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Exam 36: Partnerships: Nature, Formation, and Operation

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Question 31

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Under joint and several liability, partners must be sued jointly.

A) True
B) False

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Question 32

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Mason is a partner in the Millennium Partners group. Maserati Imports, a local car dealership is trying to impound Mason's car for lack of payment. Since Maserati Imports cannot find Mason's car, they reposes the Millennium Partners' company car instead. Is this action legal?

A) Yes, a creditor may take any piece of a partnerships property to satisfy a debt.
B) Yes, a creditor may do so, but only after giving all partners at least 60 days advance notice.
C) Yes, a creditor may do so only after giving all partners at least 30 days advance notice.
D) Yes, a creditor may seize specific items of partnership property only if the items are found on the partnership's business property.
E) No, a creditor may not seize specific items of partnership property to satisfy a personal debt of a partner.

F) A) and E)
G) A) and D)

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Question 33

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Partnership by estoppel applies only when there is no partnership agreement in place; when there is a written partnership agreement, partners not named in the agreement can deny they are partners.

Partners should not take any action that will undermine the partnership, such as engaging in business ________

Grant is fairly certain that his partner Jenny is keeping things secret from him in their art deco design firm. Grant asks Jenny to see the books. She agrees but doesn't allow him to make copies. Grant said he has the right and Jenny said he does not because she is responsible for the books. Which is correct?

[Partnership Problems] Jamar, Kenya, and Tamika want to form a partnership to sell students resume preparation and employment search services. Jamar asks Kenya and Tamika if they should draw up some sort of agreement. Kenya replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Jamar and Tamika, however, Kenya agreed to a written document setting up the partnership, which they all signed. It was a simple agreement listing the partners and did not specifically address the right to management or allocation of profits and losses. Kenya has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership; she keeps the payment she receives for herself. When Jamar and Tamika find out, Kenya replies that she was doing two-thirds of the partnership work, particularly in regard to management; that she, therefore, has two-thirds of the voting rights; and that she voted that her actions were appropriate. The articles of partnership does not address the right to share in management, but Jamar and Tamika strongly disagree with Kenya. -Is Kenya's statement that she had greater management rights because she was doing a greater percentage of work for the partnership correct?

In a partnership, a minimum of one of the partners must be an agent while the others are considered employees of the partnership.

The law requires that all title to property must be in the name of a partnership.

What was the result in Leoff v. S&J Land Co., the case in the text involving a land dispute and whether a partnership existed?

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

[Grooming Grievances] Andrew, Marie, and Cruz formed a partnership to groom dogs. Because they were good friends and anticipated making a profit sufficient to compensate all partners well, the articles of partnership did not allocate profit or losses. Marie was appointed managing partner. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. Cruz claimed that he should not have to share in losses because he had groomed more dogs than anyone. Cruz also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his extensive work. Marie claimed that she should not have to share in losses because she contributed more capital than did either of the others. Andrew claimed that he should not have to cover the losses because both Marie and Cruz had been hiding the books from him. He demanded to inspect the books and also to review a listing of all partnership assets and profit statements listing distributions to partners. Marie and Cruz denied that they had been hiding the books and claimed complete innocence of any wrongdoing. -Is Cruz correct that he is entitled to additional compensation based upon the amount of work he was doing?

If an entire judgment for a tort for which the partnership is liable is paid by one partner, other partners have no legal obligation to indemnify that partner.

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership. -Carmine owed Geoffrey two million dollars due to a judgment in a negligence lawsuit. When Geoffrey was unable to pay the judgment, Carmine sought to have the debt paid through G&J Antiques, a firm in which Geoffrey was a partner. Which of the following statements is true regarding what Carmine can recover?

[Grooming Grievances] Andrew, Marie, and Cruz formed a partnership to groom dogs. Because they were good friends and anticipated making a profit sufficient to compensate all partners well, the articles of partnership did not allocate profit or losses. Marie was appointed managing partner. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. Cruz claimed that he should not have to share in losses because he had groomed more dogs than anyone. Cruz also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his extensive work. Marie claimed that she should not have to share in losses because she contributed more capital than did either of the others. Andrew claimed that he should not have to cover the losses because both Marie and Cruz had been hiding the books from him. He demanded to inspect the books and also to review a listing of all partnership assets and profit statements listing distributions to partners. Marie and Cruz denied that they had been hiding the books and claimed complete innocence of any wrongdoing. -The proper reference for Andrew's request to review all partnership assets and profit statements listing the distributions to partners is known as a[n] ________.

Where no partnership agreement exists, will a court dismiss a suit concerning the existence or terms of the partnership?

Partnership by estoppel is a way that a person may be held liable as a partner

Which of the following is true regarding the rights of partners to share in the management of a partnership?

Quenten and Pauline have decided to create a partnership for their new tutoring business. What type of written agreement creates a partnership?

Under the Uniform Partnership Act, which of the following is defined as a "person"?

A group of businesses that use a partnership between local and multinational companies in which each individual business has a stake in the others is known as: