What is the required intent to form a partnership?

A
Specific intent to share profits
B
Specific intent to form a partnership
C
Correct Answer: Specific intent to carry on a for-profit business as co-owners
D
General intent to form a partnership
MULTIPLE CHOICE
Which of the following provisions in a partnership agreement is MOST likely to be
enforceable?
A
Correct Answer: A restriction on the transfer of partnership interests
B
Denial of a partner’s right to access partnership records
C
Waiver of a partner’s duty of care
D
Waiver of a partner’s personal liability to third parties
MULTIPLE CHOICE
Which of the following is LEAST likely to violate a partner’s fiduciary duty of loyalty to
the partnership?
A
Correct Answer: Charging the partnership reasonable interest for a loan made to the partnership
B
Lobbying for an interest adverse to the partnership’s best interests
C
Usurping a partnership opportunity
D
Running a side business in direct competition with the partnership

Which of the following statements regarding the division of profits and losses in a
partnership is FALSE?
A
The division of profits and losses is generally dictated or determined by agreement.
B
The division of profits and losses need not be the same.
C
When there is no partnership agreement regarding division of profits, profits are divided evenly.
D
Correct Answer: When there is no partnership agreement regarding division of losses, losses
are divided in accordance with capital contribution.
MULTIPLE CHOICE
Which of the following is LEAST LIKELY to be a valid and enforceable provision of a
partnership agreement?
A
Correct Answer: Partners may only access partnership records in person, not by using an
authorized agent.
B
All business matters must be approved by a majority of the partners.
C
All business matters must be approved unanimously by the partners.
D
All partners must be present at a meeting for an extraordinary business measure to be approved
at that meeting.
MULTIPLE CHOICE
Assuming that the partnership agreement contains no provisions for dissociation of a
partner, which of the following is LEAST LIKELY to result in the dissociation of a
partner?
A
An entity that is a partner dissolves.
B
A partner becomes bankrupt.
C
A partner notifies the partnership of his intent to withdraw from the partnership.
D
Correct Answer: A partner demands a distribution from the partnership.

Which of the following BEST states the rule for when partnerships are liable for a
partner’s tortious conduct.
A
A partnership is only liable in tort for a partner’s intentional torts.
B
A partnership is only liable in tort for a partner’s torts committed with explicit authority.
C
Correct Answer: A partnership is liable in tort for torts committed by partners acting within the
scope of their partnership.
D
A partnership is liable in tort for all of a partner’s intentional torts.
MULTIPLE CHOICE
Which of the following will NOT dissolve an at-will partnership?
A
A judicial determination of dissolution
B
The dissociation of a partner
C
An event that makes it unlawful to continue that has not been cured within 90 days
D
Correct Answer: The completion of the partnership’s primary undertaking
MULTIPLE CHOICE
Which of the following statements regarding limited partnerships is FALSE?
A
LP formation requires a formal filing with the state.
B
Correct Answer: No partners are personally liable for the obligations of the LP.
C
An LP requires at least one general partner and one limited partner.
D
The limited partnership comes into existence upon the filing of the certificate unless the
certificate specifies a later date.

MULTIPLE CHOICE
Which of the following is MOST LIKELY to constitute participation in the running of an
LP that would expose a limited partner to third-party liability?
A
Owning shares in the corporation serving as general partner
B
Winding up the partnership’s affairs upon dissolution
C
Attending partnership meetings
D
Correct Answer: Entering a contract on behalf of the partnership

ADD OTHER VIDEO QS ASSESS AT END

A partnership is an association of two or more persons to carry out a for-profit business as co-
owners. Is it possible to form a partnership between a corporation and another partnership? Why
or why not?
For the purpose of forming a partnership, a "person" is an individual, corporation, LLC,
trust, estate, government entity, or another partnership. Therefore, a partnership can be
formed between a partnership and a corporation. For example, Partnership X and
Corporation Y can form Partnership Z.

What kind of intent is necessary to form a partnership?

To form a partnership, there needs to be at least two "persons" with intent to carry on a
business for profit as co-owners. Specific intent is not required to form a partnership; the
agreement can be express or implied through conduct of the parties.

What six kinds of payments can be used to rebut the presumption that a partnership was intended
and created even when the payments appear to be the sharing of profits?
The sharing of profits from a business does not create a rebuttable presumption that the
arrangement is a partnership if the sharing is actually payment of:

(i) A debt (including installment payments);

(ii) Interest on a loan;
(iii) Rent;
(iv) Wages or other compensation paid to an employee or independent contractor;
(v) Goodwill payments stemming from the sale of a business (including installment
payments);
(vi) Annuities (or other retirement or health benefits) paid to a surviving spouse or
beneficiary, representative, or designee of a deceased or retired partner.

When will a person be characterized as a partner by estoppel and be liable to third parties?
When a person represents himself either orally, in writing, or implied by conduct as a
partner (or consents to or allows another to represent himself as a partner), he will be a
partner by estoppel, and he will be liable to third parties if the third party reasonably
relied on the representation and suffered damages as a result.

Generally, a person who is held out by another as a partner (without consent) is not under a duty
to deny that representation. When is it not a defense that the purported partner was unaware that
she was being represented as a partner?
It is not a defense that the purported partner was unaware that she had been held out as a
partner to a specific third party if the representation was made in a public manner.

What two fiduciary duties does a partner owe to the partnership and to the other partners?
A partner owes the partnership and the other partners the duty of loyalty and the duty of
care.

Is a written agreement required to form a partnership?

A written agreement is not required to form a partnership unless the agreement cannot be
performed within a year (because a partnership agreement is subject to the Statute of
Frauds).

When is a partner entitled to remuneration for services rendered to the partnership?

Absent an agreement to the contrary, a partner is not entitled to remuneration for services
rendered to the partnership.
Exceptions:
1. When the partner renders services in winding up
2. When the partners agree to pay a partner for her efforts

When must a partnership indemnify a partner who incurs a personal liability?

A partnership must indemnify partners that incur personal liabilities in the ordinary
course of conducting partnership business or in order to preserve the partnership's
business or property.

A partnership can be contractually bound when a partner acts with either actual or apparent
authority. How can a partnership escape liability when a partner acts with apparent authority?
For a partnership to escape liability, the third party generally must possess actual
knowledge of the partner's lack of actual authority.

What is the rule regarding use of partnership property?

A partner may use or possess partnership property only on behalf of the partnership. A
partner who uses partnership property for personal benefit must compensate the
partnership.
What rights does a partner have with respect to access to records and information of the
partnership's business?
Partners and their agents (including attorneys) have the right to access, inspect, and copy
partnership records and books. Upon demand, partners must furnish any and all
information affecting the partnership.

Does a partnership agreement govern a partnership or does RUPA?

Although a formal agreement is not required to create a partnership, if the partners have
entered into such an agreement, then the agreement, rather than RUPA, governs the
relations among the partners and between the partners and the partnership.

Under what circumstances might a judicial expulsion of a partner occur?

An expulsion of a partner by a court order may occur because the partner has either:

(i) engaged in misconduct that adversely and materially affected the partnership business;
(ii) willfully and persistently caused a material breach of the partnership agreement; or
(iii) breached a duty owed to the partnership or other partners.

When a partner dissociates from a partnership and that partner's interest is purchased by the
partnership, does the partner remain responsible for partnership obligations that occurred prior to
dissociation?
When a partnership purchases a dissociated partner’s interest, the partnership must
generally indemnify the partner against all partnership liabilities, whether the liabilities
were incurred before or after the dissociation. An exception exists for liabilities incurred by
the partnership due to the dissociated partner’s post-dissociation actions.

What does a statement of dissociation filed with the state do?

A statement of dissociation:

(i) Constitutes a limit on the dissociated partner's authority;

(ii) Gives third parties notice of the dissociation as of 90 days after the statement is filed;
and
(iii) Reduces the window of partnership liability for a dissociated partner's actions from
two years to 90 days.

Under the duty of loyalty, what is a partner required to refrain from doing?
Under the duty of loyalty, a partner is required to refrain from:

(i) Competing with the partnership;

(ii) Advancing an interest adverse to the partnership; and
(iii) Usurping a partnership opportunity (or otherwise using partnership property or
business to derive a personal benefit) without notifying the partnership.

What does a partner's duty of care entail?

Under the duty of care, a partner is required to refrain from engaging in:

(i) Grossly negligent or reckless conduct;

(ii) Intentional misconduct; or
(iii) Knowingly violating the law.

When is titled property in the name of an individual partner actually the property of the
partnership?
Property titled in the name of an individual partner is partnership property when the
instrument indicates either the named person’s capacity as a partner or the existence of the
partnership. [Property purchased with partnership assets or by using partnership credit to
obtain financing is presumed to be partnership property.]

How is a judgment for a third party against a partnership usually satisfied?

A partnership creditor generally must first exhaust the partnership's assets before levying
on a partner's personal assets.

When a partner dissociates from the partnership, but the partnership is not dissolved, what
happens to the partner's interest?
When a partner is dissociated and the partnership is not dissolved, the partnership must
buy out that partner's interest. The dissociated partner's interest is valued as if the
partnership business was wound up on the date of dissociation. (The partnership is valued
as the greater of the liquidation value of its assets or the value of the partnership as a going
concern.)

What are the procedures for converting a limited partnership into a partnership?
To convert a limited partnership into a partnership, all of the general and limited partners
must approve the conversion. Once approved, the limited partnership must cancel its
limited partnership certificate. The conversion takes effect upon the cancellation of that
certificate.

Which partners can make decisions as to matters in the ordinary course of business? Which
partners can make decisions as to matters outside the ordinary course of business?
Absent a partnership agreement to the contrary, all partners have equal rights in the
management and conduct of the partnership.

A majority of the partners can make a decision as to a matter in the ordinary course of
business, but a decision as to matters outside the ordinary course of business requires the
consent of all partners.

What happens when there is a partnership agreement that addresses the division of partnership
profits, but it is silent on the division of partnership losses?
In general, if there is no agreement or the agreement is silent as to the division of profits
and losses, each partner is entitled to an equal share of the partnership profits and losses.
When the agreement addresses only the division of profits, then losses are to be shared in
the same manner (same percentage as division of profits).
When is a partnership liable for a partner's tortious acts, including fraud?
A partnership is liable for a partner's tortious acts, including fraud, when the partner
commits the tortious acts in the ordinary course of the partnership business or with
partnership authority, whether actual or apparent. (The partnership will not be liable
when the fraudulent act occurs outside of the scope of partnership business.)

What powers does a person winding up the partnership business have?

- Dispose of and transfer partnership property
- Discharge partnership liabilities
- Preserve the business or property to maximize value
- Distribute assets to settle partners' accounts

What are the exceptions to first satisfying a judgment from partnership assets over a partner's
personal assets?
While generally a judgment against a partnership must first be satisfied by partnership
assets, exceptions exist when:

(i) The partnership is a debtor in bankruptcy;

(ii) The partner consented;
(iii) The partner is liable independently of the partnership (ex. partner was primary
tortfeasor);
(iv) The partnership's assets are clearly insufficient,
(v) Exhaustion of partnership assets would be excessively burdensome, or
(vi) It is otherwise equitable to do so

How is the partnership affected by the criminal act of one of the partners?
A partnership may be convicted of a crime for which the penalty is a fine levied on
partnership assets. Merely being a partner, however, is not sufficient to make a partner
criminally liable for the acts of another partner.

What is the exception to the general rule that a partner's knowledge or notice of fact is
immediately imputed to the partnership?
An exception to the general rule that a partner's knowledge or notice of fact is immediately
imputed to the partnership exists when a fraud on the partnership is committed by or with
the consent of the partner.

What are the procedures for converting a partnership into a limited partnership?
To convert a partnership into a limited partnership, all of the partners must approve the
conversion, and then articles of conversion must be filed with the state. The conversion
takes effect upon the filing of the articles of conversion, unless a later date is specified.

What types of events can trigger a partnership's dissolution?

The main causes of partnership dissolution are:

- By actions of partners
- By operation of law
- By judicial determination

How may a general partner withdraw from a limited partnership?

At any time, a general partner may withdraw from a limited partnership by giving written
notice to the other partners.

How may a person become a limited partner after the limited partnership is formed?
Once a limited partnership is created, a person may become a limited partner upon written
consent of all partners, unless the partnership agreement provides otherwise.

In a limited partnership, a general or limited partner may contribute a promise to pay cash, to
provide property, or to perform services. What happens when a partner is unable to perform an
enforceable promise for this kind of future contribution?
Generally, a partner is obligated to the limited partnership with respect to any written,
enforceable promise of a future contribution. When a partner is unable to perform the
promise due to death or disability, the partner or his estate must pay the cash value of the
promise.

Upon dissolution of a limited partnership, who may wind up the partnership's business?
The general partners who have not wrongfully dissolved the limited partnership may wind
up.

When there are not any such general partners, the limited partners may wind up the
partnership’s affairs.

Which partners may participate in winding up a partnership's business once it has dissolved?
Any partner who has not wrongfully dissociated from the partnership may participate in
winding up the partnership's business.

Does a partnership have to repay a loan that a partner makes in furtherance of the ordinary
course of partnership business?
A partnership is required to repay a loan or reimburse a partner for advances, including
interest from the date of the loan or advance.

What are the standing requirements for a limited partner to bring a derivative action on behalf of
the limited partnership?
To bring the action, the limited partner must be a partner at the time of bringing the action
as well as at the time of the wrongful transaction, unless the status of partner devolved on
him by operation of law or pursuant to the terms of the operating agreement.

Upon dissolution, how are partnership assets distributed?

Partnership assets are first applied to discharge partnership obligations to creditors,
including partners who are creditors, and then to partners.

What must the name of a limited liability partnership contain at the end?
A limited liability partnership's name must include one of the following at the end:

Registered Limited Liability Partnership; Limited Liability Partnership; R.L.L.P; L.L.P.;

RLLP; or LLP
What is a partner's liability for a tort committed by the limited liability partnership?
A partner in an LLP is not personally liable for an obligation of an LLP, including tortious
obligations, unless the partner also engaged in the conduct that caused the obligation.

What partnership roles are required in a limited partnership?

A limited partnership is required to have at least one general partner and at least one
limited partner.

What is the procedure for a limited partner to withdraw from a limited partnership?
Unless the written partnership agreement provides otherwise, a limited partner must give
six months’ prior written notice to each general partner before withdrawing.

A general partner in a limited partnership is personally liable to third parties and is typically
liable to the partnership, as well. What kind of partner would take on this kind of liability?
Although the general partner in a limited partnership has unlimited liability, the typical
general partner is an entity such as a corporation that has its own liability shield.

What is a general partner's accountability if he withdraws from a limited partnership in violation

of the partnership agreement?
If a general partner withdraws from a limited partnership in violation of the partnership
agreement, the general partner will be liable for damages caused by the breach of his
agreement.

What rights to distribution does a partner have in a limited partnership if those rights are not
specified in the partnership agreement?
If a partner's rights to distribution are not specified in a limited partnership's agreement,
then a partner does not have a right to receive a distribution before withdrawal or
dissolution of the partnership. [Upon withdrawal or dissolution, the partner has the right
to receive a distribution of the fair value of his interest, as measured on the date of
withdrawal.]

Can a partnership continue doing business after dissolution but prior to winding up?
Yes, the partnership may resume carrying on its business as if dissolution had not occurred
if all partners, including any properly dissociated partners, agree to waive rights to
terminate the partnership.

What must a certificate of limited partnership contain?

A certificate of limited partnership must contain the following:

- Name of the limited partnership

- In-state address
- Name and address of in-state agent for service of process
- Name and business address of each general partner
- Statement about the duration of the limited partnership
- Signatures of all general partners

When might a limited partner be personally liable for partnership obligations?

A limited partner is generally not personally liable for the obligations of a limited
partnership unless the limited partner:

(i) also serves as a general partner;

(ii) participates in the control of the business; or
(iii) allows their name to be used in the name of the limited partnership (liable then to a
creditor who extends credit, unless the creditor had actual knowledge that the limited
partner was not a general partner)

What happens when there is only one general partner in a limited partnership and that general
partner withdraws?
The withdrawal of a general partner or other occurrence in which the general partner
ceases to be a general partner terminates the partnership, unless all partners agree in
writing to carry on the business and appoint a general partner within 90 days.