09. STUDY MANUAL questions on Sole Traders and Parterhsips.

Question 1

T/F: In England and Wales, an unlimited partnership has no existence distinct from the partners.

Answer 1

TRUE

Question 2

T/F: Partners share equally in the venture’s profits.

Answer 2

TRUE

under the Partnership Act (1890)

although this can be modified by a Partnership Agreement

Question 3

In the absence of a provision in a Partnership Agreement, the Partnership Act (1890) requires that the introduction of a new partner requires …

Answer 3

the consent of all existing partners

Question 4

The Partnership Act (1890) provides that no majority of partners can expel a partner unless …

Answer 4

the power to do so has been conferred by express agreement

Question 5

If a Partnership Agreement confers the power on partners to expel a partner this must only be exercised in …

Answer 5

good faith

Question 6

A third party (does / does not) need to enquire whether a partner is acting beyond their auhority when entering into a contract with them.

Answer 6

does not

Question 7

An ‘ultra vires’ act by a partner (is / is not) nevertheless binding upon partner, the firm, and the other partners.

Answer 7

is

Question 8

An ‘ultra vires’ act by a partner nevertheless … upon the partner, the firm, and the other partners.

Answer 8

binding

Question 9

An ‘ultra vires’ act by a partner nevertheless binding upon the …

Answer 9

partner, the firm, and the other partners

Question 10

A contract entered into by a partner (can / can never) be binding upon former partners.

Answer 10

can

Question 11

An ‘ultra vires’ act by a partner is only NON binding if the third party has recieved … of their limited power to bind the firm.

Answer 11

notice

Question 12

If a third party has not received notice of the retirement of a partner they (are / are not) entitled to assume that the partner is still a member of the partnership.

Answer 12

are

Question 13

If a third party has not received … of the retirement of a partner they are entitled to assume that the partner is still a member of the partnership.

Answer 13

notice

Question 14

T/F: a partnership has a separate legal personality and therefore limited liability.

Answer 14

FALSE

Question 15

T/F: a company continues in excistence even if its participants change.

Answer 15

TRUE

perpetual succession

Question 16

T/F: a company’s liability is limited.

Answer 16

FALSE

the liability of its MEMBERS may be limited. However the company bears full responsibility for its debts.

Question 17

T/F: A partnership is not subject to any legislative regulation.

Answer 17

FALSE

the Partnership Act (1890) is one piece of legislation affecting partnershps.

Question 18

T/F: there is a maximum number of members in a LLP.

Answer 18

FALSE

Question 19

T/F: A LLP requires a general partner.

Answer 19

FALSE

a limited partnership under the 1907 Act does.

Question 20

T/F: a LLP is normally required to have its accounts audited.

Answer 20

TRUE

Question 21

T/F: the members of an LLP are required to produce a ‘directors’ report.

Answer 21

FALSE

Question 22

To form an LLP, an incorporation document signed by at least … subscribers must be sent to the registrar.

Answer 22

two

Question 23

To form an LLP, an incorporation document signed by at least two subscribers must be sent to the …

Answer 23

registrar

Question 24

The incorporation document for an LLP must give the names and addresses of at least … ‘designated ‘members.

Answer 24

two

Question 25

T/F: details of the assets of an LLP must be given on registration.

Answer 25

FALSE

Question 26

T/F: a statement detailing the contribution that each member is committed to make upon winding up must be submitted as part of the process of registering an LLP.

Answer 26

FALSE

Question 27

What is the statutory definition of partnership?

Answer 27

‘Partnership is the relationship which subsists between two or more persons carrying on a business in common with a view of profit.’ S1 Parnership Act (1890).

Question 28

T/F: A partnership can exist when parties enter into a single transaction rather than a series of transactions.

Answer 28

TRUE

Indeed a court may deem that such a ‘joint venture’ is a partnership even if the ‘partners’ did not indend it to be so.

Question 29

Assets beneficially owned by the partners (the firm) are known as …

Answer 29

partnership property

Question 30

T/F: Partnership property must be owned in equal shares.

Answer 30

FALSE

Question 31

A partners’ acts bind themselves, the firm and the other partners provided that …

Answer 31

the third party does not know that they lack authority and knows or believes them to be a partner.

Question 32

T/F: An LLP has a legal personality separate from that of its members.

Answer 32

TRUE

S1. Limited Liability Partnerships Act (2000).

Question 33

T/F: an incorporation document for an LLP must state its trading address.

Answer 33

FALSE

Only the address of its registered office is required.

Question 34

T/F: an incorporation document for an LLP must state the tax status of its members.

Answer 34

FALSE

Question 35

T/F: an incorporation document for an LLP must state at least two members which are to be its ‘designated members.’

Answer 35

TRUE

Although it may state that all member who are from time to time members of the LLP are designated members.

Question 36

T/F: the members of an LLP are agents of the LLP and each other.

Answer 36

FALSE

Unlike a general or unlimited partnership, the members are NOT agents of each other.

Question 37

T/F: an LLP must deliver audited accounts to the registrar each year.

Answer 37

TRUE

although similar exemptions apply to those for Limited Companies.

Question 38

T/F: an LLP must deliver a Confirmation Statement to the registrar each year.

Answer 38

TRUE

Question 39

T/F: the members of an LLP may propose a voluntary arrangment.

Answer 39

TRUE

Question 40

The insolvency of an LLP is dealt with in a similar way as that of a …

Answer 40

Limited Company

Question 41

The insolvency of a general or unlimited partnership is dealt with in a similar way as that of an …

Answer 41

individual