Exam 37: Partnerships: Termination and Limited Partnerships

Shawn and Jasmine want to start a partnership to sell hand woven sweaters. Jasmine's parents would like to invest, but they do not wish to be subject to liability for losses in excess of their capital contribution. Jasmine's mother tells Shawn and Jasmine that if she invests, she expects to have a significant say in the management of the business. Should Shawn, Jasmine, and Jasmine'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?

In a suit alleging wrongful dissolution, if the partner dissolves a partnership in violation of the partnership agreement, they are not liable, they simply must fix the underlying issue.

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

Which of the following is true about limited partners?

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

A limited partnership is an agreement between ________

[Fishy Fiasco] James agreed to be a limited partner in Ingrid and Darnell's tropical fish importing business. Ingrid and Darnell were general partners. James contributed $10,000 to the partnership as his capital contribution. The partnership made a profit of $30,000 the first year. James was paid nothing. When he inquired, Ingrid told him that a limited partner was only entitled to a share of profits as approved by the general partners and that perhaps things would be better the next year. The next year, however, importation was banned because of a fish disease, and the partnership lost money and owed debts of $60,000. At the end of the year, Ingrid and Darnell asked James to contribute $20,000 to cover the debts. When James complained about the amount, Darnell told him that he and Ingrid were being overly reasonable and that James actually was legally liable for an even larger percentage. In an attempt to keep the business afloat, James told Ingrid and Darnell that they should consider suing a customer who had not paid a large account. Ingrid and Darnell replied, however, that they were morally opposed to lawsuits and that they had the final say on litigation. -Which statement is true regarding James's entitlement to sue on behalf of the partnership?

When a partner dissolves a partnership in violation of the partnership agreement, this is known as ________.

Tino, Jesse, Aldo, and Inez have a partnership. Tino and Jesse are general partners and the others are limited partners. Tino wants to add his cousin Manny to the partnership. Whose consent does Tino need to add Manny?

What must the general and limited partners sign and file with a secretary state to receive limited liability?

[Fishy Fiasco] James agreed to be a limited partner in Ingrid and Darnell's tropical fish importing business. Ingrid and Darnell were general partners. James contributed $10,000 to the partnership as his capital contribution. The partnership made a profit of $30,000 the first year. James was paid nothing. When he inquired, Ingrid told him that a limited partner was only entitled to a share of profits as approved by the general partners and that perhaps things would be better the next year. The next year, however, importation was banned because of a fish disease, and the partnership lost money and owed debts of $60,000. At the end of the year, Ingrid and Darnell asked James to contribute $20,000 to cover the debts. When James complained about the amount, Darnell told him that he and Ingrid were being overly reasonable and that James actually was legally liable for an even larger percentage. In an attempt to keep the business afloat, James told Ingrid and Darnell that they should consider suing a customer who had not paid a large account. Ingrid and Darnell replied, however, that they were morally opposed to lawsuits and that they had the final say on litigation. -Which statement is true regarding James' entitlement to share in profits?

As part of the partnership agreement that Malik and Veronica make with their limited partners, Malik insists on and Veronica and the limited partners agrees to a(n) ________ that allows the continuing partners to keep partnership property and carry on the partnership business?

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

Which of the following was the result on appeal in Urbain v. Beierling, the case in the text in which the court decides whether or not to dissolve a partnership?

[Parental Involvement] Lexie and Fernando, both artists, discussed forming a partnership to paint portraits. Fernando's parents were interested in investing in the partnership, but they wanted to avoid any liability. Fernando suggested forming a limited partnership. He told Lexie and his parents that they could do it very informally, that an oral agreement was sufficient, and that the parents would be protected from liability. However, Lexie insisted that a certificate of limited partnership be filed with the secretary of state, over Fernando's objection that it was a waste of money. After a few months, Lexie and Fernando decided that they wanted to add a new partner, Melissa, to the partnership as a general partner. Melissa had some expertise in the portrait field but she had also had some scrapes with local law enforcement. Fernando's parents objected strenuously to the admission of Melissa. Lexie and Fernando took the position that the parents, as limited partners, had no say in the admission of a new partner. Fernando's father, who had an interest in painting and was concerned that the partnership was not making very much money, decided to start coming to the partnership studio to manage the business and attempt to bring it into profitability. -Are Fernando and Lexie correct that limited partners have no say regarding the admission of new partners?

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

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?

The partnership of Fregeun, Pennell and Jones is dissolving and a dispute has arisen about which debts must be paid first. According to the UPA, who must be paid first when liquidated assets of a partnership are distributed?

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?

Which of the following is not a part of the Life Cycle of a Partnership according to the text?