Deck 37: Partnerships: Termination and Limited Partnerships

Question 1

When a partnership is dissolved based upon the withdrawal of a partner,that partner no longer has actual authority to bind the partnership.

Answer 1

True
Explanation: A partner who intends to dissolve or withdraw from the partnership must give the other partners notice of this intent. Once the partnership is dissolved, the partner no longer has actual authority to bind the partnership.

Question 2

Which of the following terms is used when a partner dissolves a partnership in violation of the partnership agreement?

A) Wrongful termination
B) Untimely termination
C) Wrongful dissolution
D) Prohibited termination
E) Prohibited dissolution

Answer 2

C
Explanation: A partner who dissolves the partnership in violation of the partnership agreement can be held liable for wrongful dissolution.

Question 3

During the winding-up process,the partners must still fulfill their fiduciary duty to one another in the sense that they must disclose all information about the partnership assets.

Answer 3

True
Explanation: During the winding-up process, the partners must still fulfill their fiduciary duty to one another and disclose all information about the partnership assets.

Question 4

Which of the following is defined as the change in the relation of the partners caused by any partner's ceasing to be associated with the carrying on,as distinguished from the winding up,of the business?

A) Resolution
B) Dissolution
C) Resignation
D) Suspension
E) Transformation

Question 5

A general partner has unlimited personal liability for the debts of the limited partnership.

Question 6

Which of the following is true regarding rights of partners in regard to a rightful dissolution of a partnership?

A) All partners can demand that the partnership be wound-up but only the managing partner may participate in the wind-up.
B) The partners may continue the partnership upon majority vote.
C) If the partners unanimously agree, they can continue the business using the partnership's name.
D) Rightful dissolution is by act of a partner only.
E) Rightful dissolution is by act of court only.

Question 7

When is dissolution of a partnership considered complete?

A) Only when any partner, by choice, stops fulfilling the role of a partner to the business.
B) Only when any partner, by default, stops fulfilling the role of a partner to the business.
C) When any partner, by choice or by default, stops fulfilling the role of a partner to the business.
D) Thirty days after any partner, by choice or by default, stops fulfilling the role of a partner to the business.
E) Thirty days after any partner, by default, stops fulfilling the role of a partner to the business.

Question 8

If a partner dissolves a partnership in violation of the partnership agreement,the partner can be held liable for wrongful dissolution.

Question 9

Which of the following stages must be experienced before the termination of a partnership may be considered complete?

A) Dissolution only
B) Winding-up only
C) Dissolution and release of claims, but not winding-up
D) Release of claims and winding-up, but not dissolution
E) Dissolution and winding-up, but not release of claims

Question 10

In the case of a limited partnership,if the partners do not correctly fill or do not file the certificate of limited partnership with the secretary of state,the limited partners will not receive limited liability.

Question 11

Remaining partners have a right to continue a partnership after dissolution.

Question 12

Which of the following is true if a partner wrongfully dissolves a partnership?

A) The partner who wrongfully dissolved the partnership can require that the business be wound up.
B) The partner who wrongfully dissolved the partnership can be held liable for damages to the remaining partners.
C) The remaining partners must close the business.
D) The partner who wrongfully dissolved the business must petition the court in order to complete the process.
E) The remaining partners must petition the court in order to complete the process.

Question 13

Which of the following is a type of partnership,if any,that does not specify the objective or duration of the partnership?

A) A partnership at will
B) A partnership at sufferance
C) An indeterminate partnership
D) A temporary partnership
E) There is no such partnership because a partnership cannot exist unless either the objective or duration is stated.

Question 14

Before a partnership may be terminated,the partnership must experience the winding-up stage,but not the dissolution stage.

Question 15

Only officers in a limited partnership have a say in the management of the company.

Question 16

Which of the following may cause the dissolution of a partnership?

A) Only an act of the partners
B) Only the operation of the law
C) Only an act of the court
D) An act of the partners, an operation of the law, or an act of the court.
E) An act of the partners and an operation of the law, but not an act of the court.

Question 17

Which of the following was the ruling of the court on appeal in the case of In re Leah Beth Woskob,debtor; Alex Woskob; Helen Woskob; the Estate of Victor Woskob v.Leah Beth Woskob,the case in the text involving a dispute regarding whether a partnership was dissolved prior to the death of one of the partners making the attempt of the other partner to buy out the deceased partner's interest untimely?

A) That the exclusion of a partner from the partnership was grounds for automatic dissolution and that, on that basis, the partnership had been dissolved prior to the death of the partner at issue.
B) That the insolvency of one of the partners resulted in automatic dissolution of the partnership prior to the death of the partner at issue.
C) That the partnership was dissolved prior to the death of the partner at issue based upon lawsuits filed by third-party creditors.
D) That by agreement of the partners, the partnership had been dissolved prior to the death.
E) That the partnership had not been dissolved at the time of the death of the partner at issue.

Question 18

When is the winding-up stage in the termination of a partnership complete?

A) When account is taken of the assets of a partner who left the partnership and redistributed among the other partners.
B) When all assets of the partnership are sold.
C) When all partners sign releases terminating the partnership.
D) When the partnership is dissolved.
E) When all claims against the partnership by third parties are either settled or resolved in court.

Question 19

During the winding-up process,the partners may not engage in a business that competes with the partnership business.

Question 20

A partner being expelled from the partnership in accordance with the partnership agreement is not a reason for rightful dissolution of the partnership.

Question 21

Which of the following is true regarding the limited liability company?

A) Limited liability companies originated in Europe more than 500 years ago, around the same time as limited partnerships.
B) Limited liability companies originated in France more than 200 years ago.
C) Limited liability companies originated in U.S. more than 100 years ago.
D) Limited liability companies are a relatively new form of business organization.
E) Limited liability companies are the same thing as limited partnerships as far as regulatory rules are concerned.

Question 22

Which of the following is true regarding "provisional dissolution" of a partnership in Spain?

A) Provisional dissolution is followed by litigation to determine the legitimacy of the termination request.
B) Provisional dissolution occurs whenever a partner requests dissolution without the intervention of the court.
C) Provisional dissolution occurs whenever a party dies.
D) Provisional dissolution is the only method of dissolution of a partnership in Spain.
E) Provisional dissolution is effective for 30 days prior to actual dissolution in order to allow the parties to wind-up the partnership.

Question 23

Which of the following occurs upon dissolution of a partnership when liabilities of the partnership are greater than the liquidated assets of the partnership?

A) The liabilities remain unpaid because the partners are not liable.
B) The managing partner is liable for the liabilities, but other partners are not liable.
C) Each partner must contribute his or her share of the losses to pay creditors.
D) Only partners who did not participate in the management of the business must contribute his or her share of the losses to pay creditors.
E) Only partners who participated in management of the business must contribute his or her share of the losses to pay creditors.

Question 24

Which of the following is not a reason for provisional dissolution in Spain?

A) A partner fails to comply with provisions of the contract.
B) A partner inexplicably abandons the partnership and does not return on request.
C) A partner is declared bankrupt.
D) A partner fails to bring the capital he or she promised.
E) A partner uses capital belonging to the partnership in his or her own name.

Question 25

Which of the following was the result on appeal in Robert M.Tafoya v.Dee S.Perkins involving a sale of partnership property and the applicable statute of limitations on an action for an accounting when there was no agreement on the matter between the withdrawing partner and other partner involved?

A) That the plaintiff's suit was timely because the statute of limitations on an action for an accounting as to a partnership does not begin to run until all property owned by the partnership is sold and that the statute of limitations, computed as of that point, is six years.
B) That the plaintiff's suit was timely because the statute of limitations on an action for an accounting as to a partnership does not begin to run until all property owned by the partnership is sold and that the statute of limitations, computed as of that point, is two years.
C) That the plaintiff's suit was timely because there is no statute of limitations on an accounting as to partnership property so long as one of the partners is living.
D) That the plaintiff's suit was untimely because the statute of limitations on an action for an accounting as to a partnership begins to run when the withdrawing partner ceases to be associated with the business resulting in dissolution and that the statute of limitations, computed at that point, is six years.
E) That the plaintiff's suit was untimely because the statute of limitations on an action for an accounting as to a partnership begins to run when the withdrawing partner ceases to be associated with the business resulting in dissolution and that the statute of limitations, computed at that point, is two years.

Question 26

In a dissolution of a partnership that will be continued,if a noncontinuing partner holds 20% of the partnership in which the assets are valued at $10,000 how much will the partner receive assuming the noncontinuing partner has taken no wrongful action against the partnership?

A) $2,000
B) $2,000 minus any losses the noncontinuing partner's leaving caused the partnership to sustain.
C) $2,000 minus the noncontinuing partner's share of loses, if any, in the first year after dissolution.
D) $2,000 minus the noncontinuing partner's share of expenses involved with dissolution.
E) Nothing

Question 27

Under the UPA,which of the following is in first place for payment when liquidated assets of a partnership are distributed?

A) Payment of refunds or loans to partners for loans made to the firm.
B) Payment to partners of the capital they invested.
C) Payment of profits distributed to partners on the basis of the partnership agreement.
D) Payment to creditors of the partnership.
E) Payment of bills of lading.

Question 28

Which of the following was the result in the Case Opener involving whether a partner wrongfully caused dissolution of a partnership thereby barring him from recovering damages from other partners based upon improvements to an office building that were not properly approved?

A) That the partner at issue was partially at fault for the wrongful dissolution of the partnership but that he would be entitled to sue for damages because the dissolution was not entirely his fault.
B) That the partner at issue was partially at fault for the wrongful dissolution of the partnership and that he was therefore barred from recovering damages from the other partners.
C) That the partner at issue was not at fault for the dissolution of the partnership because expenditures were improperly made by the partnership and hidden from him but that he was barred from recovering damages because the partnership had not yet been wound up.
D) That the partner at issue was fully at fault for the wrongful dissolution of the partnership and that he was therefore barred from recovering damages from the other partners.
E) That the partner at issue was not at fault for the dissolution of the partnership because expenditures were improperly made by the partnership and hidden from him and that he could sue for damages based upon the wrongful acts of the other partners.

Question 29

Which of the following is the term for the activity of completing unfinished partnership business,collecting and paying debts,collecting partnership assets,and taking inventory?

A) Closing up
B) Winding up
C) Delineating
D) Reallocating
E) Terminating

Question 30

Which of the following is false regarding the winding-up process?

A) During the winding-up process, the partners must still fulfill their fiduciary duty to one another in the sense that they must disclose all information about the partnership assets.
B) During the winding-up process, the partners may not engage in any business that competes with the partnership business.
C) If a partnership has been rightfully dissolved, any partner can demand that the winding-up stage begin.
D) If a partner wrongfully dissolves a partnership, that partner has no right to demand a winding up.
E) During winding-up, once partnership assets are gathered, they are distributed to the partners or to creditors.

Question 31

Which of the following is true regarding a partner's actual authority to bind a partnership once a partnership is dissolved?

A) A partner has no actual authority to bind the partnership after the partnership is dissolved.
B) A partner has actual authority to bind the partnership for 10 days after the partnership is dissolved.
C) A partner has actual authority to bind the partnership for 30 days after the partnership is dissolved.
D) A partner has actual authority to bind the partnership for 45 days after the partnership is dissolved.
E) After a partnership is dissolved, a partner has actual authority to bind the partnership to any third party who has not been given notice of dissolution.

Question 32

In India dissolution of ______ refers to the dissolving of all partners' relationships and the termination of the partnership business while dissolution of ______ refers to the termination of the relationship between certain partners but the continuation of the partnership's business.

A) Partnership; the firm
B) Interests; partnership
C) The firm; interests
D) The firm; partnership
E) Interests; the firm

Question 33

Which of the following are the steps in order of the life cycle of a partnership?

A) Performance, formation, winding up, dissolution, termination or continuation.
B) Formation, performance, winding up, dissolution, termination or continuation.
C) Formation, performance, termination, winding up, dissolution or continuation.
D) Performance, formation, dissolution, winding up, termination or continuation.
E) Formation, performance, dissolution, winding up, termination or continuation.

Question 34

Which of the following is not a reason for full dissolution of a partnership in Spain?

A) A partner fails to comply with provisions of the contract.
B) One partner dies.
C) A partner is declared insane and unfit to manage the business.
D) A partner is declared bankrupt.
E) A partner requests that the partnership be terminated.

Question 35

What does the term "full dissolution" of a partnership mean in Spain?

A) That the partnership ends without litigation and without a waiting period.
B) That the partnership ends because all partners have requested its end.
C) That the partnership ends because the purposes of the partnership have been satisfied.
D) That the partnership ends because a majority of the partnership has requested its end.
E) That the partnership ends because it has been wound up and liquidated.

Question 36

Sam enters a limited partnership as a limited partner,contributing $100,000.The limited partnership consisting of two general and the two limited partners were sued over debt.Assuming the limited partnership is properly conducted,what is the maximum for which Sam can be held liable?

A) Sam has unlimited personal liability.
B) $75,000
C) $50,000
D) $25,000
E) $100,000

Question 37

Which of the following is false regarding dissolution of a partnership either by act of a partner or by operation of law?

A) Death of a partner results in dissolution of a partnership by operation of law.
B) A partnership engaging in an activity that suddenly becomes illegal results in dissolution of a partnership by operation of law.
C) A partner's engagement in any other business activity results in dissolution of a partnership through an act by a partner.
D) A partner withdrawing from the partnership at will results in dissolution through an act by a partner.
E) A partner withdrawing or being expelled pursuant to the partnership agreement results in dissolution through an act by a partner.

Question 38

Which of the following was the result on appeal in Miller v.Bill & Carolyn Ltd.P'Ship,the case in the text involving whether a bankruptcy trustee was entitled to dissolution of a limited partnership in which the debtor was a limited partner?

A) On the basis that it was not reasonable to expect the partnership to continue in business in conformity with the partnership agreement, the court reversed the Bankruptcy Appellate Panel's ruling and found that the trustee was entitled to dissolution of the partnership.
B) On the basis that the partnership agreement's stated purpose did not conform to the representations made at trial regarding the partnership's business interests, the court upheld the Bankruptcy Appellate Panel's ruling that the trustee was entitled to dissolution.
C) Finding that as a matter of law the bankruptcy trustee was entitled to choose at his option whether or not to seek dissolution, the court reversed the Bankruptcy Appellate Panel's decision refusing to uphold the trustee's motion seeking dissolution.
D) Finding an absence of evidence indicating that it was not reasonable practicable for the partnership to carry on its business in conformity with the partnership agreement, the court upheld the Bankruptcy Appellate Panel's decision refusing to require dissolution.
E) Finding that the debtor was willing to continue as both a general and limited partner, the court upheld the Bankruptcy Appellate Panel's decision refusing to require dissolution.

Question 39

Which of the following is true when upon dissolution of a partnership one partner pays liabilities of the partnership that are greater than the liquidated assets of the partnership?

A) The partner who paid has a right of contribution against any partner who did not pay.
B) The partner who paid has no right of contribution against any other partner.
C) The partner who paid has a right of contribution against other partners only if the partner who paid was not the managing partner.
D) The partner who paid has a right of contribution only against other partners who participated in the management of the partnership.
E) The partner who paid has a right of contribution only against other partners who did not participate in the management of the partnership.

Question 40

If a limited partnership is dissolved,which of the following is the order in which the limited partnership's assets are distributed?

A) Payment to partners who have loaned the partnership money, payment to third-party creditors, payment to the partners according to their investments in the partnership, and payment to the partners on the basis of their shares of the profits.
B) Payment to partners who have loaned the partnership money, payment to the partners according to their investments in the partnership, payment to third-party creditors, and payment to the partners on the basis of their shares of the profits.
C) Payment to third-party creditors, payment to the partners according to their investments in the partnership, payment to partners who have loaned the partnership money, and payment to the partners on the basis of their shares of the profits.
D) Payment to third-party creditors, payment to partners who have loaned the partnership money, payment to the partners according to their investments in the partnership, and payment to the partners on the basis of their shares of the profits.
E) Payment to the partners on the basis of their shares of the profits, payment to third-party creditors, payment to partners who have loaned the partnership money, and payment to the partners according to their investments in the partnership.

Question 41

Which of the following is true regarding any responsibility of Matt to share in losses?

A) Matt assumed no liability for the partnership beyond the capital he invested.
B) Matt has a legal obligation to share equally in losses with the general partners.
C) Matt would be responsible for one-half of any losses with the two general partners having liability for the other half.
D) Matt has no liability for losses at all.
E) Matt has liability for losses only if the general partners are insolvent.

Question 42

Which of the following is true regarding Matt's entitlement to share in profits?

A) During the first year of business, a limited partner is not legally entitled to a share of the profits.
B) During the first year of business, a limited partner is only entitled to a share of the profits at the discretion of the general partners.
C) A limited partner is generally entitled to a share of the profits, but during the first year of business, a limited partner is only entitled to one-half of whatever the share would normally have been.
D) During the first year of business and also in subsequent years, a limited partner has a right to share in the profits.
E) A new limited partner is only entitled share in the profits after a partnership has been successful for three consecutive years.

Question 43

Which of the following is an agreement stating that continuing partners can keep partnership property and carry on the partnership business?

A) A continuation agreement
B) A limitation agreement
C) A proceeding agreement
D) A forward agreement
E) A non-liquidation agreement

Question 44

According to the Revised Uniform Limited Partnership Act,which of the following is not a reason for which a limited partnership can be dissolved?

A) The expiration of the term established in the certificate of limited partnership.
B) The completion of the objective established in the certificate.
C) The withdrawal of the general partner (unless the certificate establishes that other general partners will continue).
D) An act of the court.
E) The written consent of a majority of all partners (limited and general).

Question 45

Which of the following is true regarding the Revised Uniform Limited Partnership Act (RULPA)?

A) Most states have adopted the 2001 version of the RULPA.
B) The RULPA was originally adopted in 1958.
C) The RULPA is static for the most part with few changes.
D) The RULPA has been replaced in most states with the Reviewed Uniform Limited Partnership Act.
E) Louisiana is the only state not to have adopted any version of the RULPA.

Question 46

Was George correct that a limited partnership may be created informally through an oral agreement?

A) Yes, an oral agreement will suffice.
B) George was partially correct. A written agreement is required, but only the general partners are required to sign it. Limited partners may agree orally.
C) George was partially correct. A written agreement is required, but only the limited partners are required to sign it. General partners may agree orally.
D) George was incorrect, and both general and limited partners must sign a certificate of limited partnership and file the certificate with the secretary of state.
E) George was incorrect, and both general and limited partners must sign a document of partnership limitation that is kept on file in the primary business office of the limited liability partnership.

Question 47

Which of the following is false regarding the dissolution of a partnership in Germany?

A) If a partner wishes to leave a partnership, he or she must give notice of his intention to do so at least six months before the end of the business year.
B) On receiving notification of a partner of his or her intent to leave the partnership, the other partners may begin placing bids for the purchase of the leaving partner's shares.
C) If remaining partners wish to continue the partnership after one leaves, that possibility must be provided for in the contract agreement to terminate the partnership.
D) If one partner leaves, the remaining partners may opt to fully dissolve the relationship.
E) All claims against the partnership are dismissed four years after termination.

Question 48

If a partnership does not notify third parties of a dissolution,a partner can still have ______ authority to bind the partnership.

A) Actual
B) Supposed
C) Implied
D) True
E) No

Question 49

List the circumstances under which a partnership may be rightfully dissolved.

Question 50

A limited partnership is an agreement between at least ______ general partner[s] and at least ______ limited partner[s].

A) 5; 3
B) 5; 5
C) 1; 1
D) 2; 3
E) 2; 2

Question 51

To ensure that a dissolving partner does not create additional liability for the partnership,which of the following is true regarding notice to be provided to a third party that has provided credit to a partnership?

A) There is no requirement that notice be provided because by law, the dissolving partner has no authority to bind the partnership.
B) The third party may be notified through advertisement in the newspaper.
C) The third party may be notified through a general post on the Internet at the partnership's website.
D) The third party must be provided direct verbal or written notice.
E) The third party must be provided written notice based on the statute of frauds.

Question 52

What type of partnership was XYZ law firm?

A) A partnership at will
B) An equitable partnership
C) An absolute partnership
D) A terminable partnership
E) An agency partnership

Question 53

Which of the following is true regarding whether the law firm is liable for purchases made by Wally?

A) The law firm is liable for the purchases because it had not provided notification to the office supply that Wally was no longer authorized to make purchases for the firm.
B) The law firm is liable for the purchases because Wally's authority continued for seven days after his resignation.
C) The law firm is liable for the purchases because Wally's authority continued for ten days after his resignation.
D) The law firm is liable for the purchases only if Wally was treated inequitable during the winding-up process.
E) The law firm is liable for the purchases only if Wally cannot be found within one year of the date the purchases were made.

Question 54

Which of the following is true regarding the origination of limited partnerships?

A) They originated in the United States approximately 50 years ago.
B) They originated in Europe over 500 years ago.
C) They originated in England approximately 200 years ago.
D) They originated in the United States approximately 200 years ago.
E) They originated in Mexico approximately 50 years ago.

Question 55

Which of the following is false regarding a limited liability company?

A) A limited liability company is similar to a limited partnership insofar as the limited partner and the limited liability company member have limited liability dependent on the investment he or she makes.
B) A limited liability company is similar to a limited partnership in regards to receiving the tax breaks that are often afforded to those in a partnership.
C) In a limited liability company, each member gets a say in the management of the company, whereas in a limited partnership, only the general partners get to make management decisions.
D) Limited liability companies are a relatively new form of business.
E) The Uniform Limited Liability Company Act has been accepted by a majority of the states.

Question 56

Are George and Marcy correct in that limited partners have no say regarding the admission of new partners?

A) No, because in order to add a new partner, all partners, including limited partners, must agree.
B) No, because in order to add a new partner, all general partners must agree and at least one half of limited partners must agree.
C) No, because in order to add a new partner, at least one half of general partners and one half of limited partners must agree.
D) They are correct only if all general partners agree that limited partners cannot vote on the matter.
E) They are correct.

Question 57

Which of the following is true regarding the issue of George's father deciding to manage the partnership?

A) Before he can undertake management duties, he must get the approval of at least one half of all general and limited partners.
B) There is no effect on the partnership agreement.
C) He may be involved in all matters of management except strategic planning.
D) He may be involved in management; but, as a limited partner, he may not be paid additional amounts for doing so.
E) As a limited partner, he may not be involved in management and retain limited liability.

Question 58

Limited partnerships are also known as which of the following?

A) General partnerships
B) Limited liability partnerships
C) Special partnerships
D) Specific partnerships
E) Both limited liability partnerships and specific partnerships

Question 59

Which of the following is true regarding Matt's entitlement to sue on behalf of the partnership?

A) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring the suit.
B) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring suit but only after obtaining the permission of all general partners.
C) If the general partners fail to bring a suit on behalf of the limited partnership, the limited partner can bring suit but only after obtaining the permission of a majority of the general partners.
D) A limited partner has no rights to bring suit on behalf of the partnership.
E) A limited partner has a right to bring suit on behalf of the partnership only if the litigation is in an amount of over $75,000 and then only with the permission of all general partners.

Question 60

Which of the following is true regarding whether Wally had actual authority to bind the partnership in regard to his purchases at the office supply store?

A) Wally did not have actual authority to bind the partnership.
B) Wally had actual authority to bind the partnership because the law firm had not notified anyone at the office supply that he was no longer authorized to make purchases for the law firm.
C) Wally had actual authority to bind the partnership so long as the purchases were made within seven days of his resignation.
D) Wally had actual authority to bind the partnership so long as the purchases were made within ten days of his resignation.
E) Wally had actual authority to bind the partnership only if he cannot be found within one year of the date the purchases were made.

Question 61

Set forth the circumstances under which a partnership may be dissolved by act of the court.

Question 62

How is a limited partnership created and what is the consequence if proper procedures are not followed?

Question 63

Mona and Jill wish to start a partnership to sell hand woven sweaters.Jill's parents would like to invest,but they do not wish to be subject to liability for losses in excess of their capital contribution.Jill's mother tells Mona and Jill that if she invests,she expects to have a significant say in the management of the business.Should Mona,Jill,and Jill's parents enter into a limited partnership with the parents being limited partners,and why or why not? Would a limited liability company be a good option,and why or why not?

Question 64

Set forth the order the Uniform Partnership Act establishes for the distribution of liquidated assets when a partnership is dissolved and has debt.