Partnerships 33

In the case of Hooper v. Hooper, the court found: a. when the partnership was dissolved, one partner was entitled to property in kind in an amount by which his services had enhanced the value of the partnership. b. when one partner unexpectedly became unable to contribute services and time to the partnership, there was an implied agreement that the other partner would be paid for the extra services he performed for the partnership. c. the fact that one partner contributes greater skill and takes over management of a partnership business does not give rise to a right to extra compensation. d. although the partners had an express agreement to pay one partner for extra services rendered to the partnership, such an agreement is unenforceable.

C. the fact that one partner contributes greater skill and takes over management of a partnership business does not give to a right to extra compensation

The dissolution of a partnership means the same as its termination.

False

Dissolution occurs first in the ending of a partnership

True

Which of the following is a rightful dissociation? a. A partner in a partnership at will serves notice that he intends to withdraw. b. A partner in a term partnership withdraws before the end of the term. c. A partner in a term partnership becomes bankrupt. d. A partner violates the partnership agreement.

a. A partner in a partnership at will serves notice that he intends to withdraw

Ending a partnership involves which of the following three steps? a. Dissolution, winding up, and termination. b. Dissociation, winding down, and consummation. c. Failure, dividing up, and paying off. d. Dissociation, agreement, and dissolution.

a. Dissolution, winding up, and termination

Nancy was a partner of a small business. She could see that the business was beginning to fail and that it was very unlikely it would recover. Not wanting to lose her investment, she asked that the court require the partnership to dissolve since she did not have a legal right to withdraw at that time. Does a court have the authority to order a partnership to dissolve? a. Yes. A court can dissolve a partnership when it is convinced that the partnership is unlikely to succeed. b. Yes. Under the UPA, if a partner can show the court the business suffered a loss the year before the case was filed, the court can dissolve the partnership. c. No. A court can only dissolve a partnership at the request of all the partners. d. No. A court does not have authority to dissolve the partnership.

a. Yes. A court can dissolve a partnership when it is convinced that the partnership is unlikely to succeed.

Jackie and Robert own an apartment building as partners. Cyndi, one of their tenants, gives Robert written notice she will be moving out at the end of the following month. Robert did not tell Jackie that Cyndi was moving. Has Cyndi properly given notice to the partnership? a. Yes. Notice to Robert was notice to the partnership. b. Yes, if it is determined that Robert acted negligently in failing to notify Jackie. c. No. Cyndi has an obligation to notify both Robert and Jackie. d. No. Jackie was not notified since Robert never told her Cyndi was moving.

a. Yes. Notice to Robert was notice to the partnership

19. Randy, Joan, and Arnie are partners. Their agreement did not address dissociation nor how long the partnership would last. Randy decided to leave the partnership. When Randy serves notice he intends to withdraw: a. the partnership can either buy him out and continue in business or wind up the business and terminate the partnership. b. the partnership terminates. c. the partnership winds down. d. the partnership estoppes.

a. the partnership can either buy him out and continue in business or wind up the business and terminate the partnership

Astrid and Razi formed a partnership in which they agree to share profits 60 percent to Astrid and 40 percent to Razi. Losses will be shared: a. equally, unless otherwise agreed. b. 60 percent to Astrid and 40 percent to Razi, unless otherwise agreed. c. according to their capital contributions to the partnership. d. in whatever proportion provides the greatest tax advantage for the partners that year.

b. 60 percent to Astrid and 40 percent to Razi, unless otherwise agreed

At what stage are the partnership debts paid and the proceeds distributed to the partners? a. During dissolution. b. During winding up. c. During termination. d. During dissociation.

b. During winding up

Gary and Herman are partners in a lawn mower repair business in Ohio. While Gary is on vacation, visiting his sister in Georgia, his sister's neighbor has trouble with her mower and Gary fixes it for her. She insists on paying him. Gary: a. may keep the payment since he did the work while he was on vacation. b. must turn the money over to the partnership because he earned it doing the kind of work that the partnership does. c. may not accept the money because it would create a conflict of interest. d. may not accept the money because it would mean he was taking a business opportunity away from the partnership.

b. must turn the money over to the partnership

Charles and Becky are partners. If they have a disagreement, the Uniform Partnership Act will govern their respective rights with each other: a. despite any written partnership agreement they may have signed. b. only if they do not have a written partnership agreement that addresses the issue of dispute. c. only if they agree to be bound by the UPA. d. only if their written partnership agreement states that they will be bound by the terms of the UPA.

b. only if they do not have a written partnership

If Kay, a partner in an auction business, has a personal creditor who is aggressive about collecting the debt: a. Kay can sell her share in the partnership to repay the debt, regardless of what her partners want her to do. b. the creditor can attach the partnership property to pay off the debt. c. the creditor can attach partnership profits by obtaining a charging order. d. Kay cannot meet her obligation to repay her personal creditor through her partnership assets. Her personal obligations will have to be paid through her personal funds or she will have to dissociate from the partnership and force the partnership to buy her share.

c. the creditor can attach partnerships profits by obtaining a charging order

Max, Jenny, and Craig are partners. They have purchased an elegant Victorian home and converted it into an office for their partnership. Craig decides to use the partnership's office to host some evening parties. Craig has a sideline business of arranging expensive gatherings and charging each person a handsome price to attend these "elite" parties. When Max and Jenny find out what Craig is doing, they demand that he pay them for the use of the property. How much money, if any, is Craig required to pay the partnership? a. Nothing. He is free to use partnership property for his own uses. b. Nothing, but he will be removed from the partnership for violating his fiduciary duty. c. He must turn over any profits he earned from this activity. d. He must pay the fair market value for the use of the house.

c. turn over all the profits

Art and Alma made capital contributions of 60% and 40% respectively to their newly formed partnership, AA & Associates. They did not have a written partnership agreement. At the end of the first year, the partnership made a profit of which Alma now claims half. However, Art maintains he should receive 60%. Who is correct? a. Art, since the UPA presumes that profits and losses are divided in proportion to capital contribution. b. Art, since it would only be fair. c. Alma, because she works in the business. d. Alma, as the UPA provides that profits are split equally unless the partners agree otherwise.

d. Akma, as the UPA provides that profits are split equally unless the partners agree otherwise

Which of the following would be evidence that two people intend to be partners? a. An agreement to share profits of a business. b. Referring to each other as "partners." c. Agreeing to share in the business's losses. d. All of the above are evidence of a partnership.

d. All of the above

Anne and Mike were winding up their partnership. Mike was approached by a person who wanted the partnership to do some work for him. Mike agreed that the partnership would do the work. Generally speaking, in such a situation: a. Anne is not liable since the partnership was in the winding up phase. b. Anne is not liable since she did not consent to the work. c. Anne is not liable since Mike's conduct was wrongful. d. Anne is liable unless she filed a statement of dissolution with the Secretary of State within 90 days of when Mike entered the contract.

d. Anne is liable unless she filled a statement of dissolution with the Secretary of State within 90 days of when Mike enterd the contract

A group of accounting alumni decided to hold a fund-raiser to establish a scholarship for an accounting student. This enterprise is: a. a limited partnership. b. a partnership. c. a charitable partnership. d. None of the above.

d. None of the above