Business Law II Chapter 32 Practice Questions
Actual authority terminates upon: a. dissolution of the partnership. b. illness of one of the partners. c. physical destruction of partnership papers. d. All of these are correct.
A
Actual authority terminates upon: a. dissolution of the partnership. b. illness of one of the partners. c. physical destruction of partnership papers. d. All of the above.
A
David, Ed, and Fred are partners in the DEF partnership. The partnership is being dissolved, having $200,000 in assets and owing $410,000 to creditors. David contributed $100,000 in capital; Ed contributed $50,000 in capital; and Fred contributed $25,000 in capital. Profits are shared equally. Which of the following is correct with regard to the responsibility of each partner? a. The partners will bear losses equally. b. The partners will bear losses in the proportion of their relative capital contributions. c. If Ed refuses to contribute to covering the loss and he is out of the jurisdiction, David and Fred must contribute the additional amount necessary to pay DEF's liabilities in the relative proportion of their capital contributions. d. Both (b) and (c).
A
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 dissociation if the partnership did not dissolve and if at the time of entering into the transaction the other party reasonably believed Jane was then a partner. 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. e. for an amount not to exceed her initial capital contribution to the partnership.
A
John, Samuel, and Jim are general partners in the development of an electric car. Jim pours all his money into the project, but it never seems to work out. Eventually the partnership and Jim cannot meet their daily obligations, and the partnership is dissolved. Jim files for bankruptcy. If the partnership assets are insufficient to pay all claims against the partnership: a. the trustee in bankruptcy must seek recovery of the deficiency first from John and Samuel. b. Jim is released from liability because of the bankruptcy proceedings. c. Jim's personal assets are not available for the partnership debts because he has limited liability. d. the bankruptcy court must follow the doctrine of marshaling of assets.
A
Smarth, King, and Finkel have been partners for years, but a court of equity is now segregating and considering separately the assets and liabilities of the partnership and the respective assets and liabilities of the individual partners. This process is called: a. marshaling of assets. b. liquidation. c. dissolution of the partnership. d. winding up.
A
The UPA provides that partners are __________ liable on all debts and contract obligations of the partnership. a. jointly b. strictly c. jointly and severally d. partially
A
The UPA provides that partners are __________ liable on all debts and contract obligations of the partnership. a. jointly b. strictly c. jointly and severally d. partially
A
The liability of partners for a tort or breach of trust committed by any partner is: a. unlimited, personal liability. b. limited liability. c. no liability. d. nominal liability.
A
Which of the following describes the imposing of partnership duties and liabilities upon a person who is not a partner in an existing partnership by reason of his consenting to representation that he is a partner? a. Partnership by estoppel. b. Delectus personae. c. A fiduciary duty. d. Torts of partnership.
A
Which of the following describes the imposing of partnership duties and liabilities upon a person who is not a partner in an existing partnership by reason of his consenting to representation that he is a partner? a. Partnership by estoppel. b. Delectus personae. c. A fiduciary duty. d. Torts of partnership.
A
ABC Partnership agrees to hire an "errand runner" 20 hours per week for the summer. Alan, 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. ABC Partnership is not bound to hire her. b. ABC Partnership is bound to pay her for 40 hours per week. c. Alan is bound to pay her for 20 hours per week. d. Alan has to pay her for 40 hours per week.
B
Authority that a third person, in view of the circumstances, the conduct of the parties, and a lack of notice or knowledge to the contrary, may reasonably consider to exist is known as: a. actual implied. b. apparent. c. actual express. d. None of the above.
B
General Widget's partnership assets amount to $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. The partnership owes $23,000 to creditors for inventory. 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.
B
If, in the course of business, a partner breaches trust by misapplying money or property entrusted by a third person: a. that partner alone is criminally liable. b. all partners are jointly and severally liable. c. that partner alone is liable for tort injury. d. none of these apply.
B
Under the RUPA, the partners have what type of liability for all contract obligations of the partnership? a. Joint. b. Joint and several. c. Several. d. No.
B
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.
B
Which of the following is NOT considered to be dissolution by operation of law under the UPA? a. Bankruptcy of a partner. b. Expulsion of a partner according to the partnership agreement. c. Subsequent illegality of the partnership. d. Death of a partner.
B
Which of the following is NOT considered to be dissolution by operation of law? a. Bankruptcy of a partner. b. Expulsion of a partner according to the partnership agreement. c. Subsequent illegality of the partnership. d. Death of a partner.
B
A partner may bind the partnership by her act if she has: a. actual authority, express or implied, to perform the act. b. apparent authority to perform the act. c. Both (a) and (b) are correct. d. None of the above.
C
Absent an agreement otherwise, upon dissolution under the UPA a partner is entitled to which of the following after payment of partnership creditors? a. A share of profits in proportion to his capital contribution. b. Shares of profits dependent upon the capital and time he contributed to the partnership. c. Repayment of his loans to the partnership, capital contribution, and a share of the profits. d. The UPA requires that the partners have an agreement or else they must seek a court order distributing the remaining assets.
C
Partnership creditors: a. have first priority over nonpartnership creditors against all assets of a partner, business or personal. b. share an equal footing with nonpartnership creditors against the business assets of a partner. c. share an equal footing with nonpartnership creditors against the personal assets of a partner. d. have second priority to nonpartnership creditors against the personal assets of a partner.
C
The best and most reliable tool for preserving a partnership business after dissolution is: a. a court order. b. the filing of a request with the secretary of state's office in the state where the original partnership was located. c. a continuation agreement. d. There is no tool for preserving a partnership after dissolution. A new partnership must be formed after distributing all partnership property from the original partnership.
C
Under the UPA, after dissolution: a. the partnership must be liquidated. b. the remaining partners have the right to continue the partnership if the majority of them agree c. the remaining partners have the right to continue the partnership if the partnership was dissolved in contravention of the partnership agreement. d. the partnership must be liquidated only if the dissolution was caused by the expulsion of a partner in accordance with the partnership agreement.
C
Under the UPA, after dissolution: a. the partnership must be liquidated. b. the remaining partners have the right to continue the partnership if the majority of them agree. c. the remaining partners have the right to continue the partnership if the partnership was dissolved in contravention of the partnership agreement. d. the partnership must be liquidated only if the dissolution was caused by the expulsion of a partner in accordance with the partnership agreement.
C
Under the UPA, which of the following liabilities of a partnership has the highest priority for payment out of partnership assets? a. Amounts owing to partners for profits. b. Amounts owing to partners for loans or advances. c. Amounts owing to creditors other than partners. d. Amounts owing to partners for capital.
C
Under the UPA, which of the following liabilities of a partnership has the highest priority for payment out of partnership assets? a. Amounts owing to partners for profits. b. Amounts owing to partners for loans or advances. c. Amounts owing to creditors other than partners. d. Amounts owing to partners for capital.
C
Which of the following can be done with the consent of only a majority of the partners in a partnership? a. Submission of a partnership claim to arbitration. b. Confession of judgment. c. The sale of an office computer. d. All of the above.
C
Which of the following is not true regarding dissociation? a. The death of a partner will cause dissociation. b. If a partner becomes a debtor in bankruptcy, it will cause dissociation. c. Dissociation automatically causes dissolution of the partnership. d. All of these are not true.
C
Winding up involves all but which one of the following? a. Selling assets for cash. b. Collecting debts owed to the partnership. c. Taking orders for business. d. Paying creditors.
C
Winding up involves all but which one of the following? a. Selling assets for cash. b. Collecting debts owed to the partnership. c. Taking orders for business. d. Paying creditors.
C
A partner has implied authority to: a. hire and fire employees necessary for operation of the business. b. purchase property necessary for the business. c. receive performance of obligations due the partnership. d. All of these are correct.
D
A term partnership will be dissolved when: a. the term of the partnership expires or the undertaking is complete. b. all of the partners expressly agree to dissolve. c. one-third of the partners express their will to wind up the partnership within 90 days of a partner's dissociation. d. either the term of the partnership expires or the undertaking is complete OR all of the partners expressly agree to dissolve.
D
Chuck, Betty, and Bert form CB&B Partnership to run a specialty grocery store. Bert is the day-to-day manager of the store, Betty buys the groceries, and Chuck does all the administrative work. Betty decides she would like a new car to go around and visit prospective wholesalers. She makes a contract with Big Ben Motors in the name of CB&B without consulting Chuck and Bert. CB&B and the individual partners are: a. bound by Betty's actual implied authority to buy a car. b. bound by Betty's apparent authority to buy a car. c. bound by estoppel. d. not bound because buying a car is outside the scope of the partnership business.
D
Paul is driving a truck delivering goods for his partnership when he negligently backs into a customer's new Mercedes. The customer sues the partnership and recovers $8,000 in damages. What liability do the other partners have for Paul's actions? a. No liability. b. Liability based on their capital contributions. c. Individual liability but not joint liability. d. Joint and several liability.
D
Roberts, Smith, and Thomas have been partners for twenty years. The partners, however, are now collecting debts, converting assets to cash, paying creditors, and distributing remaining assets to each partner. Roberts, Smith, and Thomas are engaged in: a. dissolution. b. marshaling assets. c. reformation. d. winding up.
D
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.
D
Which of the following is not true during dissolution of a partnership? a. Partnership assets are collected and reduced to cash. b. Assets must be used to discharge obligations of debt before any distribution to partners occurs. c. Any surplus remaining after the discharge of debt is distributed to partners in accordance with their right to distributions. d. A negative balance in any partner's account will be treated as a loss to be distributed to other partners.
D
__________ is available to a third person to whom a representation is made and who justifiably relies on the representation. a. Delectus personae b. Respondeat superior c. Culpable negligence d. Partnership by estoppel
D
A partner has implied authority to: a. hire and fire employees necessary for operation of the business. b. purchase property necessary for the business. c. receive performance of obligations due the partnership. d. bring legal actions to enforce claims of the partnership. e. All of the above.
E
David, a partner in the Speedy 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. Speedy Delivery Partnership. d. Any partner. e. Both (c) and (d).
E
"Dissolution" of a partnership and "termination"of a partnership are synonymous
F
A dissociated partner does not have the power to bind the partnership to an agreement under any circumstances.
F
A partner is criminally liable for the crimes of her partners.
F
A partner is criminally liable for the crimes of other partners.
F
A person admitted into an existing partnership is personally liable for all of the obligations of the partnership arising before his admission.
F
All partners are required to participate in winding up the partnership
F
Any partner by himself has the power to dissolve a term partnership by giving notice to the other partners.
F
Dissociation refers to those situations in which the RUPA requires a partnership to wind up and terminate.
F
In a partnership of A, B, and C, A commits fraud which creates a liability to the partnership of $9,000. If the three partners share profits and losses equally, A's liability to the partnership for his fraudulent act is $3,000.
F
Powell falsely tells Dunagan that she is a member of the partnership of Morgan and Stiles. Dunagan mentions this information to Trammell, who in reliance sells equipment on credit to Morgan and Stiles. Trammell can hold Powell liable for the misrepresentation.
F
Respondeat superior has no application to situations where a partner commits a tort, because only the partner and not the partnership is liable.
F
The RUPA requires a central filing of a statement of partnership authority specifying the names of partners authorized to execute instruments transferring real property held in the name of the partnership.
F
The actual express authority of partners must be specifically set forth in the partnership agreement
F
The withdrawal of a partner in a partnership at will may be either a rightful or wrongful dissociation
F
Under the RUPA, a judgment creditor of a partnership may first attempt to enforce a judgment against either the separate assets of a partner or the partnership itself.
F
Upon dissolution of a partnership, all authority of a partner to act on behalf of the partnership terminates.
F
A partner has implied authority to hire and fire employees whose services are necessary to carry on the partnership business.
T
A partner has the power to dissociate at any time by expressing the intent to withdraw.
T
A partner who commits a tort or breach of trust must indemnify the partnership for any damages the partnership pays to the third party.
T
A person has notice of a fact if the person has reason to know it exists from all of the facts known to the person at the time in question.
T
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.
T
After all the partnership's creditors have been paid, each partner is entitled to repayment of his capital contribution upon termination of the firm.
T
An incoming partner is not personally liable for antecedent debts of the partnership, but is liable for subsequent debts.
T
Dissolution occurs upon the happening of an event specified in the partnership agreement as resulting in dissolution. However, the partners may agree to continue the business.
T
If partners continue a term partnership after the expiration of the term, the partnership will be treated as a partnership at will.
T
If the partnership is bound by a contract, then each individual general partner has unlimited personal liability for that obligation.
T
Much of the law of partnership is the law of agency
T
Randy, Mona, and Richard are partners. Under the UPA, a creditor of their partnership must name all three partners as defendants in a suit on a contract obligation of the partnership.
T
The UPA marshaling of assets doctrine is abolished by the RUPA.
T
The doctrine of marshaling of assets involves segregation of assets and considers separately the assets and liabilities of the partnership and the respective assets and liabilities of the individual partners.
T
The liability of partners for a tort or breach of trust committed by any partner is unlimited, personal liability.
T
Under the RUPA, a partner in a term partnership who wrongfully dissociates before the end of a definite term may receive payment of a portion of the buyout price before the expiration of the term.
T
Under the RUPA, in a term partnership, if within 90 days after any specified cause of dissolution occurs, fewer than half of the remaining partners express their will to wind up the partnership business, the partnership will not dissolve.
T
Under the RUPA, it is possible to cure an illegality within 90 days after notice to the partnership of the event dissolving the partnership for illegality.
T
Under the RUPA, the partners are jointly and severally liable for all contract obligations of the partnership.
T
Under the UPA, neither a partner who causes dissolution by wrongfully withdrawing nor a partner expelled pursuant to the partnership agreement can force liquidation of the partnership.
T
Under the UPA, submission of a partnership claim to arbitration requires the consent of all the partners.
T
Upon dissolution, a partner still has authority to complete existing contracts
T
Upon termination of a firm, each partner is entitled to the return of his capital after partnership creditors have been paid.
T
Upon winding up, if a partner pays more than his share of partnership losses, he has a right of contribution against the partners who have not paid their share.
T
When one partner is notified of any matter relating to partnership affairs, it is assumed that all partners have been notified.
T
