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Exam 31: All Forms of Partnership

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Question 21

Multiple Choice

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Bev is one of three partners in Commercial Custodial. With respect to Bev's interest in the firm, when she dies, her heirs are most likely entitled to

A) nothing.
B) a payout of her capital contribution without more.
C) the buyout price paid by the firm for the interest.
D) one-third of the value of the interest.

E) A) and C)
F) All of the above

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Question 22

Multiple Choice

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Beth and Connie do business as Dig Excavators. In acting on the firm's behalf, Beth makes an honest error in underestimating the cost of a certain project. In this situation, to her firm, Beth is liable for a breach of the duty of

A) care.
B) accounting.
C) loyalty.
D) none of the choices.

E) C) and D)
F) None of the above

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Question 23

Multiple Choice

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Stef and Tyler agree in an exchange of e-mail to form a partnership to buy and sell real property. Their partnership agreement is legally binding

Generally, the law recognizes a partnership as an independent entity.

Olivia is a partner in Pacific Trade. In the majority of states, with respect to any partnership obligations that Olivia does not participate in, know about, or ratify, she would be liable for

Oscar is a partner in Party Caterers. Oscar's death will

In a limited partnership, a general partner assumes no liability for partnership debts beyond the amount of capital contributed.

When a partnership that was supposed to dissolve after one partner's death continues to operate, a court is estopped from ordering its dissolution.

One of the essential elements of a general partnership is a right to participate in the control of a business.

A partner who withdraws from a partnership for a term before its expiration date can be held liable for any resulting losses.

A limited liability partnership allows professionals to avoid personal liability for the malpractice of other partners.

Kris and Linda are partners in Mobile Devise, an online marketing firm. Kris signs a contract with Nature's Best Chocolate, a candy maker, apparently on Mobile's behalf. The contract is binding on

Sebastian was the manager of Thai Bistro, a restaurant specializing in Southeast Asian foods. Sebastian opened a bank account in Thai Bistro's name, signing the account signature card as "owner." Umeko, who was often at Thai Bistro and had free access to its office, told others that she was "an owner" and "a partner." She also opened a bank account in Thai Bistro's name, and signed the account signature card as "owner." Sebastian told Vijay, the owner of Wong Noodles, Inc., that Umeko was a member of a partnership that owned Thai Bistro. On this basis, Wong Noodles delivered its goods to Thai Bistro on credit. In fact, Thai Bistro was owned by a corporation. When the unpaid account totaled more than $10,000, Wong Noodles filed a suit against Umeko to collect. On what basis might Umeko be liable for the debt?

Amber owns and operates Bistro Café in space leased in a building owned by Cindy. The lease requires a base rent of $1,500, plus 10 percent of Bistro's profits, each month. The term is two years. Amber and Cindy are

Development LP is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals, including Ethan. Ethan loses his limited liability if he

During the winding up stage of dissolution, no party can make a claim on the partnership assets.

The major features of an LLP are that it limits the personal liability of the partners and

Rosa is a partner in Silver Dragon, a partnership consisting of the owners of a restaurant. Silver Dragon incurs debt for new dining tables and chairs. With respect to this debt, Rosa is

To eliminate costly negotiations or litigation, partners may agree on how the firm's assets will be valued or divided if the partnership dissolves.

A partner can be held liable for a partnership obligation only if he or she participated in, or knew about, whatever it was that gave rise to the obligation.