Question 1

In a limited partnership, a general partner assumes no liability for partnership debts beyond the amount of capital contributed.

Accepted Answer

In a limited partnership, a general partner has unlimited liability, meaning they are personally responsible for the partnership's debts beyond just their capital contribution. Limited partners have liability only up to the amount they have invested.

Question 2

In a limited partnership, every partner has full responsibility for the management of the partnership and its obligations.

Accepted Answer

In a limited partnership, there are general partners who manage the partnership and have full responsibility for its obligations, and limited partners who do not participate in management and are only liable up to the amount they have invested.

Question 3

In some states, limited partners cannot withdraw from a limited partnership.

Accepted Answer

Some states have laws that restrict the ability of limited partners to withdraw from a limited partnership, often requiring specific conditions or agreements to be met.

Question 4

Bhat and Cho do business as Data Security, a partnership. In most states, for the purposes of collecting judgments and having accounting performed, this firm would be treated as

Accepted Answer

In most states, partnerships like Data Security are treated as independent entities for the purposes of collecting judgments and having accounting performed. This allows the partnership to be recognized as a separate legal entity from its individual partners, facilitating legal and financial actions directly against the partnership itself.

Question 5

Dissociation occurs when a partner ceases to be associated in the carrying on of the partnership business.

Accepted Answer

Dissociation occurs when a partner ceases to be involved in the partnership business, either voluntarily or involuntarily, marking a change in the relationship among the partners within the business structure.

Question 6

Amber owns and operates Bistro Café in space leased in a building owned by Ciera. The lease requires a base rent of $1,500, plus 10 percent of Bistro's profits, each month. The term is two years. Amber and Ciera are

Accepted Answer

A partnership typically involves an agreement where parties share in the profits and losses of a business and have an ownership interest or management rights. In this scenario, Ciera, as the landlord, does not have an ownership interest or management rights in Bistro Café; she merely receives a form of rent that is partially variable, based on the café's profits. This arrangement does not constitute a partnership.

Question 7

During the winding up stage of dissolution, no party can make a claim on the partnership assets.

Accepted Answer

During the winding up stage of dissolution, parties, including creditors and partners, can make claims on the partnership assets to settle debts and distribute any remaining assets among the partners.

Question 8

Regardless of the partners' consent or agreement, the voluntary dissociation of a partner begins the dissolution of the partnership.

Accepted Answer

Voluntary dissociation of a partner does not automatically begin the dissolution of the partnership; the partnership can continue its business with the remaining partners, depending on the terms of the partnership agreement and applicable laws.

Question 9

Dissociation terminates some of the rights of the dissociated partner, requires the firm to buy his or her interest, and alters the parties' liability to third parties.

Accepted Answer

Dissociation of a partner from a partnership does terminate some of the rights of the dissociated partner, such as the right to participate in the management and conduct of the partnership business. It also typically requires the partnership to buy out the dissociated partner's interest in the partnership, and it can alter the liability of the parties to third parties, especially in terms of the dissociated partner's liability for future partnership debts.

Question 10

A partner always has the right to dissociate from the partnership.

Accepted Answer

The answer of A partner always has the right to...

Question 11

A court can order the dissolution of a partnership if the business can only be operated at a loss.

Accepted Answer

A court can indeed order the dissolution of a partnership if it finds that the business can only be operated at a loss, which is considered a justifiable reason for dissolution under partnership laws in many jurisdictions. This is to prevent the unnecessary continuation of a business that is not financially viable, protecting the interests of the partners involved.

Question 12

A partner always has the power to dissociate from the partnership.

Accepted Answer

A partner has the right to dissociate from a partnership at any time, regardless of the partnership agreement's terms, although doing so may result in liability for any damages caused by the dissociation.

Question 13

The essential elements of a partnership do not include

Accepted Answer

The essential elements of a partnership typically include a sharing of profits and losses, joint ownership of the business, and an equal right in the management of the business. An intent to act in good faith is a general legal principle applicable to all contracts and business dealings but is not specifically listed as an essential element of a partnership.

Question 14

A limited partner can force the dissolution of a limited partnership even if the other partners want to continue the business.

Accepted Answer

A limited partner typically does not have the authority to force the dissolution of a limited partnership against the wishes of the general partners or according to the terms set forth in the partnership agreement.

Question 15

Vaughn starts Wind Systems to make and sell turbines. Later, Vaughn contracts with Xi to invest additional capital in the firm in exchange for 25 percent of the profits. Vaughn and Xi are not partners in Wind Systems because

Accepted Answer

The key factor that determines a partnership is joint control or management of the business, not necessarily how profits are shared, how losses are dealt with, or the sequence in which partners join the business. Since Xi's investment for a share of the profits does not include joint control over Wind Systems, they are not considered partners.

Question 16

To eliminate costly negotiations or litigation, partners may agree on how the firm's assets will be valued or divided if the partnership dissolves.

Accepted Answer

Partners can agree in advance on a method for valuing or dividing the firm's assets to avoid costly negotiations or litigation if the partnership dissolves, often outlined in a partnership agreement.

Question 17

A limited liability partnership allows professionals to avoid personal liability for the malpractice of other partners.

Accepted Answer

In a limited liability partnership (LLP), partners are not personally liable for the malpractice of other partners, allowing them to protect their personal assets from the malpractice claims against their partners.

Question 18

Gwen and Hera do business as G&H Civil Engineers, a partnership. The Uniform Partnership Act governs the firm

Accepted Answer

The Uniform Partnership Act governs a partnership in the absence of an express agreement, providing default rules for partnerships that haven't specified their own procedures or policies.

Question 19

A partner can bring an action for an accounting during the term of the partnership and the firm's property can be sold to satisfy the partner's personal debts.

Accepted Answer

A partner can indeed bring an action for an accounting during the term of the partnership if grounds exist, but the firm's property cannot be sold to satisfy a partner's personal debts. Instead, a creditor must first obtain a charging order against the partner's interest in the partnership.

Question 20

When a partnership that was supposed to dissolve after one partner's death continues to operate, a court is estopped from ordering its dissolution.

Accepted Answer

Courts can order the dissolution of a partnership that continues to operate after a partner's death if the partnership agreement or state law allows for dissolution under such circumstances. The continuation of the business does not automatically estop a court from ordering its dissolution.

Quiz 35: All Forms of Partnerships