43. A partnership interest:
a. is personal property that may be assigned without dissolving the limited partnership.
b. may be assigned to a person who then becomes a partner.
c. may not be assigned without dissolving the limited partnership.
d. may not be assigned unless this right is specifically provided for in the partnership agreement.
44. While a limited partnership interest is transferable, the transferee will become a limited partner if:
a. the other members consent.
b. he has paid fair market value.
c. he has also donated services.
d. he has consented to the organizational character.
45. In which of the following ways is a general partner the same as a limited partner in a limited partnership?
a. Right of management and control
b. Liability to creditors of the partnership
c. Duty of care to the other partners and to the partnership
d. General partners differ from limited partners in all of these ways.
46. O’Houlihan and seven of his associates decide to form a limited partnership to operate an office complex. This
business must be formed in accordance with the:
a. common law of partnerships.
b. Uniform Commercial Code.
c. Federal Partnership Act.
d. None of these.
47. When a limited partnership dissolves and winding up commences:
a. a certificate of cancellation must be filed.
b. the state automatically cancels the certificate of limited partnership.
c. all general and limited partners can be involved in the winding up process.
d. a court must decree that the partnership is terminated.
48. The most popular and widely used unincorporated business form that provides limited liability for its members is the:
a. limited partnership.
b. limited liability partnership.
c. limited liability company.
d. limited liability limited partnership.
49. When were the last revisions made to the RULPA?
a. 1970
b. 1976
c. 1985
d. 2001
50. Which of the following need NOT be included in the certificate filed by a limited partnership under the RULPA?
a. The name of the limited partnership
b. The name and address of the agent for service of process
c. The names of each of the limited partners
d. The name and business address of each general partner
51. Which of the following is true with respect to a defective formation of a limited partnership?
a. The formation is defective if the certificate filed does not substantially meet statutory requirements.
b. It jeopardizes the limited liability of a limited partner.
c. The 1985 RULPA reduces the risk of a limited partner for defective formation.
d. All of these are correct.
52. A(n) is an unincorporated business association that provides limited liability to all of its owners and permits all
of its owners to participate in the management of the business.
a. limited partnership
b. limited liability company
c. general partnership
d. association of fiduciaries
53. Juan and Barbara form a limited liability company to conduct a particular business activity for profit. Which of the
following is not true?
a. The articles of organization must be filed in a designated state office.
b. No particular form of organization is required.
c. The company name must include the words “limited liability company” or “limited company” or the
abbreviation “LLC” or “LC.”
d. The contribution of a member may be a promissory note.
54. A foreign limited liability company:
a. is governed by the laws of the state in which it is organized.
b. is considered “foreign” in any state other than the one in which it was formed.
c. must register with the Secretary of State before transacting business in that state.
d. All of these are correct.
55. Which of the following is correct regarding the fiduciary duties in a limited partnership?
a. The general partner has a fiduciary duty to the limited partners.
b. Judicial authority seems to suggest that the limited partner has no fiduciary duty to the partnership.
c. The fiduciary duty of the general partner is extremely important to the interests of the limited partners,
because they have no ability to manage or control the partnership business.
d. All of these are correct.
56. Which of the following is untrue of a limited partnership?
a. Limited partnerships must be formed under a state statute.
b. Limited partners cannot ordinarily be named in the partnership business name.
c. Partners in limited partnerships must contribute services to the partnership.
d. Limited partners are generally not responsible for the debts of the partnership beyond their investment.
57. If Jack contributed $1,000 as a limited partner and signed a certificate of limited partnership, but the certificate was
filed in the wrong office:
a. Jack may avoid liability as a general partner if he withdraws from the business and quickly renounces future
profits.
b. Jack is not a partner at all and may withdraw his contribution.
c. Jack is a general partner for all purposes.
d. Jack may become a limited partner by quickly filing an affidavit stating he was not responsible for the
erroneous filing.
58. Kimberly contributed $50,000 as a limited partner in a limited partnership. Upon dissolution of the partnership, the
priorities in distributing the assets are to:
a. creditors of the partnership, partners and ex-partners in satisfaction of liabilities for unpaid distributions,
partners for return of contributions, and to partners for their partnership interests in the proportions in which
they share in distributions.
b. creditors of the partnership, partners for return of contributions, partners and ex–partners in satisfaction of
liabilities for unpaid distributions, and partners for their partnership interests in equal shares.
c. creditors of the partnership, partners for their partnership interests, partners for return of contributions to the
partnership, and ex–partners for liability for unpaid distributions.
d. partners for return of contributions, outside creditors of the partnership, partners for their partnership interests,
and partners and ex-partners for unpaid distributions.
59. A limited partner’s financial obligation to the partnership may be increased if the:
a. limited partner acts as agent for a competing partnership.
b. limited partner takes active part in the management of the partnership.
c. another limited partner is added to the partnership.
d. All of these are true.
60. Which of the following would have priority in distributing limited partnership assets?
a. Return of a general partner’s capital contribution
b. Repayment of a loan by a limited partner to the partnership
c. Return of a limited partner’s capital contribution
d. Payment of profits of the limited partner
61. Which of the following is true of limited liability companies?
a. Most states limit the duration of LLCs.
b. In most states, LLCs must file annual reports with the state.
c. The contribution of a member to a limited liability company must be cash or property.
d. A written operating agreement governing all of the relations between members is required in all states.
62. The new revision of the RULPA provides that, when a limited partnership is a limited liability limited partnership,:
a. a general partner is personally liable for a contractual obligation.
b. a general partner is personally liable for an obligation arising from a tort.
c. a contractual obligation or an obligation arising from a tort is solely the obligation of the limited partnership.
d. a contractual obligation or an obligation arising from a tort is the joint and several obligation of the limited
partnership and the general partners.
63. With regard to a limited partner’s capital contribution to the limited partnership:
a. the limited partner can only contribute cash.
b. a promise by a limited partner to contribute to the limited partnership is not enforceable unless it is in a signed
writing.
c. if the partner fails to make a promised capital contribution, the limited partnership has no power to hold the
partner liable.
d. All of these.
64. A general partnership that, by making the statutorily required filing, limits the liability of its partners for some or all of
the partnership’s obligations is a:
a. limited liability partnership.
b. limited liability company.
c. limited liability limited partnership.
d. limited partnership.
65. Which of the following is false with respect to the distribution of assets following dissolution of a limited liability
company?
a. Most statutes provide default rules for distributing the assets.
b. Generally, assets are distributed first to creditors, including members and managers who are creditors, except
with respect to liabilities or distributions.
c. Generally, assets are distributed to members and former members in satisfaction of liabilities for unpaid
distributions after distributions are made to creditors, including members and managers who are creditors.
d. Generally, assets are distributed first to creditors who are not members or managers.
66. The Elm Street Partnership is a limited partnership in which Arlo is the sole general partner and Barbara and Charles
are the limited partners. Now the partnership is being dissolved, and Barbara wants her money. The partnership
creditors include Charles for a $1,000 loan in addition to his capital contribution. In what order should the partnership
assets be distributed?
67. Discuss the duty of general partners to limited partners.
68. Answer the following:
(a) What is the liability of a limited partner who participates in the management or control of the
partnership?
(b) What activities can a limited partner perform without being considered to have taken part in
control of the business under the RULPA?
69. Answer the following:
(a) What is the definition of a foreign limited partnership?
(b) Does RULPA require foreign limited partnerships to be registered?
70. Describe an LLC and the interest or rights of its members.