Chapter 4 LIMITED PARTNERSHIP 1855-1867

Question 1

TRUE OR FALSE. A limited partner’s interest is not assignable.

Answer 1

FALSE. Art 1859 states that a limited partner’s interest can be assigned.

Question 2

TRUE OR FALSE. An assignee who does not become a substituted limited partner has no right to require any information or account of the partnership transactions etc.

Answer 2

TRUE

Question 3

TRUE OR FALSE. The interest may not be redeemed with the separate property of any general partner but it may be redeemed with partnership property.

Answer 3

FALSE. The interest may be redeemed with the property of general partners but may not be redeemed with partnership property.

Question 4

TRUE OR FALSE. The writing to cancel a certificate may not be signed by all partners as long as there is a stipulation to such an event.

Answer 4

FALSE. The writing to cancel a certificate shall be signed by all members.

Question 5

TRUE OR FALSE. In order for the contribution of a limited partner to be returned, it is required that all the liabilities of the partnership have been paid or assets of the partnership are sufficient to pay all liabilities.

Answer 5

TRUE

Question 6

TRUE OR FALSE. A general rule: A limited partner whose surname appears in a partnership name is liable as a general partner to partnership creditors who extend their credit to the partnership without actual knowledge that he is not a general partner.

Answer 6

TRUE

Question 7

TRUE OR FALSE. A contributor, unless he is a general partner, is a proper party to proceedings by or against a partnership, except where the object is to enforce a limited partner’s right against or liability to the partnership. (Art 1866)

Answer 7

FALSE.

Question 8

TRUE OR FALSE. A general rule: A general partner may possess partnership property, or assign their rights in specific partnership property, for other than a partnership purpose.

Answer 8

FALSE. CONSENT OF ALL PARTNERS IS NEEDED.

Question 9

TRUE OR FALSE. On due application to a court of competent jurisdiction by any creditor of a limited partner, the court may charge the interest of the indebted limited partner with payment of the unsatisfied amount of such make all other orders, directions, and inquiries which the circumstances of the case may require. (Art 1862)

Answer 9

TRUE

Question 10

TRUE OR FALSE. An assignee who becomes a substituted limited partner has no right to require any information or account of the partnership transactions or to inspect the partnership books.

Answer 10

FALSE

Question 11

TRUE OR FALSE. The members may agree that one or more of the limited partners shall have priority over the other as to the return of their contributions, compensation by way of income, etc. (Art. 1855)

Answer 11

TRUE. Article 1855 states that in a partnership where there are several limited partners, the other members may agree to give other limited partners priority over the other, in terms of the return of their contribution, income, etc.

Question 12

TRUE OR FALSE. Even in the absence of the statement in the certificate or consent of all members, limited partners do not have the right to receive cash.

Answer 12

FALSE. In the absence of the statement or consent in the certificate, limited partners only have the right to receive cash in return for their contribution.

Question 13

What are the liabilities of the limited partners to partnership?

Answer 13

1. The difference between his actual contribution and the contribution he promised in the certificate.
2. For any unpaid amount of contribution which he agreed upon in the certificate.

Question 14

TRUE OR FALSE. A waiver or compromise allowed shall affect the right of a creditor of a partnership who extended credit or whose claim arose after the filing and before cancellation or amendment of the certificate, to enforce such liability.

Answer 14

FALSE. Art 1858 states that the liabilities of a limited partner can be waived or compromised but it shall not affect the right of the creditor.

Question 15

TRUE OR FALSE. The assignee of the limited partner becomes a substituted limited partner.

Answer 15

FALSE

Question 16

TRUE OR FALSE. The executor or administrator of a death limited partner shall be all the rights of a limited partner for the purpose of settling his estate. (Art 1861)

Answer 16

TRUE

Question 17

It is a person admitted to all the rights of a limited partner who has died or assigned his interest.

Answer 17

substitute limited partner

Question 18

Limited partners may have the partnership dissolved and its affairs wound up when:

Answer 18

1. He rightfully but unsuccessfully demands the return of his contribution.
2. The other partnership liabilities have not been paid and the property is insufficient to pay the limited partners

Question 19

Limited Partners are only allowed to receive any part of his contribution or profits when: (Art. 1857)

Answer 19

1. All liabilities except liabilities to general and limited partners have been paid or with remaining but the partnership has sufficient property to pay it.
2. There is the consent of all members unless the return of the contribution may be rightfully demanded.
3. The certificate is canceled or amended to set forth the withdrawal or reduction.

Question 20

Limited Partner may rightfully demand the return of his contribution when: (Art. 1857)

Answer 20

1. on the dissolution of a partnership
2. when the date specified in the certificate for the return has arrived.
3. after he has given 6 months’ notice in writing to other members, if there is no time specified or for dissolution.

Question 21

What are the reasons and purposes why the law allows the formation of a limited partnership?

Answer 21

1. Secure capital from others for one’s business and still retain control.
2. Share in profits of a business without the risk of personal liability.
3. Associate as partners with those having business skills.

Question 22

The liabilities of the limited partners can be waived by:

Answer 22

1. By the consent of all partners

2. Innocent 3rd party creditors must not be prejudiced.

Question 23

What is the right of the assignee who does not become a substituted limited partner?

Answer 23

1. He is only entitled to receive the share of the profits or other compensation by way of income.
2. If there is a stipulation, an assignee may acquire all rights of a substituted limited partner.
3. He becomes a substituted limited partner when the certificate is amended in accordance with 1865.

Question 24

TRUE OR FALSE. The partnership dissolves when the death of the only one remaining limited partner occurred.

Answer 24

TRUE

Question 25

The writing to amend the certificate shall: (Art.1865)

Answer 25

1. Conform to the requirements of 1844

2. Be signed and sworn to by all members

Question 26

TRUE OR FALSE. The certificate shall be canceled when the partnership is dissolved or all limited partners cease to carry. (Art. 1864)

Answer 26

TRUE

Question 27

A certificate is considered canceled or amended when there is filed for the record:

Answer 27

1. A writing to amend the certificate.

2. A certified copy of the order of the court in the event of an unjustified refusal of a partner to sign the writing.

Question 28

A certificate shall be amended when:

Answer 28

1. There is a change in the name of the partnership or the amount or character of the contribution of any limited partner.
2. A person is substituted as a limited partner.
3. Additional limited partner is admitted
4. Additional general partner is admitted
5. Death of general partner takes place or becomes insolvent, sentenced to civil interdiction and the business is continued.
6. There is a change in the character of the business
7. There is a false or erroneous statement in the certificate.
8. There is a change in the time as stated in the certificate for the dissolution or return of the contribution
9. A time is fixed for the dissolution or return of the contribution or no time having been specified in the certificate.
10. The members desire to make a change in any statement in the certificate.

Question 29

In settling the accounts after the dissolution the liabilities of the partnership shall be entitled to payment in the following order: (Art. 1863)

Answer 29

1. Creditors except for general and limited partners.
2. To limited partners in respect of their profits or other income
3. To limited partners in terms of their capital.
4. To general partners (other than capital and profits)
5. To general partners in respect of their profits
6. To general partners in respect to their capital.

Question 30

TRUE OR FALSE. The retirement, death, insolvency, insanity, or civil interdiction of a general partner dissolves the partnership unless the business is continued by the remaining partners. (Art 1860

Answer 30

TRUE

Question 31

TRUE OR FALSE. The substitution of the assignee as a limited partner releases the assignor from the liability to the partnership.

Answer 31

FALSE. it does not release the assignor from his liability to the partnership.

Question 32

TRUE OF FALSE. A limited partner does not hold a trustee.

Answer 32

FALSE. A limited partner holds a trustee for partnership.

Question 33

TRUE OR FALSE. Limited partners are not liable to the 3rd person and to the partnership. (Art. 1858)

Answer 33

FALSE. Limited partners may be liable to the partnership.

Question 34

TRUE OR FALSE. A limited partner may receive from the partnership his share of the profits or other compensation, in the same ground or time as the partnership creditors. (Art. 1856)

Answer 34

FALSE. Limited partners may only receive their share of the profits from the partnership assets which are in excess of all liabilities of the partnership except the liabilities to limited and general partners.