Question 1

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

Accepted Answer

Co-ownership of means or instrumentality to accomplish a single business transaction or a limited series of transactions results in a joint venture. A partnership involves co-ownership of a business entity, while a corporation involves ownership through the purchase of stock. An R&D partnership involves joint research and development efforts between two or more parties.

Question 2

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

Accepted Answer

The Revised Uniform Partnership Act (RUPA) treats a partnership as a legal entity distinct from its partners specifically for the purpose of suing or being sued, among other capacities. This allows the partnership to hold property, enter into contracts, and conduct business in its own name.

Question 3

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

Accepted Answer

An adjudicated incompetent lacks the legal capacity to enter into contracts, including partnership agreements, due to their mental incapacity.

Question 4

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

Accepted Answer

A charging order is a legal remedy available to creditors of a partner in a partnership. It allows the creditor to attach the partner's transferable interest in the partnership to satisfy the partner's debt, without disrupting the operations of the partnership itself.

Question 5

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

Accepted Answer

In Re KeyTronics, the court emphasized that the intent of the parties to form a partnership is determined objectively from all available evidence and circumstances, rather than solely on the subjective intent or declarations of the parties. This approach aligns with the principles of the Revised Uniform Partnership Act (RUPA), which focuses on the actions and agreements of the parties to ascertain the existence of a partnership.

Question 6

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

Accepted Answer

One disadvantage of a partnership is that each partner has unlimited personal liability for the partnership's debts and obligations. Therefore, option B, which states that each partner has limited liability, is not an advantage of a partnership. Options A, C, and D are advantages of a partnership.

Question 7

Which of the following is the correct definition for a partnership?

Accepted Answer

A partnership is an association of two or more persons to carry on as co-owners a business for profit. Option A refers to a limited partnership, which is a specific type of partnership with both general and limited partners. Option B is a vague definition that could potentially apply to various types of legal entities. Option C refers to co-tenancy, which implies joint ownership of property rather than a business for profit.

Question 8

Sue, Barb, and Carlotta agree to put in $1,000 each to set up a shelter for lost animals. They each work two days a week. Donations fund the day-to-day operations. Do they have a partnership?

Accepted Answer

The key factor that determines a partnership in this context is the intention to form a business for profit. Since the shelter is funded by donations and operates as a service for lost animals rather than a profit-making business, it does not constitute a partnership in the traditional business sense.

Question 9

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

Accepted Answer

The agreement for dividing tax liability of the partnership is not typically included in a partnership agreement because tax liabilities are governed by tax laws and regulations, not by agreements between partners. The other options (duties of the partners, capital contributions, and division of profits and losses) are standard components of a partnership agreement.

Question 10

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

Accepted Answer

The unincorporated business association described in the question is a limited partnership, which consists of at least one general partner who has unlimited personal liability and controls the management of the business, and at least one limited partner who has limited liability and is passive in the management of the business. Joint ventures involve two or more businesses coming together for a specific project or purpose, while limited liability companies and partnerships are different legal structures that offer different liability protections and management structures.

Question 11

Ruben invested $40,000 in a partnership with Clark and Louis. Ruben's contract with the partnership states he will receive a portion of partnership profits, but he will be liable for partnership's debts only to the extent of the $40,000 he invested. Ruben is:

Accepted Answer

Ruben is a limited partner because he receives a portion of the partnership's profits and his liability for the partnership's debts is limited to the extent of his investment, which is a characteristic of limited partners.

Question 12

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

Accepted Answer

In Thomas v. Lloyd, the court held that whether real estate titled in the names of individual partners is considered partnership property is a question of fact, and the burden of proof lies with the person claiming that the actual ownership is different from what is indicated by the legal title. This means that just because property is in the names of individual partners does not automatically make it partnership property; it must be proven as such.

Question 13

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

Accepted Answer

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

Question 14

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

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), property acquired with partnership funds is presumed to be partnership property unless there is evidence to the contrary.

Question 15

A partner has all but which of the following duties?

Accepted Answer

A partner is not necessarily restricted from engaging in other businesses unless such a restriction is specified in the partnership agreement. Duties A, B, and D are fundamental duties of a partner, including faithful service, adherence to the partnership agreement, and not acquiring a partnership opportunity without consent.

Question 16

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

Accepted Answer

For real estate to be considered partnership property, the title may be held in the name of the partnership itself or in the names of one or more partners, as long as the partnership's name is indicated in the title instrument, showing the connection to the partnership. This allows for flexibility in how property is titled while still ensuring it is legally recognized as belonging to the partnership.

Question 17

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

Accepted Answer

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

Question 18

John, George, and Ringo pool their money to buy land to operate an insect farm from which they plan to sell the insects for medicinal uses and share the profits or losses. Are they partners?

Accepted Answer

A partnership is formed when individuals associate to carry on a business for profit as co-owners, which is the case with John, George, and Ringo pooling money to buy land and operate an insect farm with the intention of sharing profits or losses.

Question 19

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

Accepted Answer

They are a partnership because they have agreed to operate the apartment complex together with the intention of making a profit, which meets the basic definition of a partnership.

Question 20

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

Accepted Answer

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

Quiz 30: Formation and Internal Relations of General Partnerships