Deck 31: Operation and Dissolution of General Partnerships

Question 1

Under the RUPA,dissolution is the equivalent of termination of a partnership.

Answer 1

False

Question 2

The process of liquidation of a partnership is also known as "winding up."

Answer 2

True

Question 3

The law of partnership is very similar to the law of agency.

Answer 3

True

Question 4

The UPA codified all of the common law causes of dissolution of a partnership.

Question 5

Under the RUPA,if a partner is dissociated from a partnership without resulting in dissolution,the business may choose whether to purchase the dissociated partner's interest in the partnership.

Question 6

Under the RUPA,dissociation of a partner results in dissolution only in limited circumstances.

Question 7

Dale falsely tells Glenna that he is a partner in Huntsman Appraisers.Glenna casually repeats this information to Kash,who sells office equipment on credit to Huntsman in reliance on the statement.Kash cannot hold Dale liable because he was not justified in relying on the representation made privately by Dale to Glenna,which Dale did not consent to have repeated.

Question 8

Under the RUPA,a dissociated partner is not liable for a partnership obligation incurred more than two years after dissociation.

Question 9

Where the UPA is controlling,Lynette,expelled from the YLC Partnership pursuant to a provision in the partnership agreement,can now force liquidation of the partnership.

Question 10

Under the UPA,in order to avoid liability,only constructive notice of a dissolution is required to be given to third parties who had no knowledge of the partnership before its dissolution.

Question 11

The RUPA abolishes the marshaling of assets doctrine.

Question 12

A partner's notification of a fact relating to the partnership is not effective against the other partners until the relevant fact is entered on the minutes at the next partnership meeting.

Question 13

Under the UPA,any suit in contract against the partners must name all of them as defendants.

Question 14

Under the UPA,upon dissolution of a partnership,apparent authority terminates although actual authority generally continues.

Question 15

Maizie is admitted as a partner to the existing Greene Ridge Partnership in June of 2018.Unless she signs an agreement to the contrary,she will be personally liable on all partnership obligations,including one incurred in December of 2017.

Question 16

Under the UPA,if a partner makes a loan to the partnership,he will be in the same position as other creditors who are not partners in requesting repayment upon dissolution.

Question 17

A partner's liability for partnership debts is limited to his capital contribution.

Question 18

The RUPA authorizes the optional,central filing of a statement of partnership authority specifying the names of partners authorized to execute instruments transferring the partnership's real property.A filed statement is effective for six-year,renewable terms.

Question 19

Respondeat superior has no application to situations where a partner commits a tort,because only the partner,and not the partnership,is liable.

Question 20

Under the RUPA,during winding up,the partnership must apply its assets first to discharge the obligations of partners who are creditors on parity with other creditors,subject to any other laws.

Question 21

Colleen is admitted to the partnership of Elmore & Monticello and makes an initial capital contribution of $10,000.Two years later,when liabilities of the partnership exceed its assets by $20,000,the firm is dissolved.Paul had loaned the firm $5,000 six months before Colleen was admitted;Scott had loaned the firm $8,000 three months after Colleen was admitted.Colleen has:

A) no liability to Paul.
B) liability to Paul to the extent of her capital contribution and is personally liable to Scott.
C) no liability to Scott.
D) liability to Paul and Scott only to the extent of her capital contribution.

Question 22

Kline,Finkel,and Martinez have been partners for years,but a court is now dividing the assets and liabilities of the partnership separate from the assets and liabilities of the individual partners.This process is called:

A) marshaling assets.
B) liquidation.
C) dissolution of the partnership.
D) winding up.

Question 23

A person,who represents himself to third persons as being a partner,when in fact he is not,may have the liability of a partner.

Question 24

The best and most reliable tool for preserving a partnership business after dissolution is through a continuation agreement.

Question 25

The liability of partners for a tort or breach of trust committed by any partner is unlimited,personal liability.

Question 26

Actual authority terminates upon:

A) illness of one of the partners.
B) dissolution of the partnership.
C) physical destruction of partnership papers.
D) traveling to a foreign country.

Question 27

Roberts,Smith,and Tomas have been partners for ten years.The partners,however,are now collecting debts,converting assets to cash,paying creditors,and distributing remaining assets to each partner.Roberts,Smith,and Tomas are engaged in:

A) dissolution.
B) marshaling assets.
C) reformation.
D) winding up.

Question 28

The RUPA abolishes the dual priority rule.

Question 29

A retiring partner cannot be discharged from existing liabilities of the partnership except by payment.

Question 30

Under the UPA,after all the partnership's creditors have been paid,each partner is entitled to repayment of his capital contribution upon termination of the firm.

Question 31

In a partnership of Holly,Dolly & Molly,Holly commits fraud which creates a $9,000 liability to the partnership.If the three partners share profits and losses equally,Holly's liability to the partnership for her fraudulent act is $3,000.

Question 32

Under the UPA,dissolution by operation of law occurs:

A) if a partner has been adjudicated mentally incompetent.
B) upon the bankruptcy of a partner.
C) when a partner has engaged in conduct prejudicial to the business.
D) when the business can be carried on only at a loss.

Question 33

The doctrine of marshaling of assets is an equitable doctrine.

Question 34

Under the RUPA,a partner's duty not to compete terminates upon dissociation,and the dissociated partner may immediately engage in a competitive business without further consent.

Question 35

A partner who does not have actual authority to order a fax machine for the partnership office probably does not have apparent authority either.

Question 36

Under the RUPA,a partner who does not have actual authority from all of the partners may still bind the partnership by:

A) executing a contract of suretyship in the partnership name.
B) selling partnership property which is not held for sale in the usual course of business.
C) paying an individual partner's debts out of partnership assets.
D) None of these actions allow the partner to bind the partnership.

Question 37

Under the RUPA,upon dissolution,the partnership must be liquidated.

Question 38

If the partnership is bound by a contract,then each general partner has unlimited personal liability for that obligation.

Question 39

If a partnership is a debtor under the Bankruptcy Code and partnership property is insufficient to pay all the claims against the partnership,the trustee in bankruptcy must first seek recovery of the deficiency from the estates of the bankrupt partners,and then may seek recovery from general partners who are not bankrupt.

Question 40

Under the UPA,which of the following liabilities of a partnership has the highest priority for payment out of partnership assets? Amounts owing to:

A) partners for profits
B) partners for loans and advances
C) nonpartner creditors
D) partners for capital

Question 41

If a partner's act is not apparently for carrying on in the ordinary course the partnership business:

A) the partnership is bound only where the partner has actual authority.
B) the third person dealing with the partner becomes liable along with the partner.
C) the partner is necessarily acting without authority.
D) the partnership is bound anyway because a partner always has authority to bind the partnership.

Question 42

Jane,Kelly,and Lois are partners in an accounting firm,but Jane intends to retire and withdraw from the partnership at the end of the year.Under the RUPA,Jane is liable to the firm's creditors:

A) for a partnership obligation incurred within two years after her dissociation if at the time of entering into the transaction the other party reasonably believed Jane was then a partner,did not have notice of Jane's dissociation,and is not deemed to have had constructive notice of the dissociation.
B) only for all debts incurred prior to her retirement.
C) until the day of her retirement when she will be absolved of all liability.
D) for an amount not to exceed her partnership interest on the day of her retirement.

Question 43

Under the RUPA,in which of the following situations may a court order dissolution upon application by a partner?

A) An event makes it unlawful to continue substantially all of the partnership's business.
B) A definite term for the partnership has expired.
C) A partner files a petition for personal bankruptcy.
D) The court finds the economic purpose of the partnership is likely to be unreasonably frustrated.

Question 44

A partner has ____ authority to hire and fire employees whose services are necessary to carry on the business of the partnership.

A) actual implied
B) apparent
C) no
D) limited

Question 45

Which of the following is true regarding an insolvent partnership under the UPA?

A) The partners must contribute their respective share to the losses in order to pay creditors.
B) If one of the partners is out of the jurisdiction and refuses to contribute,the other parties must contribute the additional amount necessary to pay the firm's liabilities in the relative proportions in which they share the profits.
C) Any partner who pays an amount in excess of his proper share of the losses has a right of contribution against the partners who have not paid their share.
D) All of these are true.

Question 46

Shannon has just become a partner in A & R Accounting Partnership.Her capital contribution is $10,000,which she paid from her savings.Which of the following is correct with respect to Shannon's liability for partnership obligations?

A) Shannon has no liability for partnership debts that existed at the time of her admission as a partner.
B) Shannon is liable only to the extent of her capital contribution for partnership debts that occur after her admission as a partner.
C) Shannon has unlimited personal liability for all partnership debts regardless of whether they were incurred before or after she became a partner.
D) Shannon has unlimited personal liability for all partnership obligations that occur after she became a partner;she has liability to the extent of her capital contribution for obligations that existed at the time she became a partner.

Question 47

A partner:

A) cannot be held criminally liable for the crimes of his partners.
B) may be criminally liable for the crimes of his partners if he authorized the acts.
C) who commits a tort is liable to the third party only through the partnership entity.
D) has joint and several liability with his partners for contracts entered and for torts and crimes committed by other partners.

Question 48

Under the UPA,which of the following requires the unanimous consent of the partners?

A) Submission of a partnership claim to arbitration
B) Confession of judgment
C) Disposing of the goodwill of the business
D) All of these require the unanimous consent of the partners.

Question 49

Where a partner acts without either actual or apparent authority,the partnership:

A) cannot be bound.
B) is bound only if it ratifies the act.
C) is bound only if the third person did not know the partner was acting on behalf of the partnership.
D) is bound under all circumstances,since the partner is an agent of the partnership.

Question 50

Enzo and Watson Partnership agrees to hire an "errand runner" 20 hours per week for the summer.Alan Watson,a partner,interviews a college student and decides to offer her the job.But she says she needs a 40-hour-a-week job,so Alan agrees to make it 40 hours.What result?

A) Enzo and Watson Partnership is not bound to hire her.
B) Enzo and Watson Partnership is bound to pay her for 40 hours per week.
C) Alan is personally bound to pay her for 20 hours per week.
D) Alan is personally bound to pay her for 40 hours per week.

Question 51

Under the UPA,in what circumstances do the remaining partners after dissolution have the right to continue the partnership?

Question 52

David,a partner in the Tri-State Express Mail delivery partnership,negligently drove his delivery truck onto the curb during a rush-hour package delivery.Marlene was injured.Against whom can Marlene collect?

A) Only David
B) Only the other partners
C) Tri-State Express Mail Partnership or any partner
D) Only Tri-State Express Mail Partnership

Question 53

Under the RUPA,a partner's dissociation:

A) terminates the partner's right to participate in the management and conduct of the partnership business.
B) eliminates that partner's right to participate in winding up the partnership.
C) does not terminate the duty not to compete with the partnership until the process of winding up the partnership has been completed.
D) terminates that partner's duty to account to the firm for any fees received on behalf of the partnership.

Question 54

Chuck,Bob,and Bert form CB&B Partnership to run a specialty grocery store.Bert is the day-to-day manager of the store,Bob buys the groceries,and Chuck does all the administrative work.Bob decides he would like a new car to drive to visit prospective wholesalers.He makes a contract with Big Ben Motors in the name of CB&B without consulting Chuck and Bert.The partnership is:

A) bound by Bob's actual implied authority to buy a car.
B) bound by Bob's apparent authority to buy a car.
C) bound by Bob's ostensible authority to buy a car.
D) not bound because buying a car is outside the scope of the partnership business.

Question 55

A(n)____ imposes partnership duties and liabilities upon a nonpartner who has either represented himself or consented to be represented as a partner.

A) accounting
B) delectus personae
C) fiduciary proceeding
D) partnership by estoppel

Question 56

The RUPA provides that partners are ____ liable on all contract obligations of the partnership.

A) jointly and severally
B) strictly
C) not
D) partially

Question 57

Under the UPA,which of the following acts does not bind the partnership unless authorized by all of the partners?

A) Selling goods in the ordinary course of the partnership business
B) Use of partnership property for partnership business
C) Acting as an agent for the partnership
D) Confessing judgment in a claim against the partnership

Question 58

Nolan is driving a truck delivering goods for his partnership when he negligently backs into a customer's new car.The customer sues the partnership and recovers $6,000 in damages.What liability do the other partners have for Nolan's actions?

A) No liability
B) Liability based on their capital contributions
C) Individual liability but not joint liability
D) Joint and several liability

Question 59

Which of the following is true of dissociation?

A) All of the common law causes of dissociation are also causes under the RUPA.
B) A partner has the power to dissociate at any time by expressing the intent to withdraw from the partnership.
C) Which dissociations are wrongful are set forth by statute and cannot be modified by the partnership agreement.
D) The partnership agreement cannot modify the effects of wrongful dissociation.

Question 60

The Star General Partnership had assets worth $34,000 after liquidation.Frank,Gene,and Hank,equal partners,each contributed $3,000 into the capital pool at the inception of the business.Gene later loaned the business $5,000.They owe $23,000 to creditors.What will Gene get in distribution,assuming there is no agreement on the distribution of profits?

A) $5,000
B) $7,000
C) $8,000
D) $11,000

Question 61

Identify the ways a partnership is dissolved by operation of law under the UPA.List the circumstances under which a court will order a dissolution of a partnership.

Question 62

Distinguish a dissociation from a dissolution.Explain the effect of each.