Chapter 31
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 is the result? a. ABC Partnership is bound to pay her for 40 hours per week. b. Alan has to pay her for 40 hours per week. c. Alan is bound to pay her for 20 hours per week. d. ABC Partnership is not bound to hire her.
a. ABC Partnership is bound to pay her for 40 hours per week.- A partner has the authority to bind the partnership based on actual or apparent authority.
Hillary, Carly, and Donald are partners in a political consulting firm. Donald committed a tort against Jeb while in the course of conducting business for the partnership. What is the extent of Hillary and Carly's liability resulting from Donald's tort? a. Hillary and Carly face unlimited and personal liability for Donald's tort. b. Hillary and Carly face no liability for Donald's tort. c. Hillary and Carly face nominal liability for Donald's tort. d. Hillary and Carly face only limited liability for Donald's tort.
a. Hillary and Carly face unlimited and personal liability for Donald's tort.- Partners have unlimited, personal liability for torts committed by a partner in the course of partnership business.
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. Partnership by estoppel.- Partnership by estoppel 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.
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. dissolution of the partnership.- Actual authority terminates upon dissolution of the partnership.
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. dissolution of the partnership. c. winding up. d. liquidation.
a. marshaling of assets.-Marshaling assets only applies in situations in which a court of equity is administering the assets of a partnership.
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. unlimited, personal liability.- Partners have unlimited, personal liability for torts committed by a partner in the course of partnership business.
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. Expulsion of a partner according to the partnership agreement- . Expulsion of a partner according to the partnership agreement is NOT considered to be dissolution by operation of law under UPA.
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 under the UPA, assuming there is no agreement on the distribution of profits? a. $5,000. b. $8,000. c. $7,000.
c. $7,000. - Gene is entitled to payment for his loan ($5,000) plus distribution from any remaining profits:(((34,000 - 23,000)- 5,000)/3) = $2,000.
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. Amounts owing to creditors other than partners.- Highest priority is given to amounts owing to creditors other than partners.
Bobby, Sammy, and Joan are in a partnership. If the partnership incurs debt of $100,000 from a contractual obligation. What is the liability on such debt by Bobby, Sammy, and Joan under the UPA? a. Bobby, Sammy, and Joan are jointly liable for the debt. b. Bobby, Sammy, and Joan are strictly liable for the debt. c. Bobby, Sammy, and Joan are jointly and severally liable for the debt. d. Bobby, Sammy and Joan are only partially liable for the debt.
c. Bobby, Sammy, and Joan are jointly and severally liable for the debt.-The UPA provides that partners are jointly and severally liable on all debts and contract obligations of the partnership.
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. Taking orders for business-
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. a continuation agreement.- The best and most reliable tool for preserving a partnership business after dissolution is a continuation agreement
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
c. jointly and severally- The UPA provides that partners are jointly and severally liable on all debts and contract obligations of the partnership
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. the remaining partners have the right to continue the partnership if the partnership was dissolved in contravention of the partnership agreement.- After dissolutions the remaining partners have the right to continue the partnership if the partnership was dissolved in contravention of the partnership
Joe and Josh are in a partnership with one another to sell electronics. Which of the following examples does Josh have apparent authority to do under the partnership? a. Indorse checks and notes. b. Make representations and warranties in selling electronics. c. Enter into a contract with the local newspaper for advertising sales. d. All of these answers are correct
d. All of these answers are correct.- . A partner is a general managerial agent with both actual and apparent authority within the scope of the firm's ordinary business.
Deborah, Olga, and Nashim are partners. Each partner has implied authority to: a. hire and fire employees necessary for operation of the business of the partnership. b. purchase property necessary for the business of the partnership. c. receive performance of obligations due the partnership. d. All of these are correct.
d. All of these are correct.-
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. All of these are correct.- All of these are actions a partner has implied authority to do.
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 is liable only to the extent of her capital contribution for partnership debts that occur after her admission as a partner. b. Shannon has unlimited personal liability for all partnership debts regardless of whether they were incurred before or after she became a partner. c. Shannon has no liability for partnership debts that existed at the time of her admission as 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. 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. - An incoming partner is only bound for liability incurred by the partnership after she became a partner.
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 $8,000 in damages. Under the RUPA: a. if the partnership is liable, the partners other than Paul have liability up to the amount of their capital contributions to the partnership. b. regardless of whether the partnership has assets, all partners must equally share payment because Paul was an agent of the partnership. c. Paul has no duty to indemnify the partnership for any payments made because of his negligent behavior since he was on partnership business. d. the partnership is liable under the doctrine of respondeat superior.
d. the partnership is liable under the doctrine of respondeat superior.-. Under the doctrine of respondeat superior a partnership may be liable for an unauthorized tort committee by its employee in the scope of his employment.
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. marshaling assets. b. dissolution. c. reformation. d. winding up.
d. winding up.- Winding up is the process of liquidating a partnership.
