Question 1

Unless the articles of partnership states otherwise,which of the following is true regarding the rights of partners to share in profits?

Accepted Answer

If the partnership agreement does not establish another division of profits, all partners share equally in both profits and losses.

Question 2

When the articles of partnership do not address the matter,which of the following is true regarding decisions requiring unanimous agreement among the partners?

Accepted Answer

If the partners are voting on whether to change some element of their partnership agreement, they all must agree with the change. Other decisions that require a unanimous vote include the admission of new partners and alterations in the nature of the business.

Question 3

Which of the following entitles a creditor to a partner's profits?

Accepted Answer

A partner's personal creditor cannot seize specific items of partnership property; however, the creditor can obtain a charging order, which entitles the creditor to the partner's profits while the partner continues to act as a partner and engage in the partnership business.

Question 4

In Japan which of the following is true regarding any fiduciary duty between partners?

Accepted Answer

While the United States explains fiduciary duty as including a duty of "obedience" to your partner, the Japanese application of obedience and loyalty to partnerships far exceeds that of the United States.

Question 5

Unless otherwise agreed by the partners,where are records of the partnership to be kept?

Accepted Answer

Unless otherwise agreed, the records must be kept at the principal business office.

Question 6

Which of the following is true regarding a partner's right to copy partnership records?

Accepted Answer

Partners must have access to all partnership books and records and be allowed to make copies of them.

Question 7

Partners own partnership property as ____,meaning that the partners own the property as a group.

Accepted Answer

Partners own the partnership property as tenants in property which means they own it as a group.

Question 8

Which of the following was the result in Eric Johnson & Lori Johnson v.St.Therese Medical Center,the malpractice case in the text in which the plaintiffs sought to hold individual partners liable under state law for a judgment obtained only against the partnership?

Accepted Answer

According to the court, "although partners are liable for the debts of the partnership, to be able to collect from the partners the plaintiff must provide the partners with notice that they will be individually liable for the partnership's debt."

Question 9

When the articles of partnership do not address the matter,which of the following is true regarding a partner's right to sell a partnership interest to a creditor?

Accepted Answer

A partner can sell his interest in the partnership to a creditor.

Question 10

Unless otherwise agreed in the articles of partnership,which of the following is true regarding rights partners have in regard to their interactions with other partners?

Accepted Answer

Unless otherwise stated in the partnership agreement, all partners have a right to participate equally in the management of the partnership. If the partnership agreement does not establish another division of profits, all partners share equally in both profits and losses. Unless otherwise agreed, no partner will receive a salary for participation in the business regardless of the amount of time and effort put in.

Question 11

Which of the following is true regarding the result of the dispute in the Case Opener involving whether a joint venture between law firms was liable for the actions of a partner sanctioned for litigation misconduct?

Accepted Answer

Under the Uniform Partnership Act (UPA) of 1997, a joint venture is liable for any penalty incurred as the result of a wrongful act or omission, or other actionable conduct, of a joint venturer acting in the ordinary course of business of the joint venture.

Question 12

Which of the following is false regarding partnership property rights?

Accepted Answer

A partner cannot use partnership property to pay a personal debt.

Question 13

Which of the following is false regarding duties of partners to one another?

Accepted Answer

Partners should not take any action that will undermine the partnership, such as engaging in business that competes with it.

Question 14

Which of the following does the duty of obedience that one partner owes to another reference?

Accepted Answer

The duty of obedience is an example of a fiduciary duty. The partners must obey the partnership agreement; if they disobey the agreement, they can be held liable for any losses.

Question 15

Which of the following is a way that a person may be held liable as a partner without actually being named as a partner in a partnership agreement?

Accepted Answer

Most states recognize two situations in which a partnership by estoppel exists: (1) when a third party is aware of and consents to a misrepresentation of partnership, and (2) when a nonpartner has represented himself or herself as a partner and a third party reasonably relies on this information to his or her detriment.

Question 16

When the articles of partnership are silent,which of the following property rights do partners have?

Accepted Answer

Unless otherwise stated in the partnership agreement, all partners have a right to participate equally in the management of the partnership. Each partner has the right to possess partnership property. A partner also has a right to interest in the partnership.

Question 17

Which of the following is true regarding the liability of a partner for a mistake?

Accepted Answer

A partner who makes an honest mistake in fulfilling responsibilities to the partnership will not be held liable for the mistake.

Question 18

Unless the articles of partnership states otherwise,which of the following is true regarding the rights of partners to share in the management of a partnership?

Accepted Answer

Unless otherwise stated in the partnership agreement, all partners have a right to participate equally in the management of the partnership.

Question 19

Which of the following is true regarding the right of a personal creditor of a partner to seize specific items of partnership property?

Accepted Answer

A partner's personal creditor cannot seize specific items of partnership property.

Question 20

Which of the following represents a partner's right to an interest in the partnership?

Accepted Answer

A partner has a right to interest in the partnership. This interest, composed of a combination of the partner's share of the profits and a return of capital contributed by the partner, is part of the partner's personal property.

Quiz 36: Partnerships: Nature, Formation, and Operation