Question 1

If a partner acts as an agent for the partnership, the resulting contract:

Accepted Answer

A) Would not be binding on the other partners. 
B) Would not be enforceable by law. 
C) Cannot be avoided by the other partners. 
D) Is void unless the other partners ratify it 
A) Would not be binding on the other partners. 
B) Would not be enforceable by law. 
C) Cannot be avoided by the other partners. 
D) Is void unless the other partners ratify it C

Question 2

Each partner has the duty to inform the other partners about matters relating to personal profits from sources other than the partnership that do not relate to the goals of the partnership .

Accepted Answer

A) True 
 B)False  False

Question 3

What does a partner's duty to exercise loyalty and good faith mean?

Accepted Answer

A) Even a trivial breach of the partnership agreement will justify dissolution. 
B) The partnership contract must be observed scrupulously. 
C) A partner may seize an opportunity that conflicts with the interests of the partnership only if he does not use assets of the partnership in the transaction. 
D) A partner must put the firm's interest above personal advantage until profits are made. 
A) Even a trivial breach of the partnership agreement will justify dissolution. 
B) The partnership contract must be observed scrupulously. 
C) A partner may seize an opportunity that conflicts with the interests of the partnership only if he does not use assets of the partnership in the transaction. 
D) A partner must put the firm's interest above personal advantage until profits are made. B

Question 4

Personal creditors of one partner can force the sale of specific pieces of partnership property.

Accepted Answer

A) True 
 B)False

Question 5

Zen Products, a lumber wholesaler, operates in a state where individual sales are prohibited for wholesalers. If one of the partners sells one sheet of plywood to an individual, the contract is likely to be:

Accepted Answer

A) Not binding on the firm. 
B) Binding on the firm. 
C) Enforceable on the selling partner. 
D) Enforceable in a court of law. 
A) Not binding on the firm. 
B) Binding on the firm. 
C) Enforceable on the selling partner. 
D) Enforceable in a court of law.

Question 6

Which of the following best describes the articles of partnership? ​

Accepted Answer

A) It is a written agreement of all the partners. 
B) It is an unwritten agreement of the founding partners. 
C) It is an implied agreement of all the partners. 
D) It is a verbal agreement of the primary partners to form a partnership. 
A) It is a written agreement of all the partners. 
B) It is an unwritten agreement of the founding partners. 
C) It is an implied agreement of all the partners. 
D) It is a verbal agreement of the primary partners to form a partnership.

Question 7

What is the effect of the right of a partner to participate in management of the business?

Accepted Answer

A) It allows one partner to totally run the business. 
B) The exercise of this right often leads to more agreement by the partners. 
C) Every partner may hire family members to work in the business. 
D) It allows partners to maintain control over their investments. 
A) It allows one partner to totally run the business. 
B) The exercise of this right often leads to more agreement by the partners. 
C) Every partner may hire family members to work in the business. 
D) It allows partners to maintain control over their investments.

Question 8

Explain the nature of partnership liabilities. ​

Accepted Answer

Unless their agreement provides otherwis

Question 9

If a partnership agreement does not fix the ratio of sharing the profits and the losses, they are to be shared in proportion to the contribution of capital.

Accepted Answer

A) True 
 B)False

Question 10

In the absence of a statute to the contrary, a written partnership agreement need not be in a particular form.

Accepted Answer

A) True 
 B)False

Question 11

A written partnership agreement might help avoid some disputes over rights and duties. ​

Accepted Answer

A) True 
 B)False

Question 12

In a case of a false impression of a partnership, the law will frequently hold that the apparent partners are estopped from denying that a partnership exists.

Accepted Answer

A) True 
 B)False

Question 13

In a partnership, majority rule applies to such actions as an assignment for the benefit of creditors

Accepted Answer

A) True 
 B)False

Question 14

By virtue of the existence of a partnership, each partner has the authority to enter into binding contracts on behalf of the partnership.

Accepted Answer

A) True 
 B)False

Question 15

Brian, Kirk, and Jim established a partnership with equal capital contributions. However, Kirk provided an additional contribution in the form of a loan to the company. Which of the following is true?

Accepted Answer

A) Brian can withdraw capital advances from the partnership. 
B) Any of the partners can withdraw their capital contribution or advances at any time. 
C) Kirk can withdraw his capital advance after its due date. 
D) Jim can withdraw capital advances from the partnership. ​ 
A) Brian can withdraw capital advances from the partnership. 
B) Any of the partners can withdraw their capital contribution or advances at any time. 
C) Kirk can withdraw his capital advance after its due date. 
D) Jim can withdraw capital advances from the partnership. ​

Question 16

Mark and James established a partnership to deal in textiles. Both of them contributed equal capital to the partnership. Which of the following is true?

Accepted Answer

A) Mark and James have the right to participate in the management of the partnership 
B) Mark can be held liable for James committing robbery. 
C) Neither Mark nor James has the authority to bind the partnership without the signature of the other. 
D) Neither Mark nor James has the authority to endorse checks without the signature of the other. 
A) Mark and James have the right to participate in the management of the partnership 
B) Mark can be held liable for James committing robbery. 
C) Neither Mark nor James has the authority to bind the partnership without the signature of the other. 
D) Neither Mark nor James has the authority to endorse checks without the signature of the other.

Question 17

A partner who commits a tort has liability for indemnifying the partnership for any loss it sustains.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following should be contained in the articles of partnership?

Accepted Answer

A) Biographical details of each partner 
B) Each partner's personal address 
C) Allowance of withdrawals of profits. 
D) Names of every partner's guarantor 
A) Biographical details of each partner 
B) Each partner's personal address 
C) Allowance of withdrawals of profits. 
D) Names of every partner's guarantor

Question 19

Every partner has the duty to abide by majority vote.

Accepted Answer

A) True 
 B)False

Question 20

When a partner makes an honest mistake (and does not commit negligence)while working on behalf of the partnership :

Accepted Answer

A) Both the partner and the partnership are excused from liability. 
B) The entire firm is liable if third parties are involved. 
C) The other partners are equally liable. 
D) The partner who made the mistake is liable if third parties are involved. 
A) Both the partner and the partnership are excused from liability. 
B) The entire firm is liable if third parties are involved. 
C) The other partners are equally liable. 
D) The partner who made the mistake is liable if third parties are involved.

Exam 30: Creation and Operation of a Partnership

If a partner acts as an agent for the partnership, the resulting contract:

Each partner has the duty to inform the other partners about matters relating to personal profits from sources other than the partnership that do not relate to the goals of the partnership .

What does a partner's duty to exercise loyalty and good faith mean?

Personal creditors of one partner can force the sale of specific pieces of partnership property.

Zen Products, a lumber wholesaler, operates in a state where individual sales are prohibited for wholesalers. If one of the partners sells one sheet of plywood to an individual, the contract is likely to be:

Which of the following best describes the articles of partnership? ​

What is the effect of the right of a partner to participate in management of the business?

Explain the nature of partnership liabilities. ​

If a partnership agreement does not fix the ratio of sharing the profits and the losses, they are to be shared in proportion to the contribution of capital.

In the absence of a statute to the contrary, a written partnership agreement need not be in a particular form.

A written partnership agreement might help avoid some disputes over rights and duties. ​

In a case of a false impression of a partnership, the law will frequently hold that the apparent partners are estopped from denying that a partnership exists.

In a partnership, majority rule applies to such actions as an assignment for the benefit of creditors

By virtue of the existence of a partnership, each partner has the authority to enter into binding contracts on behalf of the partnership.

Brian, Kirk, and Jim established a partnership with equal capital contributions. However, Kirk provided an additional contribution in the form of a loan to the company. Which of the following is true?

Mark and James established a partnership to deal in textiles. Both of them contributed equal capital to the partnership. Which of the following is true?

A partner who commits a tort has liability for indemnifying the partnership for any loss it sustains.

Which of the following should be contained in the articles of partnership?

Every partner has the duty to abide by majority vote.

When a partner makes an honest mistake (and does not commit negligence)while working on behalf of the partnership :

Introduction to Law

Courts and Court Procedures

Business Torts and Crimes

Government Regulation of Business

Nature and Classes of Contracts

Offer and Acceptance

Capacity to Contract

Consideration

Defective Agreements

Illegal Agreements

Written Contracts

Third Parties and Contracts

Termination of Contracts

Nature of Personal Property

Special Bailments

Sales of Personal Property

Formalities of a Sale

Transfer of Title and Risk in Sales Contracts

Warranties Product Liability and Consumer Protection

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Negotiation and Discharge

Liabilities of Parties, Holders in Due Course and Defenses

Nature and Creation of an Agency

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Introduction to Business Organizations

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corporation

Principles of Insurance

Types of Insurance

Security Devices

Bankruptcy

Nature of Real Property

Transfer of Real Property

Real Estate Mortgages

Landlord and Tenant

Wills Inheritances and Trust

Filters

Which of the following best describes the articles of partnership?

Explain the nature of partnership liabilities.

A written partnership agreement might help avoid some disputes over rights and duties.