Question 1

The Uniform Partnership Act and the Revised Uniform Partnership Act do not dictate what relations among partners must be.

Accepted Answer

The Uniform Partnership Act and the Revised Uniform Partnership Act primarily provide guidelines for partnership formation, operation, and dissolution, but do not mandate specific internal relations among partners. It is up to the partners to agree on their own roles and responsibilities, as well as profit and loss distribution.

Question 2

As per the Revised Uniform Partnership Act RUPA),a partnership agreement may eliminate the duty of loyalty so as long as that is not manifestly unreasonable.

Accepted Answer

According to section 404 of RUPA, a partnership agreement can modify or eliminate the duty of loyalty as long as it is not "manifestly unreasonable."

Question 3

Under both Uniform Partnership Act UPA)and Revised Uniform Partnership Act RUPA),contract liability of the partners is joint and several.

Accepted Answer

Under the UPA, contract liability of the partners is joint, meaning a third party must sue all partners together. However, under the RUPA, the contract liability of the partners is joint and several, allowing a third party to sue one or more partners separately or all of them together.

Question 4

Which of the following duties of the partners,that they owe each other,relates to the duty to act within the bounds of the authority or trust that has been extended?
A)Duty of embezzlement
B)Duty of obedience
C)Duty of derivative action
D)Duty of replevin
E)Duty to lost volume

Accepted Answer

The duty of obedience requires partners to act within the bounds of the authority or trust that has been extended to them. Embezzlement refers to stealing from the partnership, derivative action involves pursuing legal action on behalf of the partnership, replevin involves recovering property, and the duty to lost volume pertains to the obligation to make up for profits lost due to a partner's breach of duty. None of these relate specifically to acting within the bounds of authority or trust.

Question 5

Timothy,Reuben,and John,three brothers,work in a partnership firm that specializes in organizing events for people.John's friend Sam visited their place of business and made some suggestions to John for the next event that he was handling.Timothy and Reuben were however,out on a business trip when Sam visited their place.John out of gratuity got Sam a gift out of the business account and asked him to join the partnership.This,at present,could not be possible because of the doctrine of _____.
A)delectus personae
B)corporation by estoppel
C)employment-at-will
D)family purpose
E)tenants in partnership

Accepted Answer

The doctrine of delectus personae means that in a partnership, the partners have the right to choose whom they want to enter into partnership with. Therefore, John cannot simply make Sam a partner without the consent of Timothy and Reuben, who were absent when Sam visited the business.

Question 6

_____ is the highest duty of good faith and trust,imposed on partners as to each other and the firm.
A)Embezzlement duty
B)Larceny duty
C)Escrow duty
D)Escheat duty
E)Fiduciary duty

Accepted Answer

Fiduciary duty is the highest duty of good faith and trust imposed on partners as to each other and the firm. This duty includes loyalty, honesty, confidentiality, and the obligation to act in the best interests of the partnership and its partners. The duty is similar to that of a trustee and partners must act for the benefit of the partnership and not for their personal gain.

Question 7

If no provision relating to the distribution of profits and losses is stated in the partnership agreement,then under RUPA Section 401b),"each partner is entitled to an equal share of the partnership profits and is chargeable with a share of the partnership losses in proportion to the partner's share of profits."

Accepted Answer

According to RUPA Section 401b, if there is no provision in the partnership agreement regarding the distribution of profits and losses, each partner is entitled to an equal share of the partnership profits and is chargeable with a share of the partnership losses in proportion to their share of profits.

Question 8

According to the Uniform Partnership Act,creditors of the old partnership do remain as creditors of the new partnership.

Accepted Answer

According to the Uniform Partnership Act, creditors of the old partnership are considered creditors of the new partnership and can go after the partnership's assets to satisfy their debts.

Question 9

A person working for a partnership firm who is not a partner is an associate and usually gets only a salary.

Accepted Answer

In a partnership firm, only partners have an ownership interest in the firm and are entitled to a share in profits/losses. Associates do not have an ownership interest and usually receive a salary or hourly wage for their work.

Question 10

Under Revised Uniform Partnership Act RUPA),dissolution happens when RUPA requires the partnership to wind up and terminate.

Accepted Answer

Under RUPA, dissolution requires the partnership to wind up and terminate its business affairs.

Question 11

_____ is the theory that a new partner can only be admitted to a firm with the unanimous consent of all.
A)corporation by estoppel
B)employment-at-will
C)family purpose
D)delectus personae
E)tenants in partnership

Accepted Answer

Delectus personae is a Latin term meaning the "choice of person" and is a legal concept in partnership law. It refers to the principle that a new partner can only be admitted to a firm with the unanimous consent of all existing partners because each partner has a personal relationship with the other partners and must be compatible with them for the firm to function properly. This principle ensures that each partner has a say in who they will be working with and can maintain the level of trust and confidence required in a partnership.

Question 12

As per the Section 401d)of the Revised Uniform Partnership Act RUPA),a partner is entitled for remuneration for all the services performed by him for the partnership.

Accepted Answer

Under the Revised Uniform Partnership Act (RUPA), partners are not entitled to remuneration for services performed for the partnership, except for reasonable compensation for services rendered in winding up the business of the partnership.

Question 13

The partnership firm is not liable,if a single partner disposes of the firm's goodwill.

Accepted Answer

The answer of The partnership firm is not liable,if a...

Question 14

As per the Uniform Partnership Act,a partnership is terminated on dissolution.

Accepted Answer

Dissolution is the beginning of the process of winding up the partnership affairs, but the partnership is not terminated until the winding up of affairs is completed.

Question 15

For tortuous acts,the partners are said to be jointly and severally liable under both Uniform Partnership Act UPA)and Revised Uniform Partnership Act RUPA),and the plaintiff may separately sue one or more partners.

Accepted Answer

Both the UPA and RUPA hold partners jointly and severally liable for tortuous acts committed by the partnership, allowing the plaintiff to individually sue one or more partners for damages.

Question 16

The freedom to select new partners is absolute.

Accepted Answer

The freedom to select new partners is not absolute as it can be limited by laws, social norms, personal circumstances, and ethical considerations.

Question 17

Specific property interest of a tenant in partnership vests in the surviving partners,not in the heirs.

Accepted Answer

According to the Uniform Partnership Act, the specific property interest of a tenant in partnership belongs to the partnership as a whole and not to individual partners. Therefore, if a partner dies, their interest in the partnership passes to the surviving partners and not to their heirs.

Question 18

Ralph,a partner,doing partnership along with Gilbert and Vicky,during the course of the partnership,pays a sum of $4,000 to one of the suppliers out of his personal account.The partnership firm will have to pay back this amount to Ralph as per the partner's right to _____.
A)profits and losses
B)indemnification
C)compensation
D)management
E)derivative action

Accepted Answer

Ralph paid the sum of money to the supplier on behalf of the partnership firm, which means he incurred an expense for the partnership. Therefore, he has the right to be reimbursed from the partnership for the amount he paid out of his personal account. This right is called indemnification.

Question 19

A judgment creditor has the right to obtain a charging order.

Accepted Answer

A judgment creditor can obtain a charging order to secure the debt owed to them by the debtor. This allows them to secure their interest in the debtor's property, such as real estate or personal property, and potentially collect the debt from the proceeds of the sale of that property.

Question 20

The Revised Uniform Partnership Act RUPA),generally,requires the judgment creditor to exhaust the partnership's assets before going after the separate assets of a partner.

Accepted Answer

This is true as per Section 305 of the Revised Uniform Partnership Act (RUPA), which provides that the creditor of a partnership may not seek satisfaction of the partnership's obligation directly from a partner's assets, except as provided under certain circumstances. The creditor must first exhaust the partnership's assets before seeking to enforce a judgment against the separate assets of a partner.

Quiz 19: Partnership Operation and Termination