Exam 25: Sole Proprietorships and Partnerships

John knows that The Franklin Enterprises Partnership, in which John is a partner, is interested in purchasing a particular tract of land for a business location. Can John lawfully have his aunt buy the land, so that she may resell the land to Franklin Partnership?

The Titanic Partnership's loan from Big Bank is structured so that payments on the loan are made out of profits and the amounts of the payments vary according to profitability. Which of these best describes this arrangement?

Under the RUPA, partnerships at will are automatically dissolved when a partner dies or enters bankruptcy.

A partnership is the easiest business organization to form.

The RUPA has eliminated:

Alan and Baker are disappointed in the profitability of their A and B Partnership. They want to join their partnership with the X and Y Partnership. Is it possible for a partnership to be a partner?

Striuli asks Sarducci to become a limited partner in Avionics Ltd., a limited partnership that will sell computer software. Both Striuli and Sarducci delay filing the certificate of limited partnership. If the limited partnership is sued before the certificate is filed, will Sarducci be named as a defendant? Explain.

Todd and Walker form a venture to operate snow cone stands in Smallville. The stands are only open for five warm weather months. The remainder of the year, Todd and Walker do no business together. Discuss the legal status of their business.

Tangent Enterprises is a partnership consisting of Delen, Javid, and Kaya. Kaya leaves the partnership to do volunteer work in Africa. Discuss the legal status of Tangent Enterprises.

Louisiana was the last state to adopt the Uniform Partnership Act.

Since Janine has management powers in a partnership, she is considered a managing partner in that firm.

Jack has an auto accident while on business for Small Enterprises, an RLLP consisting of Jack and Alex. Who is liable for damages resulting from the auto accident?

In the Opening Case, PNC Bank vs. Michael Farinacci, the main issue was whether the defendants be held jointly liable under the old law (UPA) or jointly and severally liable under the new law (RUPA).

Charlotte is declared mentally incompetent by a court and is unable to participate as a partner in AMLAP Enterprises. Charlotte wants to leave the AMLAP partnership, but is contractually obligated for three more years. Can Charlotte leave the AMLAP partnership?

The UPA clearly states that a partnership should be considered a separate legal entity with an existence separate from the partners.

Morgan, Slater, and Jergenston were partners in a legal consulting partnership. Jergenston pocketed $500,000 he had solicited in bank loans for expanding the partnership. When Morgan and Slater discovered Jergenston's impropriety, Jergenston told them, "Tough luck, but as partners, we are jointly liable on this debt and must pay off the $500,000 plus interest together." Was Jergenston correct? Explain.

Under the RUPA, a partnership:

Alan and Delen enter into a partnership agreement with a $10,000 capital contribution. Six months later, Delen loans Alan $1,000. The loan is a:

Jackson, Thomas, and Susan are partners in an investment firm. There is a vote taken to sell government bonds owned by the partnership, with Thomas and Susan opposed and Jackson in favor. Jackson decides to sell the government bonds and the partnership loses $50,000. Discuss Jackson's liability to the partnership.

RUPA considers a partnership to be an entity in relation to liability.