Question 1

In a partnership,each partner has limited personal liability to partnership creditors.

Accepted Answer

In a partnership,each partner has unlimited personal liability to partnership creditors.

Question 2

A partner in a trading partnership ordinarily has implied authority to borrow money for the partnership.

Accepted Answer

A partner of a trading partnership has implied and apparent authority to borrow money for the partnership.

Question 3

A partner may personally profit from a partnership transaction when he or she deals in good faith with the partnership.

Accepted Answer

A partner may not deal with the partnership when the partner has an interest adverse to the partnership or acts on behalf of another person with any adverse interest.For example,a partner may not profit personally by receiving an undisclosed kickback from a partnership supplier.

Question 4

A partnership does not have the authority to ratify the unauthorized act of partners.

Accepted Answer

A partnership may ratify the unauthorized acts of partners.

Question 5

In all partnerships,profits are shared according to the amount of capital contributed by each of the partners.

Accepted Answer

Unless there is an agreement to the contrary,partners share partnership profits equally,according to the number of partners,and not according to their capital contributions or the amount of time that each devotes to the partnership.

Question 6

A partner may not compete against the partnership unless he or she obtains consent from the other partners.

Accepted Answer

A partner may not compete against the partnership unless he or she obtains consent from the other partners.For example,a partner of a retail clothing store may not open a clothing store nearby.However,he may open a grocery store and not breach his fiduciary duty.

Question 7

A partner is under no duty to maintain the secrets of the business.

Accepted Answer

A partner must maintain the confidentiality of partnership information such as a trade secret or a customer list.

Question 8

The standards and principles of agency law's respondeat superior are applied in determining the liability of the partnership and of the other partners for the torts of a partner and other partnership employees.

Accepted Answer

The standards and principles of agency law's respondeat superior are applied in determining the liability of the partnership and of the other partners for the torts of a partner and other partnership employees.

Question 9

LLP partners are personally liable for the actions of the business.

Accepted Answer

For LLP partners,only the LLP business is liable on legal disputes and only the LLP may be sued on claims arising from the business.

Question 10

In a partnership agreement,partners are not criminally liable when a partner commits a crime in the course and scope of transacting partnership business,even if they knew of the partner's criminal tendencies and placed him or her in a position in which he or she could commit a crime.

Accepted Answer

When a partner commits a crime in the course and scope of transacting partnership business,rarely are his partners criminally liable.They may be liable when they know of a partner's criminal tendencies yet place him in a position in which he may commit a crime.

Question 11

Under the Revised Uniform Partnership Act partners owe each other loyalty.

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA)partners owe to the partnership and each other the highest degree of loyalty.

Question 12

Silent partners have the duty to serve and bear the same liability for partnership debts as any other partner.

Accepted Answer

Partners may agree to relieve a partner of the duty to serve.So-called silent partners merely contribute capital to the partnership.Silent partners do not have the duty to serve,but they have the same liability for partnership debts as any other partner.

Question 13

A partnership will be bound by the legal admissions or representations of its partners.

Accepted Answer

A partnership is bound by admissions or representations made by a partner concerning partnership affairs.

Question 14

In a partnership,some classes of partners may have greater voting rights than others.

Accepted Answer

A partnership agreement may create classes of partners,some of which will have the power to veto certain actions.Some classes of partners may be given greater voting rights.Unequal voting rights are often found in very large partnerships,such as an accounting firm with hundreds or thousands of partners.

Question 15

A partner's express and implied authority constitutes his or her apparent authority.

Accepted Answer

A partner's express and implied authority constitutes his or her actual authority.

Question 16

A partnership and its partners are usually liable for a partner's intentional torts.

Accepted Answer

While a partnership and its partners are usually liable for a partner's negligence,they usually have no liability for a partner's intentional torts.

Question 17

Partners have a right to be indemnified for expenditures they make for the partnership from their personal funds.

Accepted Answer

Closely related to the duty to account is the right of a partner to be indemnified for payments made from personal funds and for personal liabilities incurred during the ordinary conduct of the business.

Question 18

When partners disagree concerning an action to be taken in the ordinary course of business,the disagreement will be resolved only if all the partners agree.

Accepted Answer

When partners discuss a prospective action,they will usually vote on what action to take.On matters in the ordinary course of business,the vote of a majority of the partners controls ordinary business decisions and,thereby,limits the actual authority of the partners.

Question 19

Partners in a partnership cannot turn over sole authority to one partner to run the business.

Accepted Answer

The partners in a partnership may grant sole authority to manage the business to one of the partners.

Question 20

Any notice given to a partner is deemed to be a notice given to the partnership firm.

Accepted Answer

Notice to a partner is considered to be received by the partnership.

Quiz 38: Operation of Partnerships and Related Forms

In a partnership,each partner has limited personal liability to partnership creditors.

A partner in a trading partnership ordinarily has implied authority to borrow money for the partnership.

A partner may personally profit from a partnership transaction when he or she deals in good faith with the partnership.

A partnership does not have the authority to ratify the unauthorized act of partners.

In all partnerships,profits are shared according to the amount of capital contributed by each of the partners.

A partner may not compete against the partnership unless he or she obtains consent from the other partners.

A partner is under no duty to maintain the secrets of the business.

The standards and principles of agency law's respondeat superior are applied in determining the liability of the partnership and of the other partners for the torts of a partner and other partnership employees.

LLP partners are personally liable for the actions of the business.

In a partnership agreement,partners are not criminally liable when a partner commits a crime in the course and scope of transacting partnership business,even if they knew of the partner's criminal tendencies and placed him or her in a position in which he or she could commit a crime.

Under the Revised Uniform Partnership Act partners owe each other loyalty.

Silent partners have the duty to serve and bear the same liability for partnership debts as any other partner.

A partnership will be bound by the legal admissions or representations of its partners.

In a partnership,some classes of partners may have greater voting rights than others.

A partner's express and implied authority constitutes his or her apparent authority.

A partnership and its partners are usually liable for a partner's intentional torts.

Partners have a right to be indemnified for expenditures they make for the partnership from their personal funds.

When partners disagree concerning an action to be taken in the ordinary course of business,the disagreement will be resolved only if all the partners agree.

Partners in a partnership cannot turn over sole authority to one partner to run the business.

Any notice given to a partner is deemed to be a notice given to the partnership firm.