Deck 41: Partnerships

Question 1

A combination of two or more persons for a common nonprofit purpose is commonly an unincorporated association.

Answer 1

True

Question 2

A creditor of an individual partner cannot proceed against any specific items of partnership property, but can obtain a charging order against that partner's interest in the partnership.

Answer 2

True

Question 3

The assignee of a partner's interest in the partnership becomes a partner only with the consent of the other partners.

Answer 3

True

Question 4

A partnership is not inferred when profits are received in payment of a debt.

Question 5

The fact that the parties share profits and losses is strong evidence of a partnership.

Question 6

A partner must contribute capital to be considered a 'full partner.'

Question 7

The rights of partners are determined by the partnership agreement, which must be written to comply with the statute of frauds

Question 8

A partner is considered an employee of the partnership when doing work that would ordinarily be done by an employee.

Question 9

Under the UPA, partners hold title to firm property by tenancy in partnership.

Question 10

Persons who are not partners under appropriate circumstances may be held liable to third persons under the doctrine of partnership by estoppel.

Question 11

A partner requires a majority vote to do those acts that are customary for a member of a partnership conducting the particular business of that partnership.

Question 12

A registration certificate for a partnership's fictitious name contained the names of Barry, Boyd, and Swartz. Bank or America extended credit to the firm in reliance in part on the certificate that named Swartz as a partner. Swartz, in fact, had no knowledge of the certificate and never had agreed to be a partner. Because of BOA's reliance on the certificate and the statement that Swartz was a partner, Swartz has a partner's liability insofar as Cruise is concerned.

Question 13

If the partnership agreement is silent on a matter, UPA or RUPA may govern the transaction.

Question 14

A majority action of partners is not binding if it contravenes the partnership agreement.

Question 15

If Bruce receives a fixed payment for performing continuing services for a third party he is considered a partner, regardless of whether he shares in partnership profits or losses.

Question 16

In some instances, persons who are in fact not partners may be held liable to third persons as though they were partners.

Question 17

The sharing of gross returns shows no significant evidence of a partnership.

Question 18

All states except New York have adopted either the UPA or the RUPA.
The Uniform Partnership Act, a codification of partnership law, has been adopted by 49 states.

Question 19

A partner is an agent of the partnership and of the other partners.

Question 20

A partnership involves equal contributions of capital, services, or a combination of these.

Question 21

After the dissolution of a partnership, partners retain the authority to perform any acts necessary to wind up the business.

Question 22

An assignee of a partner's interest does not become a partner without the consent of the other partners and is only entitled to: _______.

A) participate in the management of the partnership.
B) receive the assignor's share of the profits during the term of the partnership and the assignor's share of capital on dissolution.
C) inspect the books of the partnership.
D) vote on matters concerning the business of the partnership.

Question 23

In a partnership of four physicians, a decision to buy an office copier for the partnership must be approved by: ______.

A) all of the partners.
B) at least three of the partners.
C) at least two of the partners.
D) one partner.

Question 24

The vested rights of partners are not extinguished by dissolving the firm and any existing liabilities remain.

Question 25

A partner cannot make a general assignment of firm property for the benefit of creditors unless authorized by the other partners or unless they have abandoned the business.

Question 26

Partners hold title to firm property by:

A) tenancy in partnership.
B) tenancy in common.
C) joint tenancy.
D) partnership in common.

Question 27

All the following are characteristics of a general partnership except: ______.

A) separate entity.
B) voluntary and consensual.
C) partner contributions.
D) co-owners for profit.

Question 28

Partners have the implied authority to bind the partnership by contracts of surety for any and all purposes.

Question 29

Bankruptcy of only one of the partners does not cause dissolution of the firm.

Question 30

When a partner executes an agreement outside the limitations of that partner's agreed scope of power, the other partners are always able to set aside the contract.

Question 31

In determining the rights of partner Dewey in the firm of Dewey, Cheatham, and Howe, the most important reference point is: ______.

A) the Uniform Partnership Act.
B) the partnership agreement.
C) the sworn testimony of Cheatham and Howe.
D) the customs and traditions of similar partnerships.

Question 32

A partner admitted as a partner into an existing partnership has unlimited liability for all obligations of the partnership arising before such admission.

Question 33

Regarding partnership property:

A) only a managing partner has the right to use firm property for firm business.
B) where a three-person partnership owns three autos, each partner owns one of the autos individually.
C) on the death of a partner, that partner's share of partnership property vests in his or her next of kin.
D) a creditor of a partner cannot proceed against any specific items of partnership property.

Question 34

When the dissolution of a partnership has been caused by operation of law, notice of such dissolution must be given to third persons.

Question 35

Creditors of a firm have first claim on the assets of the partnership.

Question 36

In determining whether a partnership exists, which of the following factors is not evidence of a partnership?

A) Shared profits and losses
B) Co-ownership of property
C) Equal control of the business
D) Partner contributions.

Question 37

Partnership property may consist of:

A) real property only.
B) personal property only.
C) any and all property acquired by the partnership.
D) all property contributed by the partners or acquired for the firm or with its funds.

Question 38

Under the UPA, and absent an agreement, a tenancy in partnership possesses all the following characteristics, except:______.

A) each partner has an equal right to use firm property for partnership purposes in the absence of a contrary agreement.
B) each partner possesses no divisible interest in any specific item of partnership property that can be voluntarily sold, assigned, or mortgaged by a partner.
C) each creditor of a partner cannot proceed against any specific items of partnership property.
D) the partnership must file necessary documentation with the state where it does business.

Question 39

The habitual drunkenness of a partner is a sufficient cause for judicial dissolution of a partnership.

Question 40

All the following are characteristics of a general partnership except: ______.

A) general
B) silent
C) secret
D) nominal

Question 41

Partners are:

A) jointly liable on all firm contracts and for all torts committed by one of the partners in the scope of partnership business.
B) jointly and severally liable on all firm contracts and for all torts committed by one of the partners in the scope of partnership business.
C) jointly and severally liable on all firm contracts and jointly liable for all torts committed by one of the partners in the scope of partnership business.
D) jointly liable on all firm contracts and jointly and severally liable for all torts committed by one of the partners in the scope of partnership business.

Question 42

When a partner disassociates with a partnership, which of the following is true?

A) The partnership is no longer bound by acts of that partner, whether or not a notice is filed.
B) The disassociated partner is prohibited from competing with the partnership for a period of one year.
C) The disassociated partner may be liable for damages for breach of contract.
D) Notice need not be given to third parties.

Question 43

Robertson and Enrickson prepared an agreement to enter into a partnership. Both of the partners realized that outside capital was needed for the firm to begin operations; however, they also realized that their individual and combined credit ratings would not attract sufficient funds. In order to improve the new partnership's ability to attract investment capital, and with the approval of Enrickson, Robertson added his friend Thompson's name to the partnership agreement. Thompson, a well-known personality from a family of means, was not asked to be a partner and knew nothing of Robertson's and Enrickson's actions. Upon seeing Thompson's name on the partnership agreement, a local bank readily agreed to advance Robertson and Enrickson the total sum required to begin operations. The partnership has now failed, and the bank would like to hold Thompson, Robertson and Enrickson liable for the amount of the loan. Will the bank recover from Thompson, Robertson and Enrickson?

Question 44

Theo, a member of TGI partnership, withdrew from the partnership and duly notified the other members. The firm was an at-will partnership and the parties parted amicably, posting a notice in the local newspaper of the dissolution of their firm. Cosmo, a customer who had conducted business with Theo several times, did not see the newspaper notice and was not informed of the dissolution. Later, Theo approached Cosmo concerning a transaction similar to those Cosmo had engaged in before with Theo acting on behalf of TGI. Cosmo placed an order, gave a substantial down payment to Theo, and received a receipt on TGI stationery from him. Theo thereafter absconded with the down payment, and TGI failed to honor the contract. Cosmo sued the other members of TGI partnership. Discuss their potential liability.

Question 45

All of the following transactions are prohibited by a by a partner without the consent of other partners except: ______.

A) a contract that makes it impossible for the firm to conduct its usual business.
B) submitting controversies of the firm to arbitration.
C) making a general assignment of firm property for the benefit of creditors
D) lease agreement for office equipment

Question 46

Each partner has to a right to do all of the following without a partnership vote except: ______.

A) take an equal part in transacting the business of the firm.
B) receive compensation for any work done for the partnership.
C) sell the firm's goods in the regular course of business.
D) borrow money for firm purposes.

Question 47

When a partnership is dissolved by a partner's bankruptcy, notice:

A) is not required.
B) must be given to the other partners only.
C) must be given to third persons only.
D) must be given to both other partners and third persons.

Question 48

A partner's authority to act for the partnership is similar to the authority of a(n):

A) agent to act for a principal.
B) independent contractor to act for an employer.
C) shareholder to act for a corporation.
D) employee to act for another employee.

Question 49

Dissolution of a partnership:

A) always means that the business has ended.
B) increases the authority of the partners.
C) is followed by a winding-up period.
D) means the partners' vested rights are extinguished.

Question 50

Rundles, Kreiger, and Larson formed a partnership to breed and show horses. Rundles and Kreiger each contributed $25,000 to the partnership. Larson contributed four (4) horses valued at $25,000. The partnership agreement provided that the partners would share profits equally. When the horses failed to perform as expected, Rundles and Kreiger decided to reduce Larson's share of the profits. Larson claims that this decision must be unanimous to be binding. How will the case be decided?

Question 51

Which of the following will not result in dissolution of the partnership by court decree?

A) Insanity of a partner.
B) Incapacity of a partner.
C) Withdrawal of a partner.
D) Habitual drunkenness of a partner.

Question 52

A partner has the power to withdraw from the partnership at any time except: ______.

A) when the withdrawal violates the partnership agreement.
B) when the partnership is not for a definite purpose.
C) when the partnership is not for a definite time.
D) when the partnership violates an agreement.

Question 53

When a partnership is dissolved by the act of a partner, notice:

A) is not required.
B) must be given to the other partners only.
C) must be given to third persons only.
D) must be given to both other partners and third persons.

Question 54

All of the following result in the automatic dissolution of the partnership by law, except: ______.

A) the expulsion of a partner.
B) the bankruptcy of the partnership or of one of the partners.
C) the death of a partner.
D) an event that make the partnership's business illegal.