Question 1

Dusty dissociated from a partnership.To protect himself from debts of the partnership after he leaves,Dusty should:

Accepted Answer

A)  secure an indemnity bond. 
B)  file a statement of dissociation with the Secretary of State. 
C)  execute a formal written agreement with the remaining partners. 
D)  demand that the partnership terminate. 
A)  secure an indemnity bond. 
B)  file a statement of dissociation with the Secretary of State. 
C)  execute a formal written agreement with the remaining partners. 
D)  demand that the partnership terminate.

Question 2

The rules set out in the UPA defining the liability of partners to outsiders can be modified by the partnership agreement.

Accepted Answer

A) True 
 B)False

Question 3

Lori and Dan own a small restaurant as partners.Dan works several hours a day cooking,waiting on tables,doing the books,and so forth.Dan believes he is entitled to be paid at least a standard wage for all his work since,at the present time,the part-time kitchen helpers earn more than he does! Lori claims Dan is not entitled to anything other than one-half the net profits.Is Lori right?

Accepted Answer

A)  Yes. The UPA states a partner may not collect a "wage" from the partnership business under any circumstances. 
B)  Yes, as there is no agreement between Lori and Dan allowing for either of them to be paid wages for work done at the restaurant. 
C)  No. Dan may collect only minimum wage, as required by federal law. 
D)  No. Dan may collect a fair wage for the work he has performed. 
A)  Yes. The UPA states a partner may not collect a "wage" from the partnership business under any circumstances. 
B)  Yes, as there is no agreement between Lori and Dan allowing for either of them to be paid wages for work done at the restaurant. 
C)  No. Dan may collect only minimum wage, as required by federal law. 
D)  No. Dan may collect a fair wage for the work he has performed.

Question 4

Which of the following would be evidence that two people intend to be partners?

Accepted Answer

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. 
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.

Question 5

Alicia and Ted have a written agreement wherein they will share the losses of their joint business.This agreement is strong evidence they are partners.

Accepted Answer

A) True 
 B)False

Question 6

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?

Accepted Answer

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. 
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.

Question 7

Village Bank believed that Spencer and Nadia were partners in an e-business.Spencer and Nadia were not partners.Spencer owned the business as a sole proprietor.Nadia,however,was a close friend of Spencer.When Spencer visited Village Bank in an effort to obtain a $10,000 loan,Nadia went with him.During the conversation with the banker,Spencer referred to Nadia as "my partner." Village Bank made the business loan believing that Spencer and Nadia were partners.Spencer defaulted on the loan.Village Bank claims that both Spencer and Nadia are liable on the loan.Will Nadia be liable on the loan?

Accepted Answer

The bank can make a case to hold Nadia l

Question 8

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:

Accepted Answer

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. 
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.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Identify and briefly discuss the management rights and duties of a partner.

Accepted Answer

Each partner has equal rights in the man

Question 11

A partnership is liable for both the negligent and intentional acts of a partner if the acts were committed within the ordinary course of the partnership's business.

Accepted Answer

A) True 
 B)False

Question 12

Andy,Becky and Charlie formed a partnership.Their business was to create Web pages for students.They would take a person's academic and career information and make an attractive Web page.Andy supplied the computer and technical advice.Becky was the business manager.Charlie did the bulk of the marketing.Charlie and Becky became irritated with Andy,as it seemed they did more work than he did.Charlie and Becky decided to end their partnership with Andy.During the winding up process,how are the assets of the partnership paid out?

Accepted Answer

The assets are paid in the fol

Question 13

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:

Accepted Answer

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. 
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.

Question 14

Doyle contributed $10,000 when he became a general partner in the existing partnership of R & Z Heating.If Albert wins a judgment for $25,000 against R & Z on a claim that was incurred before Doyle became a partner,Doyle shares joint and several liability with his new partners for the whole obligation.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a rightful dissociation?

Accepted Answer

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. 
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.

Question 16

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?

Accepted Answer

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. 
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.

Question 17

Ending a partnership involves which of the following three steps?

Accepted Answer

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. 
B)  Dissociation, winding down, and consummation. 
C)  Failure, dividing up, and paying off. 
D)  Dissociation, agreement, and dissolution.

Question 18

If Kay,a partner in an auction business,has a personal creditor who is aggressive about collecting the debt:

Accepted Answer

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 cannot 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. 
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 cannot 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.

Question 19

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?

Accepted Answer

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. 
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.

Question 20

Sandy,Ramon,and Bonnie were partners.Sandy dissociated from the partnership.Bonnie and Ramon decided to continue the business.When Sandy dissociated,there was a $50,000 debt owed to Great State Bank.Which statement is correct?

Accepted Answer

A)  Sandy remains liable on the $50,000 debt owed to Great State Bank. 
B)  Only Ramon and Bonnie are liable for the $50,000 debt owed to Great State Bank. 
C)  The debt is extinguished as a result of the dissociation. 
D)  Whether Sandy remains liable depends on whether she filed a statement of dissociation. 
A)  Sandy remains liable on the $50,000 debt owed to Great State Bank. 
B)  Only Ramon and Bonnie are liable for the $50,000 debt owed to Great State Bank. 
C)  The debt is extinguished as a result of the dissociation. 
D)  Whether Sandy remains liable depends on whether she filed a statement of dissociation.

Exam 32: Partnerships

Dusty dissociated from a partnership.To protect himself from debts of the partnership after he leaves,Dusty should:

The rules set out in the UPA defining the liability of partners to outsiders can be modified by the partnership agreement.

Which of the following would be evidence that two people intend to be partners?

Alicia and Ted have a written agreement wherein they will share the losses of their joint business.This agreement is strong evidence they are partners.

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?

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:

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

Identify and briefly discuss the management rights and duties of a partner.

A partnership is liable for both the negligent and intentional acts of a partner if the acts were committed within the ordinary course of the partnership's business.

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:

Which of the following is a rightful dissociation?

Ending a partnership involves which of the following three steps?

If Kay,a partner in an auction business,has a personal creditor who is aggressive about collecting the debt:

Sandy,Ramon,and Bonnie were partners.Sandy dissociated from the partnership.Bonnie and Ramon decided to continue the business.When Sandy dissociated,there was a $50,000 debt owed to Great State Bank.Which statement is correct?

Introduction To Law

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