39. Under the UPA, dissolution by operation of law occurs:
a. if a partner has been adjudicated mentally incompetent.
b. upon the bankruptcy of a partner.
c. when a partner has engaged in conduct prejudicial to the business.
d. when the business can be carried on only at a loss.
40. A partner has
the partnership.
a. actual implied
b. apparent
c. no
d. ostensible
authority to hire and fire employees whose services are necessary to carry on the business of
41. Jane, Kelly, and Lois are partners in an accounting firm, but Jane intends to retire and withdraw from the partnership
at the end of the year. Under the RUPA, Jane is liable to the firm’s creditors:
a. for a partnership obligation incurred within two years after her dissociation if at the time of entering into the
transaction the other party reasonably believed Jane was then a partner, did not have notice of Jane’s
dissociation, and is not deemed to have had constructive notice of the dissociation.
b. only for all debts incurred prior to her retirement.
c. until the day of her retirement when she will be absolved of all liability.
d. for an amount not to exceed her partnership interest on the day of her retirement.
42. Under the UPA, which of the following acts does not bind the partnership unless authorized by all of the partners?
a. Selling goods in the ordinary course of the partnership business
b. Use of partnership property for partnership business
c. Acting as an agent for the partnership
d. Confessing judgment in a claim against the partnership
43. Under the RUPA, in which of the following situations may a court order dissolution upon application by a partner?
a. An event makes it unlawful to continue substantially all of the partnership’s business.
b. A definite term for the partnership has expired.
c. A partner files a petition for personal bankruptcy.
d. The court finds the economic purpose of the partnership is likely to be unreasonably frustrated.
44. If a partner’s act is not apparently for carrying on in the ordinary course the partnership business:
a. the partnership is bound only where the partner has actual authority.
b. the third person dealing with the partner becomes liable along with the partner.
c. the partner is necessarily acting without authority.
d. the partnership is bound anyway because a partner always has authority to bind the partnership.
45. Where a partner acts without either actual or apparent authority, the partnership:
a. cannot be bound.
b. is bound only if it ratifies the act.
c. is bound only if the third person did not know the partner was acting on behalf of the partnership.
d. is bound under all circumstances, since the partner is an agent of the partnership.
46. The RUPA provides that partners are liable on all contract obligations of the partnership.
a. jointly and severally
b. strictly
c. not
d. partially
47. Paul is driving a truck delivering goods for his partnership when he negligently backs into a customer’s new car. The
customer sues the partnership and recovers $6,000 in damages. What liability do the other partners have for Paul’s
actions?
a. No liability
b. Liability based on their capital contributions
c. Individual liability but not joint liability
d. Joint and several liability
48. A partner:
a. cannot be held criminally liable for the crimes of his partners.
b. may be criminally liable for the crimes of his partners if he authorized the acts.
c. who commits a tort is liable to the third party only through the partnership entity.
d. has joint and several liability with his partners for contracts entered and for torts and crimes committed by
other partners.
49. Which of the following is true of dissociation?
a. All of the common law causes of dissociation are also causes under the RUPA.
b. A partner has the power to dissociate at any time by expressing the intent to withdraw from the partnership.
c. Which dissociations are wrongful are set forth by statute and cannot be modified by the partnership
agreement.
d. The partnership agreement cannot modify the effects of wrongful dissociation.
50. Under the RUPA, a partner’s dissociation:
a. terminates the partner’s right to participate in the management and conduct of the partnership business.
b. eliminates that partner’s right to participate in winding up the partnership.
c. does not terminate the duty not to compete with the partnership until the process of winding up the partnership
has been completed.
d. terminates that partner’s duty to account to the firm for any fees received on behalf of the partnership.
51. ABC Partnership agrees to hire an “errand runner” 20 hours per week for the summer. Alan, a partner, interviews a
college student and decides to offer her the job. But she says she needs a 40-hour-a-week job, so Alan agrees to
make it 40 hours. What result?
a. ABC Partnership is not bound to hire her.
b. ABC Partnership is bound to pay her for 40 hours per week.
c. Alan is bound to pay her for 20 hours per week.
d. Alan has to pay her for 40 hours per week.
52. The Star General Partnership had assets worth $34,000 after liquidation. Frank, Gene, and Hank, equal partners,
each contributed $3,000 into the capital pool at the inception of the business. Gene later loaned the business $5,000.
They owe $23,000 to creditors. What will Gene get in distribution, assuming there is no agreement on the distribution
of profits?
a. $5,000
b. $7,000
c. $8,000
d. $11,000
53. A(n) imposes partnership duties and liabilities upon a nonpartner who has either represented himself or
consented to be represented as a partner.
a. accounting
b. delectus personae
c. fiduciary proceeding
d. partnership by estoppel
54. Under the UPA, which of the following requires the unanimous consent of the partners?
a. Submission of a partnership claim to arbitration
b. Confession of judgment
c. Disposing of the goodwill of the business
d. All of these
55. Which of the following is true regarding an insolvent partnership under the UPA?
a. The partners must contribute their respective share to the losses in order to pay creditors.
b. If one of the partners is out of the jurisdiction and refuses to contribute, the other parties must contribute the
additional amount necessary to pay the firm’s liabilities in the relative proportions in which they share the
profits.
c. Any partner who pays an amount in excess of his proper share of the losses has a right of contribution against
the partners who have not paid their share.
d. All of these.
56. Chuck, Bob, and Bert form CB&B Partnership to run a specialty grocery store. Bert is the day-to–day manager of
the store, Bob buys the groceries, and Chuck does all the administrative work. Bob decides he would like a new car
to drive to visit prospective wholesalers. He makes a contract with Big Ben Motors in the name of CB&B without
consulting Chuck and Bert. The partnership is:
a. bound by Bob’s actual implied authority to buy a car.
b. bound by Bob‘s apparent authority to buy a car.
c. bound by Bob’s ostensible authority to buy a car.
d. not bound because buying a car is outside the scope of the partnership business.
57. David, a partner in the Tri-State Express Mail delivery partnership, negligently drove his delivery truck onto the curb
during a rush-hour package delivery. Marlene was injured. Against whom can Marlene collect?
a. Only David
b. Only the other partners
c. Tri-State Express Mail Partnership or any partner
d. Only Tri-State Express Mail Partnership
58. Shannon has just become a partner in A & R Accounting Partnership. Her capital contribution is $10,000, which she
paid from her savings. Which of the following is correct with respect to Shannon’s liability for partnership
obligations?
a. Shannon has no liability for partnership debts that existed at the time of her admission as a partner.
b. Shannon is liable only to the extent of her capital contribution for partnership debts that occur after her
admission as a partner.
c. Shannon has unlimited personal liability for all partnership debts regardless of whether they were incurred
before or after she became a partner.
d. Shannon has unlimited personal liability for all partnership obligations that occur after she became a partner;
she has liability to the extent of her capital contribution for obligations that existed at the time she became a
partner.
59. Answer the following:
a. What is the liability of the partnership for contracts regarding partnership business?
Under the RUPA, what is the liability of the partnership for torts committed while a partner is
b. acting in the ordinary course of partnership business? How does this compare to the liability of a
principal under respondeat superior? Explain.
60. Answer the following:
a. Does a new partner in a firm have unlimited liability for debts existing when he joined the firm?
b. What should a prospective partner do to avoid unreasonable liability? Explain.
61. Under the UPA, in what circumstances do the remaining partners after dissolution have the right to continue the
partnership?
62. Identify the ways a partnership is dissolved by operation of law under the UPA. List the circumstances under which
a court will order a dissolution of a partnership.
63. Distinguish a dissociation from a dissolution. Explain the effect of each.