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Exam 30: Formation and Internal Relations of General Partnerships

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Question 21

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Arthur, Betty, and Clara each inherit an undivided one-third interest in an apartment complex. Instead of selling it, they decide to continue to operate it for the next few years as a sideline to their other occupations just to see if they can earn some extra money. What are they?

A) A partnership.
B) Co-owners only.
C) A corporation.
D) Creditors of the apartment complex.

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Question 22

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Anita, in violation of a specific agreement not to extend credit over $1,000 without the other partners' approval, extends credit of $2,000 to a friend. Anita will be held personally liable to the partners for any unpaid debt since she violated the duty of obedience.

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Question 23

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Ed, Vivian, and Pablo enter a partnership. Identify the source of the duties among the partners and whether these can be waived or varied. Name the principal duties Ed, Vivian, and Pablo have to each other and to the partnership.

Which of the following would lack the capacity to become a partner?

The type of business enterprise with the most entities is the sole proprietorship, followed by the corporation; but the type of business enterprise with the greatest total revenue generation per year is the corporation.

Under the RUPA, a partner is a co-owner of partnership property.

Anita is hired to manage an unincorporated dress boutique owned by Betty. The two agree that Anita will receive one-third of the net profits, which amount is to be paid to her on a monthly basis. Is Anita a partner? If the boutique has a loss instead of a profit, would Anita have to share the loss? Explain.

A partner has all but which of the following duties?

Any natural person having full capacity may enter a partnership.

Mount Pleasant Tires does not have sufficient funds to pay damages for a tort that arose out of the operation of the business. Jess, a business owner, is not personally liable if:

No person may become a member of a partnership without the consent of all the partners.

Under the UPA, a partner's ownership interest in any specific item of partnership property is that of a:

Because the statute of frauds does not apply expressly to a contract for the formation of a partnership, usually no writing is required to create the relationship.

The UPA treats a partnership as a legal entity for all purposes.

A partnership agreement should include all but which one of the following?

Under the RUPA, a partner violates the duty of loyalty if the conduct furthers the partner's own interest.

The RUPA cannot be modified by agreement of the partners to a partnership. Its provisions must be strictly followed in any partnership agreement.

Luke typically spends 50-55 hours per week working in the real estate partnership he co-owns with Spencer. Spencer only spends about 30 hours a week on partnership business. Under the RUPA:

Co-ownership of the means or instrumentality of accomplishing a single business transaction or a limited series of transactions ordinarily results in a:

Former partners, as well as current partners, have some rights to access partnership books and records.