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In the case of a limited partnership, if the partners do not correctly fill out or do not file the certificate of limited partnership with the secretary of state, the limited partners will not receive limited liability.

A) True
B) False

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Reference - Parent Involvement. Marcy and George, both artists, discussed forming a partnership to paint portraits. George's parents were interested in investing in the partnership, but they wanted to avoid any liability. George suggested forming a limited partnership. He told Marcy and his parents that they could do it very informally, that an oral agreement was sufficient, and that the parents would be protected from liability. Although George protested strongly on the basis that it was a waster of money, Marcy insisted that a certificate of limited partnership be filed with the secretary of state. After a few months, Marcy and George decided that they wanted to add a new partner, Betty, to the partnership as a general partner. Betty had some expertise in the portrait field but, unfortunately, she had also had some scrapes with local law enforcement. George's parents objected strenuously to the admission of Betty. Marcy and George took the position that the parents, as limited parents, had no say in the admission of a new partner. George's father, who had an interest in painting and was concerned that the partnership was not making very much money, decided to start coming to the partnership studio to manage the business and attempt to bring it into profitability. Are George and Marcy correct in that limited partners have no say regarding the admission of new partners?


A) No, because in order to add a new partner, all partners, including limited partners, must agree.
B) No, because in order to add a new partner, all general partners must agree and at least one half of limited partners must agree.
C) No, because in order to add a new partner, at least one half of general partners and one half of limited partners must agree.
D) They are correct only if all general partners agree that limited partners cannot vote on the matter.
E) They are correct.

F) B) and D)
G) A) and D)

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


A) The partner who wrongfully dissolved the partnership cannot require that the business be wound up.
B) The partner can be held liable for damages to the remaining partners.
C) The remaining partners can choose to continue the business under the partnership name or to wind up the business.
D) The partner who wrongfully dissolved the partnership cannot require that the business be wound up, the partner can be held liable for damages to the remaining partners, and the remaining partners can choose to continue the business under the partnership name or to wind up the business.
E) The partner can be held liable for damages to the remaining partners, but he remaining partners cannot choose to continue the business under the partnership name.

F) C) and E)
G) B) and D)

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The Revised Uniform Limited Partnership Act provides that a limited partnership may be dissolved for which of the following reasons?


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 unanimous written consent of all limited and general partners.
D) The withdrawal of the general partner unless the certificate establishes that other general partners will continue.
E) All of these.

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

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


A) A garnishment order
B) A charging order
C) A reimbursement order
D) An accounting order
E) An entitlement order

F) A) and C)
G) C) and D)

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Which of the following is true regarding the treatment of a partnership as a legal entity?


A) A partnership is often considered a legal entity when it is sued or being sued.
B) State law determines whether a partnership can or cannot be named in litigation.
C) Title to property can be put in the partnership name.
D) A partnership is often considered a legal entity when it is sued or being sued, state law determines whether a partnership can or cannot be named in litigation, and title to property can be put in the partnership name.
E) A partnership is often considered a legal entity when it is sued or being sued and state law determines whether a partnership can or cannot be named in litigation, but title to property cannot be put in the partnership name.

F) A) and C)
G) A) and D)

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If a partner dissolves a partnership in violation of the partnership agreement, the partner can be held liable for wrongful dissolution.

A) True
B) False

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Which of the following is true regarding partnership agreements in Russia?


A) Russian law recognizes one type of partnership, the full partnership.
B) Russian law recognizes one type of partnership, the simple partnership.
C) Russian law allows for oral partnership agreements.
D) Russian law recognizes full partnerships and simple partnerships, and partnership agreements may be made orally.
E) Russian law recognizes full partnerships and simple partnerships, and partnership agreements must be in writing.

F) C) and D)
G) A) and D)

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Reference - Grooming Losses. Wally, Beverly, and Matthew formed a partnership to groom dogs. Unfortunately, the business did not go as well as expected and the partnership incurred some losses. The articles of partnership did not allocate profits or losses. Matthew claimed that he should not have to share in losses because he had groomed more dogs than anyone. Matthew also claimed that although the partnership did not reference compensation for additional duties, he was entitled to compensation because of his excessive work. Beverly claimed that she should not have to share in losses because she contributed more capital than did either of the others. Wally claimed that he should not have to cover the losses because both Beverly and Matthew had been hiding the books from him. He demanded to inspect the books and also to a review and listing of all partnership assets and profit. Beverly and Matthew denied that Wally was entitled to a review of the books and stored them in a safe deposit to which only Beverly had a key. They claimed complete innocence of any wrongdoing. Is Wally entitled to inspect the books?


A) Only if he is the managing partner.
B) Only if he can establish fraud on the part of another partner.
C) Only if the articles of partnership specifically gave him that right.
D) Only if the articles of partnership specifically gave him that right or the other partners voluntarily agreed.
E) Yes.

F) C) and D)
G) B) and D)

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


A) All partners have a right to participate equally in the management of the partnership.
B) Partners share in management in proportion to the amount of capital contributed to the partnership.
C) Partners share in management in proportion to the amount of work done for the partnership.
D) Partners share in management in proportion to their seniority with the partnership with partners of equal seniority sharing equally in management.
E) None of these. There is no right to share in management unless the articles of partnership specifically address management rights.

F) C) and D)
G) B) and E)

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For which of the following reasons may a partner demand an accounting?


A) Whenever the copartners wrongfully exclude a partner from the partnership or from access to the books.
B) Whenever any partner fails to disclose a profit or benefit from the partnership.
C) Whenever circumstances render an accounting as "just and reasonable."
D) Whenever the copartners wrongfully exclude a partner from the partnership or from access to the books, whenever any partner fails to disclose a profit or benefit from the partnership, and whenever circumstances render an accounting as "just and reasonable."
E) Whenever the copartners wrongfully exclude a partner from the partnership or from access to the books, and whenever any partner fails to disclose a profit or benefit from the partnership, but not whenever circumstances render an accounting as "just and reasonable."

F) All of the above
G) B) and E)

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During the winding-up process, the partners must still fulfill their fiduciary duty to one another in the sense that they must disclose all information about the partnership assets.

A) True
B) False

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Which of the following are included within the duty partners hold to one another to be loyal?


A) The fiduciary duty to other partners.
B) The duty of obedience.
C) The duty of care.
D) The fiduciary duty to other partners, the duty of obedience, and the duty of care.
E) The fiduciary duty to other partners and the duty of care, but not the duty of obedience.

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

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Reference - Partnership Disruption. Bruce, Sandra, and Minnie want to form a partnership to assist students with resume preparation and employment searches. Bruce asks Sandra and Minnie if they should draw up some sort of agreement. Sandra replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Bruce and Minnie, however, Sandra agreed to a written agreement. Sandra has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership. She keeps the funds she receives for herself. When Bruce and Minnie found out, Sandra replied that she was doing two-thirds of the partnership work; that she, therefore, had a majority of the voting rights; and that her actions were appropriate. The articles of partnership did not address the right to share in management, but Bruce and Minnie strongly disagreed with Sandra. Did Sandra commit any breach of duty to the partnership?


A) Yes, she breached her fiduciary duty to the other partners.
B) Yes, she breached her duty of obedience to the other partners.
C) Yes, but only if the other partners can show that she made more income through doing the work on her own than she would have made if she had done the work through the partnership.
D) Yes, but only if the other partners can show that they could have done a better job on the resumes than did Sandra.
E) No, she did not breach any duty.

F) B) and C)
G) C) and E)

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Reference - Partnership Disruption. Bruce, Sandra, and Minnie want to form a partnership to assist students with resume preparation and employment searches. Bruce asks Sandra and Minnie if they should draw up some sort of agreement. Sandra replies that a written agreement is not legally required and that an oral agreement will set up a partnership. Upon the urging of Bruce and Minnie, however, Sandra agreed to a written agreement. Sandra has an opportunity to assist some students with resumes and does so without revealing her employment to the partnership. She keeps the funds she receives for herself. When Bruce and Minnie found out, Sandra replied that she was doing two-thirds of the partnership work; that she, therefore, had a majority of the voting rights; and that her actions were appropriate. The articles of partnership did not address the right to share in management, but Bruce and Minnie strongly disagreed with Sandra. Which of the following is correct regarding Sandra's statement to the effect that she had greater management rights because she was doing a greater percentage of work for the partnership?


A) Sandra is incorrect because unless otherwise stated in the articles of partnership, all partners share equally in the management of the partnership.
B) Sandra is incorrect because unless otherwise stated in the articles of partnership, partners share in management rights in proportion to their rights to profits.
C) Sandra is incorrect because unless otherwise stated in the articles of partnership, partners share in management rights in proportion to their obligation for losses.
D) Sandra is correct only if the proportion of work she was doing was inequitable.
E) Sandra is correct.

F) A) and E)
G) A) and B)

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A partner being expelled from the partnership in accordance with the partnership agreement is not a reason for rightful dissolution of the partnership.

A) True
B) False

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Which of the following may be a "person" under the Uniform Partnership Act?


A) Individuals only
B) Partnerships and individuals
C) Partnerships, individuals, and corporations
D) Partnerships, individuals, corporations, and other associations
E) Partnerships, individuals, and other associations, but not corporations.

F) B) and C)
G) A) and B)

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Reference - Mortuary Blues. Barry and Elaine had a partnership running a mortuary. Elaine died, and Barry continued to run the mortuary for a short time. He then decided to shut down the mortuary because it was too depressing without Elaine, who was a very vivacious person. Barry incurred expenses in closing the business affairs of the mortuary. He sought compensation for that, but the executor of Elaine's estate objected. The executor also claimed that Barry had no rights in Elaine's share of the specific partnership property. Barry, however, took the position that all interests of Elaine passed to him and that he owed her estate nothing. The articles of partnership do not address dissolution of the partnership or death of a partner. Which of the following is correct regarding the executor's rights, if any, in specific partnership property?


A) The executor was entitled to one-half of the partnership assets including half of the specific partnership property.
B) The executor was not entitled to any specific partnership property because all property rights passed to Barry according to the right of survivorship.
C) The executor was entitled to one-half an interest in the specific partnership property only if Elaine was the managing partner pursuant to the articles of partnership.
D) The executor was only entitled to specific partnership property not in use at the mortuary at the time of her death.
E) The executor was entitled to a one-half interest in specific partnership property, but that interest could only be realized when Barry decided to close the mortuary and liquidate assets.

F) C) and D)
G) D) and E)

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No partnership is created based upon an employer sharing profits with an employee as payment for work.

A) True
B) False

Correct Answer

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Which of the following bring foreign information and communication technology companies into a partnership and serve as hubs?


A) Keiretsus
B) Stares
C) In rems
D) Res ipsas
E) Internal groups

F) B) and E)
G) All of the above

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