Deck 32: Creation and Operation of a Partnership

Question 1

Which of the following is a right of a partner?

A) Right to inspect the books at all times
B) Right to deny advances to other partners
C) Right to deny drawings to other partners
D) Right to protect oneself from company losses

Answer 1

A

Question 2

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.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

Mark and James established a partnership firm dealing with textiles. Both of them contributed equally to the partnership during establishment. However, two years later James sold his share of the firm to Mike. Which of the following is legally permissible in such a scenario?

A) James is entitled to keep the money he received from Mike.
B) Mike can claim nondisclosure and reclaim the money from James.
C) Mark can sue Mike for buying the firm from James.
D) Mark can sue James and reclaim the other half.

Question 5

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

A) It is a written agreement of partnership between all partners.
B) It is an unwritten agreement between the founding partners.
C) It is the terms of partnership as described by company law.
D) It is a verbal agreement to form a partnership between the primary partners.

Question 6

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

A) cannot be refuted by the other partners.
B) would not be enforceable by law.
C) would not be binding on the other partners.
D) can be canceled by the other partners.

Question 7

Every partner has the duty to abide by majority vote.

Question 8

When a partner makes an honest mistake:

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

Question 9

Each partner has the duty to inform the other partners about matters relating to personal profits from sources other than the partnership.

Question 10

Each partner must keep a written record of all transactions performed for the firm.

Question 11

Which of the following is a duty of a partner?

A) Duty to abide by minority vote
B) Duty to refrain from other partnerships
C) Duty to keep records
D) Duty to refrain from personal profits

Question 12

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

Question 13

Zen Distilleries, a tobacco wholesaler, operates in a state where individual sales are prohibited for wholesalers. However, if one of the partners sells two cartons of cigarettes to an individual, the contract is likely to be:

A) enforceable in a court of law.
B) binding on the firm.
C) enforceable on the selling partner.
D) null and void.

Question 14

Explain the customary or implied authority of partners.

Question 15

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

A) Brian can withdraw capital advances from the partnership.
B) Jim and Brian can legally prevent Kirk from withdrawing advances from the partnership.
C) Kirk and Brian can legally prevent Jim from withdrawing advances from the partnership.
D) Jim can withdraw capital advances from the partnership.

Question 16

Which of the following should be contained in any article of partnership?

A) Biographical details of each partner
B) Each partner's personal address
C) Amounts of withdrawals of money
D) Names of every partner's guarantor

Question 17

Articles of partnerships need not contain the signatures of the partners.

Question 18

A partnership does not have liability for the torts committed by a partner in the course of partnership business.

Question 19

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.

Question 20

A partnership can exist only if the parties have a written agreement.