Question 1

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

Accepted Answer

In a partnership, each partner has joint and several liability. This means that each partner is individually responsible for the entire amount of any liability incurred by the partnership. Therefore, Paul’s negligent actions and resulting damages create liability for the entire partnership, and each partner is individually responsible for the full amount of the damages.

Question 2

Under the UPA, which of the following requires the unanimous consent of the partners?
A) Submission of a partnership claim to arbitration
B) Confession of judgment
C) Disposing of the goodwill of the business
D) All of these

Accepted Answer

According to the Uniform Partnership Act (UPA), all of the given actions require unanimous consent of the partners. Submission of a partnership claim to arbitration, confession of judgment, and disposing of goodwill are all significant actions that affect the partnership as a whole, thus requiring the unanimous agreement of all partners.

Question 3

The Star General Partnership had assets worth $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. They owe $23,000 to creditors. What will Gene get in distribution, assuming there is no agreement on the distribution of profits?
A) $5,000
B) $7,000
C) $8,000
D) $11,000

Accepted Answer

Gene will first be repaid his loan of $5,000 as a creditor. After paying all creditors ($23,000), the remaining $11,000 is divided equally among the three partners, giving Gene an additional $3,667. Thus, Gene gets a total of $8,667, but since this option is not available, the closest correct choice is $7,000.

Question 4

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.

Accepted Answer

The answer of Under the RUPA, in which of the...

Question 5

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.

Accepted Answer

Bob's role in the partnership is to buy groceries, not vehicles. Making a contract for a car, especially without consulting the other partners, falls outside the scope of the partnership's business and his authority within that business.

Question 6

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.

Accepted Answer

In situations where a partner's actions do not seem to be for conducting the usual business of the partnership, the partnership is only bound by those actions if the partner had actual authority to perform them. This is because partners are generally presumed to have authority for acts in the ordinary course of business, but for acts outside of that scope, specific, actual authority is required.

Question 7

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 result?
A) ABC Partnership is not bound to hire her.
B) ABC Partnership is bound to pay her for 40 hours per week.
C) Alan is bound to pay her for 20 hours per week.
D) Alan has to pay her for 40 hours per week.

Accepted Answer

The answer of ABC Partnership agrees to hire an "errand...

Question 8

Under the UPA, which of the following acts does not bind the partnership unless authorized by all of the partners?
A) Selling goods in the ordinary course of the partnership business
B) Use of partnership property for partnership business
C) Acting as an agent for the partnership
D) Confessing judgment in a claim against the partnership

Accepted Answer

According to the UPA, confessing judgment in a claim against the partnership is an action that requires authorization from all partners to bind the partnership. However, selling goods in the ordinary course of the partnership business, use of partnership property for partnership business, and acting as an agent for the partnership do not require unanimous consent and can be conducted by any partner within their scope of authority.

Question 9

Which of the following is true of dissociation? A) All of the common law causes of dissociation are also causes under the RUPA. B) A partner has the power to dissociate at any time by expressing the intent to withdraw from the partnership. C) Which dissociations are wrongful are set forth by statute and cannot be modified by the partnership ^agreement. D) The partnership agreement cannot modify the effects of wrongful dissociation.

Accepted Answer

The answer of Which of the following is true of...

Question 10

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:
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.

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), a dissociated partner is liable to the partnership's creditors for a partnership obligation incurred within two years after dissociation if at the time of entering into the transaction, the other party reasonably believed the dissociated partner was then a partner, did not have notice of the dissociation, and is not deemed to have had constructive notice of the dissociation. Therefore, Jane is liable for any partnership obligations incurred within two years after her retirement if the above conditions are met.

Question 11

Which of the following is true regarding an insolvent partnership under the UPA?
A) The partners must contribute their respective share to the losses in order to pay creditors.
B) If one of the partners is out of the jurisdiction and refuses to contribute, the other parties must contribute the additional amount necessary to pay the firm's liabilities in the relative proportions in which they share the profits.
C) Any partner who pays an amount in excess of his proper share of the losses has a right of contribution against the partners who have not paid their share.
D) All of these.

Accepted Answer

The UPA provides that in an insolvent partnership, each partner must contribute their respective share to the losses in order to pay creditors. If one partner is out of the jurisdiction and refuses to contribute, the other partners must contribute the additional amount necessary to pay the firm's liabilities in the relative proportions in which they share the profits. Any partner who pays an amount in excess of his proper share of the losses has a right of contribution against the partners who have not paid their share. Therefore, all options are correct.

Question 12

₅₃_._A(n) _impose_s_partnershi_p_dutie_s_an_d_liabilitie_s_upo_n_a_nonpartne_r_wh_o_ha_s_eithe_r_represente_d_himsel_f_or Consented to be represented as a partner. A) accounting B) delectus personae C) fiduciary proceeding D) partnership by estoppel

Accepted Answer

Partnership by estoppel occurs when a person represents themselves or consents to be represented as a partner, thereby imposing partnership duties and liabilities upon them.

Question 13

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

Accepted Answer

Marlene can collect from the Tri-State Express Mail Partnership or any partner because David was acting within the scope of his partnership duties when the accident occurred, making the partnership liable for his actions under the principle of vicarious liability. Additionally, any other partner in the partnership can also be held liable for David's negligence, as they are jointly and severally liable for the partnership's debts and obligations.

Question 14

Answer the following: a. What is the liability of the partnership for contracts regarding partnership business? _Unde_r_th_e_RUPA_,_wha_t_i_s_th_e_liabilit_y_o_f_th_e_partnershi_p_fo_r_tort_s_committe_d_whil_e_a_partne_r_is b. acting in the ordinary course of partnership business? How does this compare to the liability of a principal under respondeat superior? Explain. _Unde_r_th_e_UPA_,_partner_s_ar_e_jointl_y_liabl_e_o_n_al_l_partnershi_p_debt_s_an_d_contracts.

Accepted Answer

The answer of Answer the following:
a. What is the liability...

Question 15

Answer the following:
a. Does a new partner in a firm have unlimited liability for debts existing when he joined the firm?
b. What should a prospective partner do to avoid unreasonable liability? Explain.

Accepted Answer

The answer of Answer the following:
a. Does a new partner...

Question 16

Where a partner acts without either actual or apparent authority, the partnership:
A) cannot be bound.
B) is bound only if it ratifies the act.
C) is bound only if the third person did not know the partner was acting on behalf of the partnership.
D) is bound under all circumstances, since the partner is an agent of the partnership.

Accepted Answer

The partnership is only bound by the actions of a partner without actual or apparent authority if the partnership ratifies those actions. Ratification can be explicit or implied, but it must occur for the partnership to be legally bound by the partner's actions.

Question 17

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.

Accepted Answer

According to the principle of unlimited liability, partners are personally liable for all partnership obligations. As a result, Shannon has unlimited personal liability for all partnership obligations that occur after she became a partner. However, she is only liable to the extent of her capital contribution for obligations that existed at the time she became a partner. This means that Shannon's liability is limited to the $10,000 she contributed to the partnership.

Question 18

The RUPA provides that partners are liable on all contract obligations of the partnership.
A) jointly and severally
B) strictly
C) not
D) partially

Accepted Answer

According to the RUPA, partners are liable on all contract obligations of the partnership jointly and severally. This means that each partner is individually responsible for the full amount of the partnership's debts and liabilities. If the partnership is unable to pay its debts, creditors can go after the personal assets of any or all of the partners to satisfy the debt.

Question 19

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.

Accepted Answer

The answer of Under the RUPA, a partner's dissociation:
A) terminates...

Question 20

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.

Accepted Answer

A partner may be criminally liable for the crimes of his partners if he authorized those acts, indicating a direct involvement or endorsement of the criminal behavior.

Quiz 31: Operation and Dissolution of General Partnerships

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?

Under the UPA, which of the following requires the unanimous consent of the partners?

Under the RUPA, in which of the following situations may a court order dissolution upon application by a partner?

If a partner's act is not apparently for carrying on in the ordinary course the partnership business:

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 result?

Under the UPA, which of the following acts does not bind the partnership unless authorized by all of the partners?

Which of the following is true of dissociation?

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:

Which of the following is true regarding an insolvent partnership under the UPA?

53. A(n) imposes partnership duties and liabilities upon a nonpartner who has either represented himself or Consented to be represented as a partner.

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?

Answer the following: a. Does a new partner in a firm have unlimited liability for debts existing when he joined the firm? b. What should a prospective partner do to avoid unreasonable liability? Explain.

Where a partner acts without either actual or apparent authority, the partnership:

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?

The RUPA provides that partners are liable on all contract obligations of the partnership.

Under the RUPA, a partner's dissociation:

A partner:

₅₃_._A(n) _impose_s_partnershi_p_dutie_s_an_d_liabilitie_s_upo_n_a_nonpartne_r_wh_o_ha_s_eithe_r_represente_d_himsel_f_or Consented to be represented as a partner.