ch. 37 Flashcards
Generally, the law recognizes a partnership as an independent entity.
False
Shih was the manager of Thai Bistro, a restaurant specializing in Southeast Asian foods. Shih opened a bank account in Thai Bistro’s name, signing the account signature card as “owner.” Umeko, who was often at Thai Bistro and had free access to its office, told others that she was “an owner” and “a partner.” She also opened a bank account in Thai Bistro’s name, and signed the account signature card as “owner.” Shih told Vijay, the owner of Wong Noodles Inc., that Umeko was a member of a partnership that owned Thai Bistro. On this basis, Wong Noodles delivered its goods to Thai Bistro on credit. In fact, Thai Bistro was owned by a corporation. When the unpaid account totaled more than $10,000, Wong Noodles filed a suit against Umeko to collect. On what basis might Umeko be liable for the debt?
Umeko might be held liable for these charges through “partnership by estoppel”. Vijay should address the false representation provided when filing the law suit.
A partner who withdraws from a partnership for a term before its expiration date can be held liable for any resulting losses.
True
In a limited partnership, a general partner assumes no liability for partnership debts beyond the amount of capital contributed.
False
Vern is one of three partners in Waffles Food Truck. Concerning all aspects of the partnership business, Vern is entitled to information
on a complete basis.
Beth and Connie do business as Dig Excavators. In acting on the firm’s behalf, Beth makes an honest error in underestimating the cost of a certain project. In this situation, to her firm, Beth is liable for a breach of the duty of
none of the choices.
Del and Efron want to form a limited partnership to do general business bookkeeping with an emphasis on tax accounting. In most states, a limited partnership will be created when Del and Efron
file a certificate of limited partnership.
A single person carrying on a business for profit, with control over its operation, can constitute a partnership.
False
Cal, Dex, and Erin agree to be partners in Fajitas, a food cart outfit, splitting the profits equally. Cal contributes 65 percent of the capital. When Fajitas is dissolved, its liabilities are greater than its assets. The losses are paid by
all of the partners in proportion to their shares of the profits.
A court can order the dissolution of a partnership if the business can only be operated at a loss.
True
Dean, a partner in Equipment Sales, applies for a loan with Farmers Bank allegedly on Equipment’s behalf but without the authorization of the other partners. The bank knows that Dean is not authorized to take out the loan. Liability in the event of default will be imposed on
Dean.
Stef and Tyler agree in an exchange of e-mail to form a partnership to buy and sell real property. Their partnership agreement is legally binding
without more.
In many instances, agency law governs the relationships among partners.
True
A partner can put his or her self-interest before the interest of the partnership without violating any fiduciary duty owed to the firm.
False
A partner can bring an action for an accounting during the term of the partnership and the firm’s property can be sold to satisfy the partner’s personal debts.
False
Dissociation occurs when a partner ceases to be associated in the carrying on of the partnership business.
True
A partner always has the right to dissociate from the partnership.
False
Resort Gift Shop is operated as a partnership, with five partners. Shan has a one-third interest in the firm. Each of the other partners has a one-sixth interest. Thieu is the senior partner. With respect to management decisions
a majority of the partners must agree.
When there is no formal, written partnership agreement, an agreement to form a partnership is unenforceable.
False
A partnership agreement must apportion profits and losses in the same ratio as the partners’ investment of time and capital in the business.
False
Rosa is a partner in Sugar & Spice, a partnership consisting of the owners of a bakery. Sugar & Spice incurs debt for new ovens. With respect to this debt, Rosa is
personally liable to the full extent.
Sol and Thom agree to form a partnership to sell real property. To be enforceable under the Statute of Frauds, their agreement must be
in writing.
Kim and Lyle are partners in K&L Sales, which exports technical equipment. If Congress declares that the equipment can no longer be exported, K&L
dissolves immediately unless the partners change its business.
One of the essential elements of a partnership is an equal right to be involved in the management of the business.
True
