Question 1

RULPA requires a lesser duty of care by a general partner to a general partnership than that owed by a general partner to a limited partnership.

Accepted Answer

RULPA (Revised Uniform Limited Partnership Act) does not change the duty of care that a general partner owes to a partnership, whether it is a general partnership or a limited partnership. The duty of care remains the same in both contexts, requiring general partners to act with the care an ordinarily prudent person in a like position would exercise under similar circumstances.

Question 2

The causes of dissolution and the priorities in the distribution of assets for a limited partnership are not the same as those of a general partnership.

Accepted Answer

Limited partnerships have different structures and agreements than general partnerships and therefore have different causes of dissolution and priorities in asset distribution.

Question 3

A partner may not receive a distribution from a limited partnership unless the remaining assets are deemed sufficient to pay partnership liabilities other than liabilities to partners on account of their partnership interests.

Accepted Answer

This is a requirement stated in most limited partnership agreements and is also part of the default rules for limited partnerships under state law.

Question 4

The certificate of limited partnership need not be amended if a new general partner is admitted.

Accepted Answer

The certificate of limited partnership typically needs to be amended to reflect the admission of a new general partner, as this is a significant change in the partnership's structure that must be documented officially.

Question 5

A creditor of a limited partner may obtain a charging order against the limited partner's interest in the partnership,thereby becoming an assignee of the partnership interest.

Accepted Answer

This is true according to the Uniform Partnership Act (UPA) and the Revised Uniform Partnership Act (RUPA). The charging order allows the creditor to receive any distributions that would be made to the limited partner, but does not grant the creditor the right to participate in the management of the partnership or vote on partnership matters.

Question 6

It remains unclear under the law whether a limited partner's fiduciary duty is to his general partners or to the limited partnership.

Accepted Answer

The law is unclear on this point and there is no clear answer. Some argue that the limited partner owes a fiduciary duty to both the general partners and the limited partnership, while others believe that the duty is owed only to the limited partnership. Ultimately, the specific terms of the partnership agreement and state law will dictate the scope of the limited partner's fiduciary duty.

Question 7

After the formation of a limited partnership,the admission of additional general partners can only be accomplished with the written consent of all partners.

Accepted Answer

The admission of additional general partners can be accomplished with the written consent of the majority of the general partners, as stated in section 303 of the Uniform Limited Partnership Act.

Question 8

An oral promise by a limited partner to contribute to the limited partnership is enforceable.

Accepted Answer

An oral promise by a limited partner to contribute to the limited partnership is not enforceable. Limited partners are only required to contribute the amount of capital that they have agreed to in writing in the partnership agreement. Any additional contributions must also be agreed upon in writing.

Question 9

Unless otherwise provided in the LLC's operating agreement,a member may assign his financial interest in the LLC without dissolving the LLC.

Accepted Answer

Unless the LLC's operating agreement specifies otherwise, a member may assign their financial interest in the LLC without dissolving it. However, an assignment of the membership interest may not confer on the assignee any voting or management rights unless the operating agreement provides for such transferability.

Question 10

A limited partner may vote on the sale of all of the assets of the limited partnership or a change in the nature of the business without being deemed to have taken part in control of the business.

Accepted Answer

Limited partners can vote on significant matters such as the sale of all of the assets of the partnership or changes in the nature of the business without losing their limited liability status or being considered as taking part in the control of the business.

Question 11

A general partner,but not a limited partner,may be either a secured or unsecured creditor of the partnership with the same rights as a person who is not a partner.

Accepted Answer

The answer of A general partner,but not a limited partner,may...

Question 12

If the partnership agreement does not specify when a limited partner may withdraw or specify a definite time for the limited partnership's dissolution,a limited partner may withdraw upon giving at least one month's written notice to each general partner.

Accepted Answer

Under the Uniform Limited Partnership Act (2001), unless the partnership agreement states otherwise, a limited partner does not have the right to withdraw from the partnership at will. The terms of withdrawal are typically specified in the partnership agreement.

Question 13

A limited partnership agreement may not provide that limited partners have the right to vote on matters as a separate class from the general partners.

Accepted Answer

A limited partnership agreement can provide that limited partners have the right to vote on matters as a separate class from the general partners. The specific rights and obligations of limited partners can be detailed in the partnership agreement, including voting rights on certain issues.

Question 14

One of the most appealing features of a limited partnership is the limited personal liability it offers to limited partners.

Accepted Answer

Limited partners are not personally liable for the debts and obligations of the partnership beyond their investment in the partnership. This means that if the partnership were to go bankrupt or face legal action, the limited partner's personal assets would not be at risk.

Question 15

All states except one have adopted either the 1976 or 1985 RULPA.

Accepted Answer

This statement is true. All states except for Pennsylvania have adopted either the 1976 or 1985 Revised Uniform Limited Partnership Act (RULPA).

Question 16

Judson is a limited partner in a limited partnership.Judson does not have the right to dissolve the partnership except by decree of a court.

Accepted Answer

Limited partners typically do not have the authority to dissolve a partnership; such actions usually require a court decree or the consent of all partners.

Question 17

False statements in a certificate of limited partnership or in an amendment to the certificate that cause loss to third parties who rely on the statements may result in liability for the general partners.

Accepted Answer

False statements in a certificate of limited partnership or in an amendment to the certificate that cause loss to third parties who rely on the statements may result in liability for the general partners under the Uniform Limited Partnership Act.

Question 18

The RULPA recognizes the right of a limited partner to bring an action on the behalf of a limited partnership to recover a judgment in its favor if the general partners having authority to do so have refused to bring the action.

Accepted Answer

This is known as a derivative action and is recognized under the RULPA (Revised Uniform Limited Partnership Act). The limited partner must first make a demand on the general partners to bring the action, and if they refuse or fail to act within a reasonable time, the limited partner may then bring the action on behalf of the partnership.

Question 19

In states where limited liability limited partnerships (LLLPs)are available,a limited partnership may register as an LLLP without having to form a new organization.

Accepted Answer

In states where LLLPs are available, a limited partnership can choose to register as an LLLP by filing the appropriate paperwork without having to dissolve and reform as a new entity.

Question 20

A limited liability company is a form of unincorporated business association that blends the advantages of both general and limited partnerships,because all its members may have limited liability and all may participate in management and control without loss of limited liability.

Accepted Answer

This statement is true, as a limited liability company (LLC) combines the limited liability protection of a corporation with the flexibility of a partnership or sole proprietorship. LLC members are not personally liable for the debts and obligations of the business, and they have the ability to participate in management and control without putting their personal assets at risk.

Quiz 32: Limited Partnerships and Limited Liability Companies