BUSINESS LAWS

The Law on Partnership

PART 1

1. Partner who contributes money and / or property, except

a. General b. Capitalist c. Industrial d. Managing

2. Partner who contributes industry or labor

a. General b. Capitalist c. Industrial d. Managing

3. Partner who contributes both capital and industry

a. General b. limited c. Managing d. Capitalist-industrial

4. Partner who is liable beyond the extent of his contribution

a. General b. Capitalist c. Industrial d. Silent

5. Partner who is liable only to the extent of his contribution

a. Limited b. General c. Industrial d. Managing

6. Partner who manage actively the firm’s affairs

a. Silent b. Liquidating c. Managing d. Dormant

7. Partner who does not participate in the management though he shares in the profits or
losses
a. Liquidating b. Nominal c. Ostensible d. Silent

8. Partner who winds up the affairs of the firm after it has been dissolved
a. Liquidating b. Managing c. Industrial d. Capitalist

9. Partner whose connection with the firm is known to the public

a. Ostensible b. Secret c. Silent d. Nominal

10. Partner whose connection with the firm is concealed or kept a secret
a. Ostensible b. Secret c. Silent d. Nominal

11. Partner who is both a secret and silent partner

a. Nominal b. Ostensible c. Limited d. Dormant

12. Partner who is not really a partner but who may become liable as such insofar as third
persons are concerned
a. Nominal b. Ostensible c. Silent d. Secret

13. May contributed money, property or industry to the common fund

a. Limited partner c. Both limited and general partner
b. General partner d. Dormant partner

14. May be required to make additional contribution in case of imminent loss:

a. Capitalist partner
b. Limited partner
c. Industrial partner
d. Dormant partner

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15. A. F was a bookkeeper in a partnership named “GH”, with a yearly salary amounting to
5% of the net profits for the year. F, however had no vote at all in the management of the
business. He is a partner in GH.
B. Unless there is a stipulation to the contrary, the partners shall contribute equal shares to
the capital of the partnership.
a. both statement are true
b. both statement are false
c. only the first is true
d. only the second is true

16. A. Co-ownership or co-possession does not in itself establish a partnership, except when
such co-owners or co-possession share in the profits made by the use of the property.
B. The sharing gross returns does not of itself established a partnership, except when the
persons sharing them have a joint or common right or interest in any property from which the
returns are derived.
a. both statement are true
b. both statement are false
c. only the first is true
d. only the second is true

17. A. The receipt by a person of a share of the profits of a business is conclusive evidence
that he is a partner in the business
B. A partnership of all present property is where the partner contribute all the property
which actually belong to them to a common fund, with the intention of dividing the same
among themselves, as well as all the profits which they may acquire therewith.
a. both statement are true
b. both statement are false
c. only the first is true
d. only the second is true

18. A. In a universal partnership of all present property, the property which belong to each of
the partners at the time of constitution of the partnership becomes a common fund of all
partners and all profits which they may acquired therewith. A stipulation for the common
enjoyment of any profits may also be made. But properties which they may acquired through
inheritance, legacy, or donation cannot be included in such stipulation, except the fruits
thereof.
B. The universal partnership of profits comprises all that the partners may acquire by
industry or work during the existence of the partnership. Movable or immovable property
which each may possess at the time of the celebration of the contract shall continue to pertain
exclusively to each, only the usufruct passing to the partnership.
a. both statement are true
b. both statement are false
c. only the first is true
d. only the second is true

19. A. Every partner may associate another person with him in his share, but the associated
shall not be admitted in the partnership without the consent of all the other partners, even if
the partner having an associate should be a manager.
B. Articles of universal partnership, entered into without specification of its nature, only
constitute universal partnership of profits.
a. both statement are true
b. both statement are false

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 c. only the first is true
d. only the second is true

PART II.

1. Which of the following is not correct?

a. A- cash (Ltd.); B – cash (Gen.); C – service (Gen)
b. A- property (Ltd.); B – cash (Gen.); C – service (Gen)
c. A- service (Ltd.); B – cash (Gen.); C – service (Gen)
d. A- cash (Ltd.); B – property (Gen.); C – service (Gen)

2. A and B orally agreed to form a partnership two years from today, each one to contribute
P10, 000.00. At the arrival of the said date, if one refuses to go ahead with the agreement,
can the other enforce the agreement?
a. Yes, since the agreement is to be enforced after one year from the making thereof, the
same should be in writing to be enforceable.
b. Yes, because the prior agreement was voluntarily made.
c. Yes, because the contract of partnership is not governed by the Statute of Frauds.
d. No, because the agreement was merely oral.

3. If a partner is insolvent, the first in the order of preference in the distribution of his assets
is:
a. Partnership creditors
b. Partner’s contribution to the partnership
c. Separate creditors of the debtor
d. Pro-rata between the separate creditors and the partnership creditors.

4. The following except one, are common characteristics of partnership and corporation.
Which is the exception?
a. The individuals composing both organizations have little voice in the conduct of the
business.
b. Both can only act through agents.
c. Both are business organizations composed of a number of individuals.
d. Both have juridical personalities separate and distinct from that of the members
composing it.

5. Which of the following is not a requisite prescribed by law in order that the partnership
may be held liable to a third party for the acts of one of the partners.
a. The partners bind the partnership by acquiescence for obligations he may have
contracted in good faith.
b. The partner must have the authority to bind the partnership.
c. The contract must be in the name of the partnership or for its own account.
d. The partner must act on behalf of the partnership.

6. X, Y and Z are partners in Ace & Co. W represented himself as a partner in the said
partnership to A, who on the faith of such representation, granted P1M loan to the
partnership. Assuming only X and Y consented to such representation, who shall be liable
to A?
a. Since the partnership benefited from the credit extended by A, all partners X, Y and Z
are liable.
b. Only X, Y and W are partners by estoppel and are liable pro rata.
c. Since the loan was extended to the partnership, all the partners and W are liable.
d. Only W who made the representation shall be liable.

7. A, B, and C are general partners in the merchandising firm. Having contributed equal
amounts to the capital, they also agreed on equal distribution of whatever profit is realized
per fiscal period. After two years of operation however, C conveys her whole interest in
the partnership to D, without knowledge and consent of A and B. Is the partnership

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 dissolved?
a. The partnership is not dissolved because the conveyance of a partner’s interest in the
partnership does not of itself dissolve the partnership.
b. The partnership is not dissolved because the assignment made by C of his whole
interest was without the knowledge and consent of A and B.
c. The partnership was dissolved because the assignee, D automatically becomes a new
partner and strictly speaking, there is a new entity.
d. It is dissolved because C has ceased to be a partner because of the assignment of his
whole interest to D.

8. Based on the preceding facts:

a. D can participate in the management of the partnership.
b. D cannot inspect the books nor copy them for any information on the partnership
affairs as a partner can.
c. C has ceased to have the rights to use the partnership property.
d. C cannot take part in the control of the business anymore.

9. Still based on the same facts:

a. If A and B want to dissolve the partnership, C as a partner need not consent thereto
because he had assigned his interest to D.
b. D may ask the court for its dissolution being the assignee of C’s interest in the
partnership.
c. A, B and D may dissolve the partnership even without the consent of C.
d. A, B and C cannot dissolve the partnership without the consent of D.

10. Spouses A and B formed a limited partnership to engage in real estate business and A
contributed P1M only. Is the partnership between the spouses valid?
a. The partnership is not valid because the spouses cannot enter into a limited
partnership.
b. The partnership is valid because spouses can enter into a partnership, limited or
general, universal or particular.
c. The partnership is not valid because spouses cannot enter into any kind of partnership
for business except conjugal partnership.
d. The partnership is valid because spouses are prohibited to enter into a universal
partnership only.

11. ••A corporation cannot enter into a partnership contract with natural person but with a
juridical person it can.
••A general partner is always the capitalist in a limited partnership.
a. Both statements are false
b. First is true, second is false
c. Both are true
d. First is false, second is true