Business Law Chapter 30
Mike and Tom are partners who started a car dealership. Mike, however, secretly started a car dealership on the other side of town without consulting the partnership. What duty did Mike violate?
Fiduciary duty
A legal entity separate and distinct from its owners referred to as shareholders, and formed by filing articles of incorporation is a:
corporation
A partner owes all of the following duties to the partnership except: a. duty of loyalty. b. duty of obedience. c. duty of care. d. duty of control.
duty of control
In choosing the form in which to conduct business, if ease of formation is the primary concern, the owners would choose a:
general partnership
A partner who has no right to participate in control of the business and who has limited liability is called a:
limited partner
Martha is a partner with JOA Partnership, but Martha has no right to participate in the control of the partnership's business and has limited liability. Which best describes Martha's role in the partnership?
limited partner.
A __________ is an unincorporated business association consisting of at least one general partner and at least one limited partner.
limited partnership
Peter is a general partner to an unincorporated business association, and Diane is a limited partner to this business association. Which best describes Peter and Diane's business formation?
limited partnership
Which of the following forms of business association may elect that only the partners/members are taxed? a. general partnerships b limited partnership c. limited liability company
-general partnerships -limited partnership -limited liability company
Arthur, Betty, and Clara each inherit an undivided one-third interest in an apartment complex. Instead of selling it, they decide to continue to operate it for the next few years as a sideline to their other occupations just to see if they can earn some extra money. What are they?
A partnership
Which of the following would lack the capacity to become a partner?
An adjudicated incompetent.
Sam, John, Richard, and Fred are partners. Mary is interested in becoming a new partner with the partnership. Under RUPA, in order for Mary to properly become a partner, which of the following is true?
Mary must receive the consent of all of the partners.
Sue, Barb, and Carlotta agree to put in $1,000 each to set up a shelter for lost animals. They each work two days a week. Donations fund the day-to-day operations. Do they have a partnership?
No, because there is no business for profit.
A partnership agreement should include all but which one of the following? a. The duties of the partners. b. The capital contribution of the partners. c. The agreement for dividing tax liability of the partnership. d. The division of profits and losses.
The agreement for dividing tax liability of the partnership.
Which of the following is the most convincing evidence of a partnership arrangement?
Two or more persons carry on a business for profit, but they have no formal agreement.
Marilyn, George, and Christine pool their money to buy land to operate a vegetable farm from which they plan to sell the produce and share the profits or losses. Are they partners?
Yes, since they are associating to carry on a for-profit business that they co-own.
A partner's interest is subject to the claims of that partner's creditors who may obtain a judicial lien known as a(n) __________ against the partner's transferable interest.
changing order
In the case of Enea v. The Superior Court of Montery County, the court held:
partners owe a fiduciary duty to the partnership and may not take advantages for themselves at the expense of the partnership.
In the case of In Re Keytronics, the court held:
that King and Wilson had formed a partnership based on their actions, even if they did not intend to form a partnership.
Mount Pleasant Tires does not have sufficient funds to pay damages for a tort that arose out of the operation of the business. Jess, a business owner, is not personally liable if:
the business is a corporation and he is a shareholder.
Andre invested $100,000 in a partnership with Erik and Louis for the purchase of an apartment complex, with each owner sharing equally in the profits and losses. The property is owned by:
the general partnership
Luke typically spends 50-55 hours per week working in the real estate partnership he co-owns with Spencer. Spencer only spends about 30 hours a week on partnership business. Under the RUPA:
unless the partners have otherwise agreed, Luke is not entitled to payment for his work for the partnership, even if it is disproportionate to his partner's work.
In the case of Thomas v. Lloyd, the court held:
whether real estate titled in the names of individual partners is partnership property is a question of fact, and the burden of proof is on the one alleging that the actual ownership does not match the names on the legal title.
