Question 1

Where did the concept of the limited partnership originate?

Accepted Answer

A)   China
B)   The United States
C)   Switzerland
D)   Europe
E)   AustriaF) B) and C)
G) B) and D)

Question 2

[Fishy Fiasco] James agreed to be a limited partner in Ingrid and Darnell's tropical fish importing business. Ingrid and Darnell were general partners. James contributed $10,000 to the partnership as his capital contribution. The partnership made a profit of $30,000 the first year. James was paid nothing. When he inquired, Ingrid told him that a limited partner was only entitled to a share of profits as approved by the general partners and that perhaps things would be better the next year. The next year, however, importation was banned because of a fish disease, and the partnership lost money and owed debts of $60,000. At the end of the year, Ingrid and Darnell asked James to contribute $20,000 to cover the debts. When James complained about the amount, Darnell told him that he and Ingrid were being overly reasonable and that James actually was legally liable for an even larger percentage. In an attempt to keep the business afloat, James told Ingrid and Darnell that they should consider suing a customer who had not paid a large account. Ingrid and Darnell replied, however, that they were morally opposed to lawsuits and that they had the final say on litigation.
-Which statement is true regarding any responsibility James has to share in losses?

Accepted Answer

A)   James assumed no liability for the partnership beyond the capital he invested.
B)   James has a legal obligation to share equally in losses with the general partners.
C)   James would be responsible for one-half of any losses with the two general partners having liability for the other half.
D)   James has no liability for losses at all.
E)   James has liability for losses only if the general partners are insolvent.F) D) and E)
G) A) and E)

Question 3

[Drone Debacle] Bruno and Martin run Skyview, LLC, a drone company that takes aerial photographs. After an accident with the drone, Bruno tells Martin that he does not want to be involved in management any longer. Martin tells Bruno that if he stops participating in management, they will no longer be protected by the limited liability of an LLC. Bruno says that if there is a lawsuit, they are both equally liable. Martin replies that if Bruno wants, he could be a limited LLC member and then he won't have a say in the company.
-Is Martin correct that Bruno can be a limited LLC member but would not have any say in the company?

Accepted Answer

A)   No, each member of an LLC has a say in the management of the company.
B)   Yes, like a limited partnership, an LLC can have limited partners and general partners.
C)   Although an LLC does not have limited partners and general partners, one can be a limited member without any say in the company.
D)   Yes, like a limited partnership, only the general members of an LLC make management decisions.
E)   Martin is correct.F) B) and C)
G) A) and E)

Question 4

Which of the following may cause the dissolution of a partnership?

Accepted Answer

A)   Only an act of the partners
B)   Only the operation of the law
C)   Only an act of the court
D)   An act of the partners, operation of the law, or an act of the court
E)   A partnership cannot dissolve unless there is a written agreement stating how the dissolution must occur.F) C) and E)
G) B) and C)

Question 5

In general, members of LLCs execute an agreement at the time of the LLC's formation, however, members of limited partnerships do not.

Accepted Answer

A) True 
 B)False

Question 6

[Drone Debacle] Bruno and Martin run Skyview, LLC, a drone company that takes aerial photographs. After an accident with the drone, Bruno tells Martin that he does not want to be involved in management any longer. Martin tells Bruno that if he stops participating in management, they will no longer be protected by the limited liability of an LLC. Bruno says that if there is a lawsuit, they are both equally liable. Martin replies that if Bruno wants, he could be a limited LLC member and then he won't have a say in the company.
-Is Martin correct that Bruno can be a limited LLC member but would not have any say in the company?

Accepted Answer

A)   No, in general, each member of an LLC may have a say in the management of the company.
B)   Yes, like a limited partnership, an LLC can have limited partners and general partners.
C)   Although an LLC does not have limited partners and general partners, one can be a limited member without any say in the company.
D)   Yes, like a limited partnership, only the general members of an LLC make management decisions.
E)   Martin is correct.F) A) and E)
G) A) and B)

Question 7

Markum is a partner in a partnership that is dissolving. The partnership does not notify a third party vendor of the dissolution. This means that Markum still has ________ authority to bind the partnership.

Accepted Answer

A)   express
B)   substantial
C)   implied
D)   apparent
E)   no authority because of the dissolutionF) A) and E)
G) A) and D)

Question 8

Which of the following is true in regard to a partner who is unfairly accused under a provisional dissolution in Spain?

Accepted Answer

A)   Provisional dissolution prevents those unfairly accused of certain behaviors from losing their position in the partnership.
B)   Provisional dissolution makes it clear that the partner abandons the partnership and cannot return until requested to do so by the partnership.
C)   A partner is considered to be a probationary member and still has limited controls of the partnership assets.
D)   A partner that is wrongfully accused can sue the partnership for punitive damages.
E)   A partner can receive limited profits but must return those profits plus interest if found to be liable for any wrongdoing.F) C) and D)
G) A) and E)

Question 9

If, upon dissolution of a partnership, one partner pays liabilities of the partnership that are greater than the liquidated assets of the partnership, which of the following is true?

Accepted Answer

A)   The partner who paid has a right of contribution against any partner who did not pay.
B)   The partner who paid has no right of contribution against any other partner.
C)   The partner who paid has a right of contribution against other partners only if the partner who paid was not the managing partner.
D)   The partner who paid has a right of contribution only against other partners who participated in the management of the partnership.
E)   The partner who paid has a right of contribution only against other partners who did not participate in the management of the partnership.F) D) and E)
G) B) and D)

Question 10

[Big Spender] Ryan was a partner in ZYX law firm. He decided to withdraw from the partnership because he wanted to retire early in Costa Rica. The partnership agreement of ZYX law firm did not specify the objective or duration of the partnership. Although Ryan gave proper notice, the other partners claimed that he had no right to withdraw. Ryan was angry and decided to get even. Two days after he withdrew and before the partnership had provided notification to any suppliers of his departure, Ryan went to the office supply store at which he typically purchased supplies on account for the firm. He purchased several cameras, a computer, and other items, which he placed on the firm's account. Ryan just smiled when Joe, the manager at the store, told Ryan that he really appreciated the law firm's business. The next day Ryan headed for Costa Rica and cannot be located. Joe later requests that ZYX firm pay the bill for Ryan's purchases. The law firm, whose members had decided to continue the partnership after the dissolution resulting from Ryan's resignation, refused on the basis that Ryan had no authority to make the purchases. Joe says that he did not know that and that he expects to be paid immediately.
-Which statement is true regarding whether Ryan had actual authority to bind the partnership in regard to his purchases at the office supply store?

Accepted Answer

A)   Ryan did not have actual authority to bind the partnership.
B)   Ryan had actual authority to bind the partnership because the law firm had not notified anyone at the office supply that he was no longer authorized to make purchases for the law firm.
C)   Ryan had actual authority to bind the partnership so long as the purchases were made within seven days of his resignation.
D)   Ryan had actual authority to bind the partnership so long as the purchases were made within ten days of his resignation.
E)   Ryan had actual authority to bind the partnership only if he cannot be found within one year of the date the purchases were made.F) All of the above
G) A) and E)

Question 11

Partners may not engage in a business that competes with the partnership business during the winding-up process.

Accepted Answer

A) True 
 B)False

Question 12

What are the steps, in order, of the life cycle of a partnership?

Accepted Answer

A)   Performance, formation, winding up, dissolution, termination or continuation.
B)   Formation, performance, winding up, dissolution, termination or continuation.
C)   Formation, performance, termination, winding up, dissolution or continuation.
D)   Performance, formation, dissolution, winding up, termination or continuation.
E)   Formation, performance, dissolution, winding up, termination or continuation.F) A) and B)
G) A) and C)

Question 13

When the Townsend limited partnership began, the timeline in the certificate of limited partnership set the time for the partnership to expire in on July 1, 2018. Shaun, one of the partners, wants to continue the partnership after July 1, 2018. Can he do so under RULPA?

Accepted Answer

A)   No, the expiration of term dissolves the partnership.
B)   Yes, but only for 6 additional months.
C)   Yes, but only for one additional year.
D)   Yes, for three additional years.
E)   No, unless all the partners in the limited partnership agree to turn their shares over to Shaun.F) A) and D)
G) A) and C)

Question 14

James is a partner in DDH Law Firm, a general partnership. At the request of James' family, the court has declared him insane. What effect, if any, does the insanity ruling have on DDH?

Accepted Answer

A)   None.
B)   The partnership can be dissolved at the request of the other partners.
C)   The partnership is dissolved by the act of a partner.
D)   The partnership is dissolved by operation of law.
E)   The partnership is dissolved by an act of the court.F) A) and D)
G) A) and C)

Question 15

In an LLC, each member has limited liability dependent on the amount of debt he or she assumes.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true if a partner wrongfully dissolves a partnership?

Accepted Answer

A)   The partner who wrongfully dissolved the partnership can require that the business be wound up.
B)   The partner who wrongfully dissolved the partnership can be held liable for damages to the remaining partners.
C)   The remaining partners must close the business.
D)   The partner who wrongfully dissolved the business must petition the court in order to complete the process.
E)   The remaining partners must petition the court in order to complete the process.F) C) and D)
G) B) and E)

Question 17

According to the Revised Uniform Limited Partnership Act, which of the following is not a reason for which a limited partnership can be dissolved?

Accepted Answer

A)   The expiration of the term established in the certificate of limited partnership.
B)   The completion of the objective established in the certificate.
C)   The withdrawal of the general partner (unless the certificate establishes that other general partners will continue) .
D)   An act of the court.
E)   The written consent of a majority of all partners (limited and general) .F) All of the above
G) A) and B)

Question 18

Oslo and Faraya want to form a partnership. Oslo is very ill and they verbally agree that Faraya can continue the business after his death. What type of agreement should they execute in order to ensure that Faraya can keep the partnership property and carry on the business after Oslo's death?

Accepted Answer

A)   Contingent agreement.
B)   Honorable agreement.
C)   Continuation agreement.
D)   Post-death agreement.
E)   There is no such agreement.F) C) and E)
G) A) and B)

Question 19

A partnership can continue after dissolution is complete.

Accepted Answer

A) True 
 B)False

Question 20

In the Case Nugget in the book, Bluestein and Krugman v. Olden, what did the court determine in regards to the winding-up of the partnership when all partners were in agreement to the dissolution of the partnership but not in agreement with the selling price of the partnership?

Accepted Answer

A)   Because the partnership was terminated in accordance with the partnership agreement, the court ruled that Olden could not prevent maximization of the partnership's assets.
B)   Because the partners could not agree, the court determined that it had jurisdiction to decide a selling price and distribution of partnership assets.
C)   That because the defendant wanted to continue the business components of the partnership, he had right of first refusal to buy all the partnership assets at a reduced cost.
D)   That the parties had a partnership agreement that was not being followed and as such, the court determined the partnership had to continue until the parties could come to an agreement and appointed a mediator to help in the process.
E)   That the partnership agreement was invalid, and the entire set of assets must be sold at auction and distributed according to money invested by each partner.F) A) and E)
G) A) and D)

Exam 37: Partnerships: Termination and Limited Partnerships

Which of the following may cause the dissolution of a partnership?

Correct Answer
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Correct Answer
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If, upon dissolution of a partnership, one partner pays liabilities of the partnership that are greater than the liquidated assets of the partnership, which of the following is true?

Correct Answer
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James is a partner in DDH Law Firm, a general partnership. At the request of James' family, the court has declared him insane. What effect, if any, does the insanity ruling have on DDH?

Correct Answer
verified

Correct Answer
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Oslo and Faraya want to form a partnership. Oslo is very ill and they verbally agree that Faraya can continue the business after his death. What type of agreement should they execute in order to ensure that Faraya can keep the partnership property and carry on the business after Oslo's death?

Correct Answer
verified

Where did the concept of the limited partnership originate?

Correct Answer
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Which of the following is true if a partner wrongfully dissolves a partnership?

Correct Answer
verified

In an LLC, each member has limited liability dependent on the amount of debt he or she assumes.

Correct Answer
verified

Partners may not engage in a business that competes with the partnership business during the winding-up process.

Correct Answer
verified

According to the Revised Uniform Limited Partnership Act, which of the following is not a reason for which a limited partnership can be dissolved?

Correct Answer
verified

In the Case Nugget in the book, Bluestein and Krugman v. Olden, what did the court determine in regards to the winding-up of the partnership when all partners were in agreement to the dissolution of the partnership but not in agreement with the selling price of the partnership?

Correct Answer
verified

When the Townsend limited partnership began, the timeline in the certificate of limited partnership set the time for the partnership to expire in on July 1, 2018. Shaun, one of the partners, wants to continue the partnership after July 1, 2018. Can he do so under RULPA?

Correct Answer
verified

Correct Answer
verified

In general, members of LLCs execute an agreement at the time of the LLC's formation, however, members of limited partnerships do not.

Correct Answer
verified

Correct Answer
verified

A partnership can continue after dissolution is complete.

Correct Answer
verified

Markum is a partner in a partnership that is dissolving. The partnership does not notify a third party vendor of the dissolution. This means that Markum still has ________ authority to bind the partnership.

Correct Answer
verified

What are the steps, in order, of the life cycle of a partnership?

Correct Answer
verified

Which of the following is true in regard to a partner who is unfairly accused under a provisional dissolution in Spain?

Correct Answer
verified

Exam 37: Partnerships: Termination and Limited Partnerships

Which of the following may cause the dissolution of a partnership?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If, upon dissolution of a partnership, one partner pays liabilities of the partnership that are greater than the liquidated assets of the partnership, which of the following is true?

Correct AnswerverifiedShow Answer

James is a partner in DDH Law Firm, a general partnership. At the request of James' family, the court has declared him insane. What effect, if any, does the insanity ruling have on DDH?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Oslo and Faraya want to form a partnership. Oslo is very ill and they verbally agree that Faraya can continue the business after his death. What type of agreement should they execute in order to ensure that Faraya can keep the partnership property and carry on the business after Oslo's death?

Correct AnswerverifiedShow Answer

Where did the concept of the limited partnership originate?

Correct AnswerverifiedShow Answer

Which of the following is true if a partner wrongfully dissolves a partnership?

Correct AnswerverifiedShow Answer

In an LLC, each member has limited liability dependent on the amount of debt he or she assumes.

Correct AnswerverifiedShow Answer

Partners may not engage in a business that competes with the partnership business during the winding-up process.

Correct AnswerverifiedShow Answer

According to the Revised Uniform Limited Partnership Act, which of the following is not a reason for which a limited partnership can be dissolved?

Correct AnswerverifiedShow Answer

In the Case Nugget in the book, Bluestein and Krugman v. Olden, what did the court determine in regards to the winding-up of the partnership when all partners were in agreement to the dissolution of the partnership but not in agreement with the selling price of the partnership?

Correct AnswerverifiedShow Answer

When the Townsend limited partnership began, the timeline in the certificate of limited partnership set the time for the partnership to expire in on July 1, 2018. Shaun, one of the partners, wants to continue the partnership after July 1, 2018. Can he do so under RULPA?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In general, members of LLCs execute an agreement at the time of the LLC's formation, however, members of limited partnerships do not.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A partnership can continue after dissolution is complete.

Correct AnswerverifiedShow Answer

Markum is a partner in a partnership that is dissolving. The partnership does not notify a third party vendor of the dissolution. This means that Markum still has ________ authority to bind the partnership.

Correct AnswerverifiedShow Answer

What are the steps, in order, of the life cycle of a partnership?

Correct AnswerverifiedShow Answer

Which of the following is true in regard to a partner who is unfairly accused under a provisional dissolution in Spain?

Correct AnswerverifiedShow Answer

Correct Answer
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