Partnerships

Question 1

Partnership is formed when

Answer 1

Two or more persons operate as co-owners of a business for profit

Question 2

Is an express agreement required for a partnership?

Answer 2

NO

Question 3

What actions trigger a presumption of a partnership??

Answer 3

Sharing profits, losses and sharing control of business

Question 4

A partnership agreement controls

Answer 4

a partner’s rights to share in profits and losses

Question 5

How much in losses is partner chargeable when the agreement only addresses division of partnership profits?

Answer 5

Chargeable in losses in proportion to his share of profits

Question 6

General partnership

Answer 6

to or more persons agree to share in all assets, profits, and financial and legal liabilities of a jointly-owned business

Question 7

What degree of liability do partners in a general partnership share for debts of partnership?

Answer 7

Jointly and severally liable for debts of partnership

Question 8

Purported partner

Answer 8

person who represents herself as partner, or consents to being represented by another as a partner is liable to 3rd person who extend credit to apparent partnership in reliance on the representation

Question 9

Limited Partnership

Answer 9

Partnership where partners have varying levels of liability and ownership

Question 10

Limited Partnership: General Partner’s Liability

Answer 10

general partners have unlimited liability for debts of partnership

Question 11

Limited Partnership: limited partner’s liability

Answer 11

Not liable for debts of limited partnership

Question 12

Limited partners can lose their limited liability if they

Answer 12

participate in the control of business or if other party reasonably believes they are a general partner

Question 13

Limited partnership: general partner also has liabilities to the ___ and the other ___

Answer 13

general partner has liability to the partnership and other partners

Question 14

How does an action of a limited partner become an obligation of the partnership

Answer 14

when a limited P had ACTUAL or APPARENT AUTHORITY to ACT ON BEHALF OF GENERAL PARTNER

Question 15

Even if no actual or apparent authority, partnership can be liable if General Partner/Partnership ____ LP’s conduct

Answer 15

General partner ratified LP’s conduct

Question 16

General partner is not entitled tp a management fee unless

Answer 16

partnership agreement provided for one

Question 17

Limited partner’s liability for unpaid contributions (in general)

Answer 17

Limited P is liable for any unpaid contributions to partnership

Question 18

Can a creditor of the limited P enforce a limited partner’s obligation to make a contribution to partnership?

Answer 18

Yes

Question 19

Assignee limited partner is not liable for assignor’s unpaid contribution to partnership if

Answer 19

the unpaid contributions were unknown to assignee at time he became a limited P

Question 20

A suretyship is a

Answer 20

3rd party K, where one party (surety) promises second party (obligee) that surety will be responsible for any debt or other obligation of a 3rd party resulting from Principal’s failure to pay/perform

Question 21

What does a Partner’s dissociation do?

Answer 21

terminates one partner’s legal relationship with the partnership, including any right to profits and obligations for debts or other liabilities.

Question 22

If the partnership continues without the partner, the partners or the partnership must

Answer 22

buyout dissociated partner’s interest

Question 23

In general, dissociation occurs when

Answer 23

partner provides notice of express intent to withdraw

Question 24

A partner is also dissociated from partnership upon

Answer 24

death…but death does not trigger dissolution and winding up of partnership

Question 25

Does partnership terminate immediately upon dissolution?

Answer 25

No

Question 26

Upon dissolution, partnership enters

Answer 26

winding up phase

Question 27

During winding up, a partnership is bound by partner's act if act is

Answer 27

appropriate for winding up partnership

Question 28

Dissolution of partnership is triggered by

Answer 28

by providing a notice of dissolution.

Question 29

Who has rights to partnership assets during dissolution

Answer 29

only those partners that remain in the partnership have the right to any partnership assets

Question 30

The winding up procedure requires partnership to

Answer 30

1) Collect any remaining business assets 2) Settle any remaining debts owed to non-partner creditors 3) Distribute the remaining assets to the remaining partners

Question 31

Any funds resulting from the wind-up stage are first used to

Answer 31

pay off any outstanding debts of the partnership.

Question 32

Any remaining funds will be distributed to

Answer 32

the partners individually.

Question 33

This distribution is typically calculated based on their

Answer 33

ownership interest in the partnership

Question 34

Upon dissolution, partnership must

Answer 34

wind up its business activities and distribute its assets.

Question 35

Winding up includes

Answer 35

liquidating or distributing any property or assets remaining after the dissolution of the partnership.

Question 36

Partnership must buy out dissociated partner's interest when

Answer 36

partnership continues after partner's dissociation

Question 37

Purchasing Deceased Partner's Interest: Buy out price is the greater of the partnership's

Answer 37

1) liquidation value; or 2) going concern value on date of dissociation

Question 38

Dissociated Partner's Liability for obligations incurred after dissociation

Answer 38

Dissociated partner is generally not liable for obligations incurred after dissociation

Question 39

Dissociated Partner WILL be liable to 3rd party who transacted business w the partnership within ___ year(s) of dissociation and who ___ ___ that the dissociated partner was __ __ ___ w/o notice or knowledge otherwise

Answer 39

1 year of dissociation and who reasonably believed that the dissociated partner was still a partner w/o notice or knowledge otherwise

Question 40

What kind of actions may partners bring against other partners?

Answer 40

Derivative action for breach of duty of loyalty

Question 41

Although partners may not compete during life of partnership, partners may

Answer 41

prepare to compete

Question 42

Defense to Breach of partnership

Answer 42

transaction was fair to partnership

Question 43

Can partner compel a distribution of partnership profits?

Answer 43

No, unless agreement states otherwise