Chapter 36: Partnerships & Limited Liability Partnerships
Barb owns Barb's Salon, which owed back rent to Capital Properties, a landlord. Barb agrees to pay a percentage of her profit each month until the debt is paid. Capital Properties is
Barb's creditor only.
Carl holds himself out as a partner of Delta Associates, a partnership, even though he has no connection to the firm. Carl obtains a loan based on the misrepresentation. Carl's default on the loan results in
Carl's sole liability for the amount.
A general partner is not personally liable for partnership debts if its assets are insufficient to pay its creditors.
F
In most states, no partnership can exist unless a certificate of partnership is filed with the state.
F
Unless a partnership agreement specifies otherwise, profits are shared in the same ratio as capital contributions.
F
In a limited liability of a limited partner is limited to the amount of capital he invests in the partnership.
F (LLLP)
The death of a limited partner dissolves a limited partnership.
F (Only the death of a general partner)
In a limited liability partnership, no partner is exempt from personal liability for partnership obligations.
F (Partners can avoid liability for any partnership obligation.)
Myra, Nico, and Odel are partners in Payroll Accounting Services (PAS). Mrya quits the firm, with Nico and Odel's knowledge. Later, Nico and Odel sign a contract with a supplier. The contract is binding on
Nico, Odel, and PAS only.
A partnership is an association of 2 or more persons to carry on, as co-owners, a business for profit.
T
A partnership is usually considered a legal entity apart from its owners.
T
In a limited liability limited partnership, the liability of a general partner is limited to the amount of capital he invests in the partnership.
T
Unless the partnership agreement states otherwise, a general partner has 1 vote in management matters.
T
Jack and Jill form J&J, a limited partnership. Jack is a general partner. Jill is a limited partner. Dissolution of the firm would result from Jill's
none of the above.
Eton is a limited partner in Fast Sales, a limited partnership. Good Credit Co., a Fast creditor, claims that Eton is subject to personal liability for Fast's debts b/c Eton has the right, as a limited partner to take control of the firm. Good is correct about
none of the choices.
Holly owns International Imports. She hires Jay as a salesperson, agreeing to pay $10 per hour, plus a commission of 10% of his sales. The term is 1 year. Holly and Jay are
not partners, b/c Jay doesn't have an ownership interest or management rights in the business.
Kris is admitted to an existing partnership. A partnership debt incurred before the date of her admission comes due. Kris is
only liable for the debt to the amount of her capital contribution.
Dina is a partner in Eagle Technical Group. Dina's dissociation from the partnership will cause
the partnership's buyout of Dina's interest in the firm.
Drs. Lucas and Milo are partners in a medical clinic, which is organized as a limited liability partnership. Lucas manages the clinic. A court holds Milo liable in a malpractice suit. Lucas is liable
to the extent of her capital contribution.
Owen and Pat are partners in Quality Investments, a partnership. Owen convinces Roy, a customer, to invest in a nonexistent gold mine. Owen absconds with Roy's money. If Roy sues Pat, Roy will
win, b/c partners are jointly and severally liable.