Chapter 31 Business law
A partner's liability for partnership debts is limited to his capital contribution. True or False
False
A partner's receipt of notification of a fact relating to the partnership is not effective against the other partners until the receiving partner enters the relevant fact on the minutes at the next business meeting of the partnership. True or False
False
A retiring partner cannot be discharged from existing liabilities of the partnership except by payment. True or False
False
In a partnership of A, B, and C, A commits fraud which creates a $9,000 liability to the partnership. If the three partners share profits and losses equally, A's liability to the partnership for his fraudulent act is $3,000. True or False
False
Maria is admitted as a partner to the existing Greene Ridge Partnership in June of 2010. Unless she signs an agreement to the contrary, she will be personally liable on all partnership obligations, including one incurred in December of 2009. True or False
False
Respondeat superior has no application to situations where a partner commits a tort, because only the partner, and not the partnership, is liable. True or False
False
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. True or False
False
The law of partnership differs greatly from the law of agency. True or False
False
Under the RUPA, dissolution is the equivalent of termination of a partnership. True or False
False
Under the RUPA, upon dissolution, the partnership must be liquidated. True or Fasle
False
A partner who does not have actual authority to order a fax machine for the partnership office probably has apparent authority to do so. True or False
True
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. True or False
True
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. True or False
True
If the partnership is bound by a contract, then each general partner has unlimited personal liability for that obligation. True or False
True
The best and most reliable tool for preserving a partnership business after dissolution is through a continuation agreement. True or False
True
The liability of partners for a tort or breach of trust committed by any partner is unlimited, personal liability. True or False
True
The process of liquidation of a partnership is also known as "winding up." True or False
True
Under the RUPA, a dissociated partner is not liable for a partnership obligation incurred more than two years after dissociation. True or False
True
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. True or False
True
Under the RUPA, dissociation of a partner results in dissolution only in limited circumstances. True or False
True
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. True or False
True
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. True or False
True
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. ostensible
a
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.
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: Correct! 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.
a
The RUPA provides that partners are ____ liable on all contract obligations of the partnership. a. jointly and severally b. strictly c. not d. partially
a
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.
a
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.
b
Actual authority terminates upon: a. illness of one of the partners. b. dissolution of the partnership. c. physical destruction of partnership papers. d. All of these.
b
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.
b
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
c
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
d
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.
d
Paul 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 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 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.
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
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.
d
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.
d