes, the written agreement is necessary.

Question 17

Only the partnership agreement determines the implied authority of partners.

Question 18

Almost any individual or group of people can serve as a partner.

Question 19

Under the Uniform Partnership Act, which of the following is defined as a "person"?

A) Individuals only
B) Partnerships and individuals
C) Partnerships, individuals, and corporations
D) Partnerships, individuals, corporations, and other associations
E) Corporations only

Question 20

The law requires that all title to property must be in the name of a partnership.

Question 21

Which of the following property rights do partners have, when the articles of partnership are silent?

A) The right to participate in the management of the business, the right to possess partnership property, and the right to an interest in the partnership.
B) The right to participate in the management of the business, but not the right to possess partnership property or the right to an interest in the partnership.
C) The right to participate in the management of the business and the right to possess partnership property, but not the right to an interest in the partnership.
D) The right to participate in the management of the business and the right to an interest in the partnership, but not the right to possess partnership property.
E) The right to possess partnership property and the right to an interest in the partnership; but not the right to participate in the management of the business because while the right to participate in management may exist, it is not a property right.

Question 22

Which of the following statements is false regarding the treatment of a partnership as a legal entity?

A) A partnership is often considered a legal entity when it is sued or being sued.
B) State law determines whether a partnership can or cannot be named in litigation.
C) Title to property can be put in the partnership name.
D) Every partner is considered an agent of the partnership, but not every partner has a fiduciary duty to all other partners.
E) Under the doctrine of marshaling assets, partnership assets are arranged in a certain order to pay any outstanding debts.

Question 23

Which of the following statements represents a partner's right to an interest in the partnership?

A) A partner has no right to an interest in the partnership.
B) The right is composed only of the partner's share of profits.
C) The right is composed only of the partner's right to return of capital contributed by the partner.
D) The right is composed only of the partner's right to return of capital contributed by the partner and any wages due.
E) The right is composed of a combination of the partner's share of the profits and a return of capital contributed by the partner.

Question 24

Partnership by estoppel is a way that a person may be held liable as a partner

A) because they have done business with the partnership
B) without actually being named as a partner in a partnership agreement.
C) by common law agency principals
D) under federal law
E) due to the appearance of a partnership created in an online deal

Question 25

The duty of obedience is considered ________

A) a fiduciary duty.
B) an article of good faith in a partnership agreement.
C) the duty that binds the partnership to federal law.
D) a duty associated with the distribution of profits.
E) a duty for any personal expenditures to be itemized out for the partnership.

Question 26

In a partnership, the partners own partnership property as tenants in property, which means they own it ________

A) individually.
B) as tenants in common.
C) in equal shares.
D) as a group.
E) as tenants with the right of the partnership to take their interest away.

Question 27

Which of the following statements is not true regarding offshore partnerships, in regard to developing countries?

A) They combine the strengths of firms that operate in developing countries and firms that operate in countries that are foreign to the developing countries.
B) Firms in developing countries use offshore partnerships to gain international exposure.
C) Firms in developing countries use offshore partnerships to gain technological competence.
D) Foreign firms use offshore partnerships to gain the opportunity to enter developing markets.
E) Offshore partnerships are rarely used for workers because workers from offshore partnerships tend to be highly priced.

Question 28

Which of the following was the result in Floyd Finch v. Bruce Wayne Campbell, the case concerning whether the fiduciary relationship between law partners gives rise to a duty to bill clients expeditiously, the court held that

A) by not billing clients in a timely manner, Finch was purposefully trying to undermine Campbell's reputation and therefore expulsion from the firm was proper.
B) expelling a partner who did not bill clients expeditiously, even after requests by the partners and clients, because the partner did not want to show 'income' for purposes of his dissolution of marriage was in fact a breach of fiduciary.
C) the jury errored in finding that Finch breached his fiduciary duty because there was conflicting evidence presented at trial.
D) Finch and Campbell were partners and as such each had the right to expel the other for practice that hurt the law firm and neither breached their fiduciary duty to each other.
E) expelling a partner by another partner is question of law that is governed by the Uniform Partnership Act and that the trial court incorrectly gave a summary judgment to Finch.

Question 29

As explained in the text, the United States explains a fiduciary duty as including a duty of obedience, the ________ application of obedience and loyalty far exceeds the United States.

A) German
B) Japanese
C) Chinese
D) European
E) Norwegian

Question 30

Which of the following is true regarding the rights of partners to share in the management of a partnership?

A) Unless the articles of partnership states otherwise, all partners have a right to participate equally in the management of the partnership.
B) Unless the articles of partnership states otherwise, partners share in management in proportion to the amount of capital contributed to the partnership.
C) Unless the articles of partnership states otherwise, partners share in management in proportion to the amount of work done for the partnership.
D) Unless the articles of partnership states otherwise, partners share in management in proportion to their seniority with the partnership with partners of equal seniority sharing equally in management.
E) Rights to management are suspended until the partners amend the articles of partnership to address management rights.

Question 31

Which of the following is true regarding decisions requiring unanimous agreement among the partners, when the articles of partnership do not address the matter?

A) A decision to change some element of the partnership agreement, a decision to admit a new partner, and a decision to alter the nature of the firm's business all require unanimous agreement among the partners.
B) A decision to change some element of the partnership agreement requires unanimous agreement, but a decision to admit a new partner and a decision to alter the nature of the firm's business may be made by majority vote.
C) A decision to change some element of the partnership agreement and a decision to admit a new partner require unanimous agreement among the partners, but a decision to alter the nature of the firm's business may be made by majority vote.
D) A decision to admit a new partner and a decision to alter the nature of the firm's business require unanimous agreement among the partners, but a decision to change some element of the partnership agreement may be made by majority vote.
E) All decisions are made by majority vote and none require unanimous agreement.

Question 32

Regarding partnership property rights, which of the following statements is false?

A) Any property brought into the partnership is considered property of the partnership.
B) Any property acquired by the partnership is considered property of the partnership.
C) Any property in the name of an individual partner that was purchased with partnership funds is considered partnership property.
D) A partner may use partnership property to pay a personal debt.
E) Each partner has the right to possess partnership property.

Question 33

In regards to the rights of partners to share in profits, if the partnership agreement does not establish how the partnership will distribute profits,

A) distribution of profits is suspended until a court can allocate the proper distribution amount.
B) partners share in profits in proportion to the amount of capital contributed to the partnership.
C) partners share in profits in proportion to their status as senior, full, associate or junior status in the partnership.
D) all partners have a right to a share in the profits equally.
E) the partnership must allocate profits based only on a written agreement.

Question 34

Unless otherwise agreed in the articles of partnership, which of the following is true regarding rights partners have in regard to their interactions with other partners?

A) Partners have the right to participate equally in management, the right to share equally in profits, the obligation to share equally in losses, and the right to additional compensation for devoting time to the business.
B) The right to participate in management according to the level of capital contribution, the right to share in profits according to the level of capital contribution, the obligation to share in losses according to the level of capital contribution, and the right to additional compensation for devoting time to the business.
C) The right to participate in management according to the level of capital contribution, the right to share equally in profits, the obligation to share equally in losses, and the right to additional compensation for devoting time to the business.
D) The right to participate equally in management, the right to share in profits according to the level of capital contribution, the obligation to share in losses according to the level of capital contribution, but no right to additional compensation for devoting time to the business.
E) The right to participate equally in management, the right to share equally in profits, the right to share equally in losses, but no right to additional compensation for devoting time to the business.

Question 35

Which statement is correct regarding the liability of a partner for a mistake?

A) A partner who makes an honest mistake in fulfilling his or her responsibilities to the partnership is not held personally liable for the mistake.
B) A partner who makes an honest mistake in fulfilling his or her responsibilities to the partnership is held personally liable for the mistake, but only to the extent of his or her capital contribution.
C) A partner who makes an honest mistake in fulfilling his or her responsibilities to the partnership is held personally liable for the mistake, but only to the extent that he or she shares in profits.
D) A partner who makes an honest mistake in fulfilling his or her responsibilities to the partnership is held personally liable for the mistake, but only to the extent that he or she shares in losses.
E) A partner who makes an honest mistake in fulfilling his or her responsibilities to the partnership is held fully personally liable for the mistake.

Question 36

Which of the following was the result in Robert Law, on Behalf of the Robert M. Law Profit Sharing Plan v. Ronald Zemp, the case in the text which considers how the partnership can be adversely affected by the negligence of one partner?

A) A court may require a partnership to which a defendant belongs to provide financial information and can restrict the partners from encumbering or transferring their interest, but a court cannot restrict the partnership from making loans.
B) A court may require a partnership to which a defendant belongs to provide financial information and can restrict the partnership from making loans; but a court cannot restrict the partners from encumbering or transferring their interests.
C) A court may not require a partnership to which a defendant belongs to provide financial information, nor restrict the partnership from making loans or from encumbering or transferring their interests.
D) A court may require a partnership to which a defendant belongs to provide financial information, and can restrict the partnership from making loans or from encumbering or transferring their interests.
E) A court may require a partnership to which a defendant belongs to provide financial information but cannot restrict the partnership from making loans or from encumbering or transferring their interests.

Question 37

If the articles of partnership do not address the matter, which of the following is a true statement regarding the right of a partner to sell their interest in the partnership to a creditor?

A) Partners can sell his or her interest in a partnership to a creditor.
B) Partners cannot sell any of his or her interest in a partnership to a creditor.
C) Partners can sell 50% of his or her interest in a partnership to a creditor.
D) Partners can sell up to 49% of his or her interest in a partnership to a creditor.
E) If a partner wants to sell their interest to a creditor it can only be if the partner is about to claim bankruptcy.

Question 38

Quenten and Pauline have decided to create a partnership for their new tutoring business. What type of written agreement creates a partnership?

A) No actual written agreement is needed to create a partnership
B) Agreement in partnership
C) Partnership articles
D) Articles of partnership
E) Partners in law agreement

Question 39

Partners should not take any action that will undermine the partnership, such as engaging in business ________

A) that competes with it.
B) that owes the partnership money.
C) that sells different goods or services.
D) that might one day be a partner.
E) that may owe money to the IRS.

Question 40

A group of businesses that use a partnership between local and multinational companies in which each individual business has a stake in the others is known as:

A) groupings
B) foreign investments
C) keirestu
D) multinational
E) investment grouping

Question 41

[Partnership Problems] Jamar, Kenya, and Tamika want to form a partnership to sell students resume preparation and employment search services. Jamar asks Kenya and Tamika if they should draw up some sort of agreement. Kenya replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Jamar and Tamika, however, Kenya agreed to a written document setting up the partnership, which they all signed. It was a simple agreement listing the partners and did not specifically address the right to management or allocation of profits and losses. Kenya has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership; she keeps the payment she receives for herself. When Jamar and Tamika find out, Kenya replies that she was doing two-thirds of the partnership work, particularly in regard to management; that she, therefore, has two-thirds of the voting rights; and that she voted that her actions were appropriate. The articles of partnership does not address the right to share in management, but Jamar and Tamika strongly disagree with Kenya.
Did Kenya commit any breach of duty to the partnership?

A) Yes, she breached her fiduciary duty to the other partners.
B) Yes, she breached her duty of integrity to the other parties.
C) Yes, but only if the other partners can show that she made more income through doing the work on her own than she would have made if she had done the work through the partnership.
D) No, but only because she held two-thirds of the voting rights and could approve the work herself.
E) No, she did not breach any duty.

Question 42

In their partnership agreement, Tulum is responsible for the books. The principal office of the partnership is in Denver but Tulum works from home most of the time in Colorado Springs. Unless otherwise agreed, the records of a partnership ________

A) are kept in a safety deposit box at the bank used by the partnership.
B) are able to be taken to any partners home.
C) are to be kept at the location of the partnership's principal business office.
D) can be kept in a locked box at Tulum's house and brought back to the business each week to be audited.
E) can be kept at all the different locations of the partnership's business office.

Question 43

[Partnership Problems] Jamar, Kenya, and Tamika want to form a partnership to sell students resume preparation and employment search services. Jamar asks Kenya and Tamika if they should draw up some sort of agreement. Kenya replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Jamar and Tamika, however, Kenya agreed to a written document setting up the partnership, which they all signed. It was a simple agreement listing the partners and did not specifically address the right to management or allocation of profits and losses. Kenya has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership; she keeps the payment she receives for herself. When Jamar and Tamika find out, Kenya replies that she was doing two-thirds of the partnership work, particularly in regard to management; that she, therefore, has two-thirds of the voting rights; and that she voted that her actions were appropriate. The articles of partnership does not address the right to share in management, but Jamar and Tamika strongly disagree with Kenya.
The written agreement creating the partnership entered into by Jamar, Kenya, and Tamika is referred to as the ________.

A) Contract of partnership
B) Contract of agreement
C) Partnership articles
D) Articles of partnership
E) Clauses of the articles of partnership

Question 44

[Partnership Problems] Jamar, Kenya, and Tamika want to form a partnership to sell students resume preparation and employment search services. Jamar asks Kenya and Tamika if they should draw up some sort of agreement. Kenya replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Jamar and Tamika, however, Kenya agreed to a written document setting up the partnership, which they all signed. It was a simple agreement listing the partners and did not specifically address the right to management or allocation of profits and losses. Kenya has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership; she keeps the payment she receives for herself. When Jamar and Tamika find out, Kenya replies that she was doing two-thirds of the partnership work, particularly in regard to management; that she, therefore, has two-thirds of the voting rights; and that she voted that her actions were appropriate. The articles of partnership does not address the right to share in management, but Jamar and Tamika strongly disagree with Kenya.
Is Kenya's statement that she had greater management rights because she was doing a greater percentage of work for the partnership correct?

A) No, Kenya is incorrect because unless otherwise stated in the articles of partnership, all partners share equally in the management of the partnership.
B) No, Kenya is incorrect because unless otherwise stated in the articles of partnership, partners share in management rights in proportion to their rights to profits.
C) No, Kenya is incorrect because unless otherwise stated in the articles of partnership, partners share in management rights in proportion to their obligation for losses.
D) Yes, Kenya is correct only if the proportion of work she was doing was inequitable.
E) Yes, Kenya is correct only if she can establish that the other partners are guilty of mismanagement in such a significant manner that a breach of fiduciary duty has occurred.

Question 45

Which of the following statements is true regarding the result of the dispute in the Case Opener involving whether a joint venture between law firms was liable for the actions of a partner sanctioned for litigation misconduct?

A) That the law firms were not liable because on the basis of the independent management of the law firms involved, no joint venture actually existed.
B) That while a joint venture existed, vicarious liability could not be asserted in order to hold members of a joint venture vicariously liable for a partner's misconduct.
C) That a joint venture existed and that members could be held liable for a partner's misconduct while acting in the ordinary course of the joint venture's business.
D) That because a joint venture is defined as a multiple-purpose partnership, the participants could be held liable, but only if the misconduct stemmed from activities engaged in on behalf of the joint venture.
E) That because a joint venture is defined as a multiple-purpose LLC, the participants could not be held liable regardless of whether the misconduct stemmed from activities engaged in on behalf of the joint venture.

Question 46

Which of the following statements is true under the Uniform Partnership Act, regarding profit and partnerships?

A) There is no requirement that a partnership be formed with a profit-making motive, and all states recognize the status of non-profit partnerships.
B) A partnership must have a profit-making motive only if the partnership has five or more members.
C) There is a requirement that a partnership have a profit-making motive only if the partnership has been in existence for over one year.
D) The partners must operate the business for a profit, and the partnership must be dissolved if no profit is made for three consecutive years.
E) The partners must operate the business for a profit, which is construed to mean that the partners must intend to make some kind of profit from the business.

Question 47

[Partnership Problems] Jamar, Kenya, and Tamika want to form a partnership to sell students resume preparation and employment search services. Jamar asks Kenya and Tamika if they should draw up some sort of agreement. Kenya replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Jamar and Tamika, however, Kenya agreed to a written document setting up the partnership, which they all signed. It was a simple agreement listing the partners and did not specifically address the right to management or allocation of profits and losses. Kenya has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership; she keeps the payment she receives for herself. When Jamar and Tamika find out, Kenya replies that she was doing two-thirds of the partnership work, particularly in regard to management; that she, therefore, has two-thirds of the voting rights; and that she voted that her actions were appropriate. The articles of partnership does not address the right to share in management, but Jamar and Tamika strongly disagree with Kenya.
Is Kenya's statement that a written agreement is not necessary to set up a partnership correct?

A) Yes, she is correct.
B) Yes, she is correct, but only because three or fewer members are involved.
C) No, she is incorrect, but only because fewer than five members are involved.
D) Yes, she is correct only if all partners are considered sophisticated investors.
E) No, she is incorrect only if none of the partners have experience with the partnership form of business.

Question 48

Which of the following is true about the Revised Uniform Partnership Act (RUPA)?

A) There is no disagreement between the Uniform Partnership Act and the Revised Uniform Partnership Act about the rules of partnership.
B) Changes in relation to the Revised Uniform Partnership Act and the Uniform Partnership Act are insignificant.
C) Roughly half of the states have adopted the RUPA
D) The RUPA just took effect in 2010.
E) The Revised Uniform Partnership Act did not expand the UPA

Question 49

Tomlin is a partner in the accounting firm of TSY. He embezzles client funds. Shay and Yalinda are his partners. Since Tomlin committed the tort within the scope of his partnership duties, are Shay and Yalinda liable?

A) Yes, partners have common liability.
B) Yes, partners have joint and several liability.
C) Partners are only liable in accordance with the percentages used for the allocation of profits.
D) Partners are liable in accordance with the percentages used for the allocation of losses.
E) No, only Tomlin is responsible.

Question 50

[Grooming Grievances] Andrew, Marie, and Cruz formed a partnership to groom dogs. Because they were good friends and anticipated making a profit sufficient to compensate all partners well, the articles of partnership did not allocate profit or losses. Marie was appointed managing partner. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. Cruz claimed that he should not have to share in losses because he had groomed more dogs than anyone. Cruz also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his extensive work. Marie claimed that she should not have to share in losses because she contributed more capital than did either of the others. Andrew claimed that he should not have to cover the losses because both Marie and Cruz had been hiding the books from him. He demanded to inspect the books and also to review a listing of all partnership assets and profit statements listing distributions to partners. Marie and Cruz denied that they had been hiding the books and claimed complete innocence of any wrongdoing.
Is Andrew entitled to inspect the books?

A) Only if he is the managing partner.
B) Only if he can establish fraud on the part of another partner.
C) Only if the articles of partnership specifically gave him that right.
D) Only if the articles of partnership specifically gave him that right or the other partners agreed.
E) Yes.

Question 51

Nadine and Lawrence are partners in a real estate business. Nadine notices that several listings that were in their inventory are no longer in their inventory. When she asks Lawrence about these listings he indicated the by sellers had changed their mind. She is suspicious that Lawrence sold the properties and kept the commissions to the property. Lawrence refuses to let Nadine see the books. Nadine could ________

A) ask for a profit analysis to be completed.
B) demand an accounting.
C) seek an indemnity agreement.
D) ask a forensic auditor to audit the books.
E) create her own set of books and keep them from Lawrence.

Question 52

Which of the following statements is false regarding the implied authority of partners?

A) Partners generally have less authority than typical agents.
B) The implied authority of partners is usually determined by the nature of the business.
C) Implied authority permits partners to enter into agreements necessary to carry on partnership business.
D) A partner has the authority to purchase goods necessary to perpetuate the business.
E) A partner does not have implied authority to sell partnership property without the consent of all other partners.

Question 53

[Grooming Grievances] Andrew, Marie, and Cruz formed a partnership to groom dogs. Because they were good friends and anticipated making a profit sufficient to compensate all partners well, the articles of partnership did not allocate profit or losses. Marie was appointed managing partner. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. Cruz claimed that he should not have to share in losses because he had groomed more dogs than anyone. Cruz also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his extensive work. Marie claimed that she should not have to share in losses because she contributed more capital than did either of the others. Andrew claimed that he should not have to cover the losses because both Marie and Cruz had been hiding the books from him. He demanded to inspect the books and also to review a listing of all partnership assets and profit statements listing distributions to partners. Marie and Cruz denied that they had been hiding the books and claimed complete innocence of any wrongdoing.
Which of the following statements is correct regarding how the partnership losses would be allocated?

A) Losses would be allocated first based on a judicial determination as to whether losses should be allocated to a partner because of poor decisions, and, if not, then equally.
B) Losses would be allocated in proportion to the amount of work done in the business, with a partner who contributed more work being allocated less in the way of losses.
C) Losses would be allocated in proportion to the right to share in management.
D) Losses would be allocated equally.
E) Losses would be allocated in proportion to the capital contribution, with partners who contributed more capital being allocated less in the way of losses.

Question 54

Mason is a partner in the Millennium Partners group. Maserati Imports, a local car dealership is trying to impound Mason's car for lack of payment. Since Maserati Imports cannot find Mason's car, they reposes the Millennium Partners' company car instead. Is this action legal?

A) Yes, a creditor may take any piece of a partnerships property to satisfy a debt.
B) Yes, a creditor may do so, but only after giving all partners at least 60 days advance notice.
C) Yes, a creditor may do so only after giving all partners at least 30 days advance notice.
D) Yes, a creditor may seize specific items of partnership property only if the items are found on the partnership's business property.
E) No, a creditor may not seize specific items of partnership property to satisfy a personal debt of a partner.

Question 55

[Grooming Grievances] Andrew, Marie, and Cruz formed a partnership to groom dogs. Because they were good friends and anticipated making a profit sufficient to compensate all partners well, the articles of partnership did not allocate profit or losses. Marie was appointed managing partner. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. Cruz claimed that he should not have to share in losses because he had groomed more dogs than anyone. Cruz also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his extensive work. Marie claimed that she should not have to share in losses because she contributed more capital than did either of the others. Andrew claimed that he should not have to cover the losses because both Marie and Cruz had been hiding the books from him. He demanded to inspect the books and also to review a listing of all partnership assets and profit statements listing distributions to partners. Marie and Cruz denied that they had been hiding the books and claimed complete innocence of any wrongdoing.
Is Cruz correct that he is entitled to additional compensation based upon the amount of work he was doing?

A) Yes, he is correct.
B) Maybe; Based upon equitable principles he may be correct, but only if he can establish that the other partners wrongfully refused to do their share of the work.
C) No, he is incorrect.
D) No, he is incorrect unless he can establish that he honestly did not know the law in regard to partnerships and did the extra work believing that he would be compensated.
E) No, he is incorrect unless he can establish that he did at least 30% more work than any other partner.

Question 56

Which of the following is false regarding the rights and obligations of partners?

A) Each partner can serve as an agent for the partnership.
B) As long as the partner has authority to act, each partner's act in performing business duties is binding on the partnership.
C) As long as the partner has authority to act, each partner's act in making agreements with third parties is binding on the partnership.
D) As long as one partner has authority to act and the partnership is bound by the act, each partner has unlimited personal liability for the obligation.
E) A partner cannot serve as an agent for other partners.

Question 57

Which of the following statements is true regarding the duty of care, if any, that one partner owes to another?

A) The duty of care is not involved in the law of partnership.
B) The duty of care is owed by each partner to the partnership itself, but partners do not owe a duty of care among themselves.
C) Partners owe a duty of care among themselves, but only in regard to transactions involving over $5,000.
D) While partners owe a duty of care to each other, a partner who makes an honest mistake in fulfilling responsibilities to the partnership will not be held liable for the mistake.
E) Partners owe a duty of care to each other, and a partner is liable to other partners on a strict liability basis for any mistakes or errors made.

Question 58

Under the Uniform Partnership Act regarding personal liability of partners, if the partnership itself is liable, how is the allocation of personal liability distributed among the partners?

A) If a partnership is liable, each partner has unlimited personal liability no matter how many partners.
B) If a partnership is liable, each partner will pay only their allocation according to the partnership agreement.
C) If a partnership is liable, no partner has personal liability.
D) If a partnership is liable, each partner will share in the loss dependent on work allocations.
E) Only the senior partners have unlimited personal liability, junior partners are not held liable.

Question 59

A creditor can obtain a(n) ________, which entitles the creditor to the partner's profits while the partner continues to act as a partner and engage in the partnership business.

A) garnishment order
B) payment order
C) creditor's lien
D) accounting order
E) charging order

Question 60

Grant is fairly certain that his partner Jenny is keeping things secret from him in their art deco design firm. Grant asks Jenny to see the books. She agrees but doesn't allow him to make copies. Grant said he has the right and Jenny said he does not because she is responsible for the books. Which is correct?

A) Grant, a partner has a right to copy partnership records.
B) Jenny, a partner does not have a right to copy any partnership records.
C) They are both right, however, a partner only has a right to copy partnership records that are not marked "confidential."
D) They are both right, however, a partner only has a right to copy partnership records that are not marked "confidential" and that are not being used in litigation.
E) Grant is correct, however, he only has a right to copy partnership records that directly impact that partner's right to profits.

Question 61

[Fishing Kings] Kyle and Felix have a business called Fishing Kings, which escorts tourists on fishing expeditions in Florida. Fishing Kings is doing poorly. Ernesto, a contractor, wants $10,000 for the work he did on Kyle's house. Colin, a tech consultant, wants $7,000 owed to him for setup and purchase of computers in Fishing Kings' office. Kyle sells one of Fishing Kings' boats in order to pay some of the debts. When Felix finds out about the sale, he is furious and yells that Kyle had no right to sell the boat without his permission. Kyle responds that he was acting as an agent of the partnership in selling the boat.
Did Kyle have a right to sell the boat without Felix's agreement?

A) No, because all partners must participate in the transaction.
B) Yes, because he was acting as an agent of the partnership.
C) Yes, but only if Kyle identified himself in writing as an agent of the partnership in the transaction.
D) Yes, because there is no evidence of fraud.
E) No, because he sold the boat for his own personal gain.

Question 62

[Mortuary Blues] Jack and Bianca had a partnership running a mortuary. Bianca died, and after her death, Jack decided to shut down the mortuary. Jack incurred some expenses in closing the business affairs of the mortuary. He sought compensation for those expenses but Gus, the executor of Bianca's estate, objected. Gus also claimed that Jack had no rights in Bianca's share of the partnership property and that Gus, the executor, had the right to confiscate her share of the property and sell it at auction. Jack, however, took the position that all interests of Bianca passed to Jack and that Jack owed her estate nothing. The articles of partnership did not address death.
Is Jack correct that he owed Bianca's estate nothing?

A) Yes, because all rights passed to him at the time of her death.
B) He is correct only if Bianca's will was silent on the matter.
C) He is correct only if he, not Bianca, was the managing partner.
D) No, he is incorrect because he had a duty to account to Bianca's estate for the value of Bianca's interest in specific property.
E) No, he is incorrect because he had a duty to give the executor half the caskets, etc. on hand when Bianca died as well as half of all accounts due.

Question 63

[Mortuary Blues] Jack and Bianca had a partnership running a mortuary. Bianca died, and after her death, Jack decided to shut down the mortuary. Jack incurred some expenses in closing the business affairs of the mortuary. He sought compensation for those expenses but Gus, the executor of Bianca's estate, objected. Gus also claimed that Jack had no rights in Bianca's share of the partnership property and that Gus, the executor, had the right to confiscate her share of the property and sell it at auction. Jack, however, took the position that all interests of Bianca passed to Jack and that Jack owed her estate nothing. The articles of partnership did not address death.
Phillian and Millian enter into a partnership agreement and agree to bring in Millian's minor daughter Jillian to also serve as a partner in their partnership. Is this legal?

A) Yes, but the partnership agreement is voidable.
B) Yes, and the partnership agreement is valid.
C) No, this is not allowed by the UPA.
D) No, individuals serving as partners must have legal capacity to be partners and must be at least 18 years of age.
E) No, child labor laws do not allow minors to serve as partners.

Question 64

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership.
Does Leo have any obligation to tell Gordon about the BigBox deal?

A) No, because Gordon has chosen not to come to work and not to perform any duties.
B) No, because Gordon breached his fiduciary duty.
C) Yes, partners must disclose any material facts affecting the business.
D) Yes, but Leo only has to tell Gordon about the BigBox deal if they are going to split up the business.
E) No, although partners must disclose any material facts affecting the business, Leo does not need to tell Gordon unless he signs an agreement to place SafeT Car in every BigBox store nationwide.

Question 65

[Partnership Agreement] Rufus, Sven, and Igor are partners in a Health Club. They executed a partnership agreement ten years ago. Rufus and Sven want to grow the company and approach Igor with their ideas. First, they want to add two partners into the partnership who have extensive capital. Second, they want to move the club into a new direction, by adding a restaurant and a casino. Third, they want to purchase new exercise equipment from SportsCo. Igor doesn't want to add new partners and despises the idea of adding the restaurant and casino. Igor agrees that new equipment is needed, but insists they continue to purchase equipment from HealthCo. Rufus and Sven tell Igor, that he's outvoted and also tell him they want to revise the partnership agreement's provision regarding mandatory retirement.
Can Rufus and Sven change the partnership agreement if Igor votes against doing so?

A) Yes, because they have a majority vote.
B) No, because a written partnership agreement cannot be amended.
C) No, partnership decisions must be made by 4/5 majority.
D) Yes, as long as the change to the partnership agreement does not negatively affect any partner.
E) No, because all partners must agree with a change to an element of a partnership agreement.

Question 66

[Partnership Agreement] Rufus, Sven, and Igor are partners in a Health Club. They executed a partnership agreement ten years ago. Rufus and Sven want to grow the company and approach Igor with their ideas. First, they want to add two partners into the partnership who have extensive capital. Second, they want to move the club into a new direction, by adding a restaurant and a casino. Third, they want to purchase new exercise equipment from SportsCo. Igor doesn't want to add new partners and despises the idea of adding the restaurant and casino. Igor agrees that new equipment is needed, but insists they continue to purchase equipment from HealthCo. Rufus and Sven tell Igor, that he's outvoted and also tell him they want to revise the partnership agreement's provision regarding mandatory retirement.
Can Rufus and Sven move forward with adding a restaurant and casino to the club over Igor's rejection?

A) Yes, because there is a majority vote in favor of the restaurant and casino.
B) Yes, unless the creation of the restaurant and casino require an amendment to the partnership agreement.
C) No, because there is no 4/5 vote in favor of the admission of new partners.
D) Yes, but only if all material facts about the restaurant and casino have been disclosed to Igor.
E) No, alterations to the nature of the business require a unanimous vote.

Question 67

[Health Food] Josh and Merida are partners and owners of J&M Health Food Store. Carson, who is a registered dietician, works for J&M on and off as a consultant, as he is very knowledgeable about the health benefits of natural herbs. Carson travels to conventions around the country and tests new products and often relays information about the new products to J&M. At a convention last month, Carson met Monte, a vitamin producer, who stated that he was glad to meet one of J&M's partners. Carson replied that the new Fresh product line was exactly what J&M needed and placed a significant order for J&M. When the Fresh product was delivered, J&M had closed the store for remodeling, and the product spoiled.
Can Monte seek damages from Carson?

A) No, because the agreement was with J&M.
B) Yes, because Carson represented himself as a partner of J&M and Monte reasonably relied on this information to his detriment.
C) No, because Monte should have verified the delivery.
D) Yes, because Carson is a partner of J&M, and Carson can seek indemnification from J&M.
E) No, because there was no partnership by estoppel.

Question 68

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership.
Is Leo liable to the partnership for the $6,000 repair?

A) Yes, unless he disclosed the fact of the collision to Gordon within a reasonable time.
B) Yes, because Leo breached his duty of care in not being careful when moving the car.
C) No, because the garage door is property of the partnership.
D) No, as long as the collision was an honest mistake.
E) No, because the collision occurred on partnership property.

Question 69

[Partnership Agreement] Rufus, Sven, and Igor are partners in a Health Club. They executed a partnership agreement ten years ago. Rufus and Sven want to grow the company and approach Igor with their ideas. First, they want to add two partners into the partnership who have extensive capital. Second, they want to move the club into a new direction, by adding a restaurant and a casino. Third, they want to purchase new exercise equipment from SportsCo. Igor doesn't want to add new partners and despises the idea of adding the restaurant and casino. Igor agrees that new equipment is needed, but insists they continue to purchase equipment from HealthCo. Rufus and Sven tell Igor, that he's outvoted and also tell him they want to revise the partnership agreement's provision regarding mandatory retirement.
Are Rufus and Sven correct that Igor is outvoted?

A) Yes, partnership decisions are made by majority vote.
B) No, partnership decisions must be unanimous.
C) No, partnership decisions must be made by 4/5 majority.
D) Rufus and Sven are correct as to some decisions, but some partnership decisions require agreement by all partners.
E) Yes, because all partnership decisions, other than the decision to terminate the partnership, must be made by majority vote.

Question 70

[Partnership Agreement] Rufus, Sven, and Igor are partners in a Health Club. They executed a partnership agreement ten years ago. Rufus and Sven want to grow the company and approach Igor with their ideas. First, they want to add two partners into the partnership who have extensive capital. Second, they want to move the club into a new direction, by adding a restaurant and a casino. Third, they want to purchase new exercise equipment from SportsCo. Igor doesn't want to add new partners and despises the idea of adding the restaurant and casino. Igor agrees that new equipment is needed, but insists they continue to purchase equipment from HealthCo. Rufus and Sven tell Igor, that he's outvoted and also tell him they want to revise the partnership agreement's provision regarding mandatory retirement.
Can Rufus and Sven move forward with the purchase of new equipment from SportsCo, over Igor's insistence on purchasing the equipment from HealthCo?

A) Yes, because most partnership decisions are made by majority vote and this decision does not involve an alteration in the nature of the business.
B) No, because decisions that involve an alteration in the nature of the business require a unanimous vote.
C) No, although most partnership decisions are made by majority vote, this decision involves an alteration in the nature of the business.
D) Yes, but only if all material facts about the restaurant and casino have been disclosed to Igor.
E) No, alterations to the nature of the business require a unanimous vote.

Question 71

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership.
In the absence of a partnership agreement, what happens to partnership property when a partner dies?

A) The surviving partners receive the rights to the partnership property.
B) The surviving partners and the surviving spouse receive the rights to the partnership property.
C) The surviving partners and the deceased partner's heirs receive the rights to the partnership property.
D) The surviving spouse takes the place of the deceased partner and shares equally in the rights to the partnership property.
E) Without a partnership agreement, there is no effect on partnership property.

Question 72

[Grooming Grievances] Andrew, Marie, and Cruz formed a partnership to groom dogs. Because they were good friends and anticipated making a profit sufficient to compensate all partners well, the articles of partnership did not allocate profit or losses. Marie was appointed managing partner. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. Cruz claimed that he should not have to share in losses because he had groomed more dogs than anyone. Cruz also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his extensive work. Marie claimed that she should not have to share in losses because she contributed more capital than did either of the others. Andrew claimed that he should not have to cover the losses because both Marie and Cruz had been hiding the books from him. He demanded to inspect the books and also to review a listing of all partnership assets and profit statements listing distributions to partners. Marie and Cruz denied that they had been hiding the books and claimed complete innocence of any wrongdoing.
The proper reference for Andrew's request to review all partnership assets and profit statements listing the distributions to partners is known as a[n] ________.

A) Report
B) Synopsis
C) Accounting
D) Review
E) Overview

Question 73

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership.
Did Gordon breach any duty by opening his own oil change store?

A) Yes, Gordon breached his fiduciary duty by engaging in a business that competes with the partnership.
B) Yes, but only if the oil change store is also a partnership.
C) No, because there was no written agreement that sets forth the duties of the partners.
D) No, because, even though there was no written agreement, partners are permitted to form their own businesses so long as they remain loyal to the partnership.
E) No, but only if Gordon also continues to work at SafeT Car.

Question 74

[Mortuary Blues] Jack and Bianca had a partnership running a mortuary. Bianca died, and after her death, Jack decided to shut down the mortuary. Jack incurred some expenses in closing the business affairs of the mortuary. He sought compensation for those expenses but Gus, the executor of Bianca's estate, objected. Gus also claimed that Jack had no rights in Bianca's share of the partnership property and that Gus, the executor, had the right to confiscate her share of the property and sell it at auction. Jack, however, took the position that all interests of Bianca passed to Jack and that Jack owed her estate nothing. The articles of partnership did not address death.
Is Jack entitled to compensation for closing down the mortuary?

A) No, he is not entitled to any compensation unless the articles of partnership specifically gave him that right.
B) No, he is not entitled to any compensation, unless credible proof exists that Bianca acknowledged prior to her death that expenses in eventually closing down the business should be compensated.
C) Yes, he is entitled to compensation for the work, but only if he can establish that all outstanding debts of the mortuary have been paid.
D) Yes, he is entitled to compensation for the work, but only if the executor agreed that it needed to be done.
E) Yes, he is entitled to compensation for the work.

Question 75

[Fishing Kings] Kyle and Felix have a business called Fishing Kings, which escorts tourists on fishing expeditions in Florida. Fishing Kings is doing poorly. Ernesto, a contractor, wants $10,000 for the work he did on Kyle's house. Colin, a tech consultant, wants $7,000 owed to him for setup and purchase of computers in Fishing Kings' office. Kyle sells one of Fishing Kings' boats in order to pay some of the debts. When Felix finds out about the sale, he is furious and yells that Kyle had no right to sell the boat without his permission. Kyle responds that he was acting as an agent of the partnership in selling the boat.
Which creditor, if any, has priority in Fishing Kings' assets?

A) Ernesto and Colin have equal priority in the assets of Fishing Kings.
B) Ernesto, if he filed his claim first.
C) Colin, because creditors of the partnership have first priority in partnership assets.
D) Ernesto, because he is a creditor of land.
E) Kyle and Felix.

Question 76

[Mortuary Blues] Jack and Bianca had a partnership running a mortuary. Bianca died, and after her death, Jack decided to shut down the mortuary. Jack incurred some expenses in closing the business affairs of the mortuary. He sought compensation for those expenses but Gus, the executor of Bianca's estate, objected. Gus also claimed that Jack had no rights in Bianca's share of the partnership property and that Gus, the executor, had the right to confiscate her share of the property and sell it at auction. Jack, however, took the position that all interests of Bianca passed to Jack and that Jack owed her estate nothing. The articles of partnership did not address death.
Which of the following examples of sharing of profits could constitute evidence of the existence of a partnership?

A) Pablo, a photographer who sets up photoshoots, gives his friend Olita, who is learning the business, $100 for "helping him out" on the photoshoots.
B) Pablo, a photographer, gives his friend Olita, who owns a building, $500 for letting him use an apartment for his photoshoots.
C) Pablo, a photographer, gives Olita $500 from the fees of a photoshoot, to repay a loan.
D) After Pablo's photography partner dies, Pablo gives Olita, the partner's widow, $100 a month out of respect for Sander.
E) Pablo and Olita, two photographers, split the fees obtained at their photoshoots.

Question 77

[Partnership Agreement] Rufus, Sven, and Igor are partners in a Health Club. They executed a partnership agreement ten years ago. Rufus and Sven want to grow the company and approach Igor with their ideas. First, they want to add two partners into the partnership who have extensive capital. Second, they want to move the club into a new direction, by adding a restaurant and a casino. Third, they want to purchase new exercise equipment from SportsCo. Igor doesn't want to add new partners and despises the idea of adding the restaurant and casino. Igor agrees that new equipment is needed, but insists they continue to purchase equipment from HealthCo. Rufus and Sven tell Igor, that he's outvoted and also tell him they want to revise the partnership agreement's provision regarding mandatory retirement.
Can the two potential new partners be added to the partnership without Igor's vote in favor of doing so?

A) Yes, because there is a majority vote in favor of the admission of new partners.
B) No, because there is no unanimous vote in favor of the admission of new partners.
C) No, because there is no 4/5 vote in favor of the admission of new partners.
D) Yes, but only if all material facts about the new partners have been disclosed to Igor.
E) Yes, because the two potential partners will bring significant capital into the partnership.

Question 78

[Health Food] Josh and Merida are partners and owners of J&M Health Food Store. Carson, who is a registered dietician, works for J&M on and off as a consultant, as he is very knowledgeable about the health benefits of natural herbs. Carson travels to conventions around the country and tests new products and often relays information about the new products to J&M. At a convention last month, Carson met Monte, a vitamin producer, who stated that he was glad to meet one of J&M's partners. Carson replied that the new Fresh product line was exactly what J&M needed and placed a significant order for J&M. When the Fresh product was delivered, J&M had closed the store for remodeling, and the product spoiled.
Assume Carson pays the damages suffered by Monte. Carson then asks J&M for a share of J&M's profits, which J&M refuses. Is J&M justified in denying Carson any share of the profits?

A) Yes, even though Carson paid the debt, Carson is not a partner of J&M and is not entitled to profits.
B) Yes, even though Carson is considered a partner, he is not entitled to a share of the profits because he failed to seek approval of his partners for the deal.
C) No, Carson is now considered a partner of J&M and is entitled to a share of the profits.
D) No, even though Carson is not considered a partner of J&M, he is entitled to a share of the profits up to the amount of damages paid to Monte.
E) No, even though Carson is not considered a partner of J&M, he is entitled to a share of the profits up to the amount of damages paid to Monte and any reasonable expenses.

Question 79

[Grooming Grievances] Andrew, Marie, and Cruz formed a partnership to groom dogs. Because they were good friends and anticipated making a profit sufficient to compensate all partners well, the articles of partnership did not allocate profit or losses. Marie was appointed managing partner. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. Cruz claimed that he should not have to share in losses because he had groomed more dogs than anyone. Cruz also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his extensive work. Marie claimed that she should not have to share in losses because she contributed more capital than did either of the others. Andrew claimed that he should not have to cover the losses because both Marie and Cruz had been hiding the books from him. He demanded to inspect the books and also to review a listing of all partnership assets and profit statements listing distributions to partners. Marie and Cruz denied that they had been hiding the books and claimed complete innocence of any wrongdoing.
Is Andrew entitled to a review of all partnership assets and profit statements listing the distributions to partners?

A) Yes, because partners are always entitled to an accounting.
B) No, because there is no evidence that one of the other partners failed to disclose a profit or benefit earned from the partnership.
C) Yes, if he can establish that a review would be just and reasonable.
D) No, because he had not been appointed the managing partner.
E) No, because there is no evidence that one of the partners committed fraud against the partnership.

Question 80

[Mortuary Blues] Jack and Bianca had a partnership running a mortuary. Bianca died, and after her death, Jack decided to shut down the mortuary. Jack incurred some expenses in closing the business affairs of the mortuary. He sought compensation for those expenses but Gus, the executor of Bianca's estate, objected. Gus also claimed that Jack had no rights in Bianca's share of the partnership property and that Gus, the executor, had the right to confiscate her share of the property and sell it at auction. Jack, however, took the position that all interests of Bianca passed to Jack and that Jack owed her estate nothing. The articles of partnership did not address death.
Did the executor have any rights in Bianca's share of the property to sell at auction?

A) Yes, the executor was entitled to one-half of the partnership assets including half the partnership property.
B) No, the executor was not entitled to partnership property because rights in specific partnership property passed to Jack according to the right of survivorship.
C) Yes, the executor was entitled to one-half the partnership property, but only if Bianca was the managing partner pursuant to the articles of partnership.
D) Yes, the executor was only entitled to half of the partnership property not in use at the mortuary at the time of her death.
E) Yes, the executor was entitled to partnership property, but only if Bianca's will stated that the executor was so entitled.