Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

BUSINESS LAW > DISSOLUTION AND WINDING UP -CHAPTER 3 > Flashcards

DISSOLUTION AND WINDING UP -CHAPTER 3 Flashcards

You may prefer our related Brainscape-certified flashcards:
MBE flashcards MPRE flashcards Civil Procedure 1L flashcards
1
Q

It is the change in the relation of the partners due to any partner ceasing to be associated in the carrying on of the business.

A

Dissolution

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

TRUE OR FALSE. General rule - If the cause of the dissolution is death, act, or insolvency of a partner, the authority of a partner to bind ceases upon the consent of the partners

A

False. It ceases upon the knowledge of the dissolution.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

TRUE OR FALSE. In dissolution, the partnership is not yet terminated and does not continue to operate until winding up of the partnership affairs is completed.

A

FALSE. It is not yet terminated and it continues to operate for the sake of winding up partnership affairs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the causes of dissolution?

A
  1. Partnership agreement has not yet been violated.
  2. Contravention of the partnership agreement.
  3. Death of any partner
  4. Insolvency of any partner
  5. Unlawful act ceases for the partnership to continue to operate.
  6. Specific thing promised by the partner to contribute even the ownership to the partnership has perished before its delivery to the partnership.
  7. Decree of court.
  8. Civil interdiction of any partner.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the differences between winding up, termination, and dissolution?

A

Dissolution is the point of time where any partner ceases to carry on the operation of the business.

Winding up is the process of settling the partnership affairs.

Termination is the point of time when the partnership affairs are completed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the effects of dissolution?

A
  1. Partnership is not terminated
  2. Partnership continues for a limited purpose
  3. Transaction of a new business is prohibited.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

TRUE OR FALSE. A partnership has ceased to exist, the partnership has no more juridical personality nor capacity to sue and be sued.

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

TRUE OR FALSE. If the cause of the dissolution is not justified or no cause is given, the withdrawing partner is liable for the damages and he is compelled to stay in the partnership.

A

FALSE. He is not compelled to stay in the partnership.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

TRUE OR FALSE. If there is a specified term, but one partner causes its dissolution, the partnership may be dissolved.

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When the dissolution is caused by the act, death, insolvency of a partner, each partner is liable to other co-partners for his share in the liability made by the partner acting unless:

A
  1. Has knowledge about the dissolution.

2. Has knowledge about the death or insolvency of the partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Who may petition for the dissolution?

A
  1. Partners

2. Assignee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

When can the court decide the dissolution of the partnership or decree of a court of the dissolution? (Art 1831)

A
  1. Partner becomes insane or has an unsound mind.
  2. Does not have the capability to participate in the business or do his duties.
  3. Persistently breaching the contract of the partnership.
  4. only carried at loss.
  5. guilty of civil interdiction.
  6. other circumstances
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Dissolution terminates all authority of any partner to act for the partnership:

A
  • A. With respect to the partners
    1. when the dissolution is not by the act, insolvency, death, etc of a partner.
    2. When the dissolution is by such insolvency, act, death of a partner.
  • B. With respect to persons, not partners.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

TRUE OR FALSE. The liability of a partner by any transaction which would bind the partnership if dissolution had not taken place shall be satisfied out of the separate assets of the general partners when such before the dissolution (a) unknown as a partner to the person with whom the contract is made (b) so far unknown and inactive in PS affairs.

A

FALSE. Must be paid out from the partnership assets first.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

After the dissolution, a partner can bind the partnership except:

A
  1. Unlawful to still carry on the business
  2. partners become insolvent.
  3. Partners have no authority to wind up unless the extended credit had knowledge of the dissolution or had no extended credit but had knowledge of the dissolution.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

TRUE OR FALSE. After dissolution, a partner can bind the partnership. (Art 1834)

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

TRUE OR FALSE. If the dissolution is caused by an act of one of the parties, co-partners are not liable to contribute towards the liability as if no dissolution has happened, provided that there is no notice or he does not have knowledge of the dissolution. (Art 1833)

A

FALSE. He is liable.

18
Q

After the dissolution, a partner can bind the partnership:

A
  1. by the appropriate action for the winding up of the affairs.
  2. any transaction that will bind the partnership if there is no dissolution such as the transaction that extends credit with knowledge of dissolution and does not extend credit but with knowledge.

1834

19
Q

TRUE OR FALSE. The individual property of a deceased partner shall not be liable for all the obligations of the partnership while he was a partner but subject to the prior payment of his separate debts.

A

FALSE. The property of the deceased partner is liable and can be paid to the liabilities of the partnership when he was still in the partnership.

20
Q

TRUE OR FALSE. Partners who have not wrongfully dissolved the partnership or representative of the last surviving partner, not insolvent, unless otherwise agreed, has a right to wind up the partnership affairs, provided that any partner, legal representative, or assignee, may obtain winding up by the court. (Art 1836)

A

TRUE

21
Q

TRUE OR FALSE. If partners do not give notice to the persons extending credit which he is entitled to, they may not hold the retired partner for obligations made by the continuing partners after dissolution.

A

FALSE. HE IS LIABLE IF HE DID NOT GIVE NOTICE TO THE PERSONS EXTENDING THE CREDIT

22
Q

TRUE OR FALSE. The dissolution discharge the existing liability of any partner. (Art 1835)

A

FALSE. IT DOES NOT DISCHARGE THE PARTNER TO THEIR EXISTING LIABILITY

23
Q

TRUE OR FALSE. A partner is discharged from any existing liability upon dissolution of the partnership by an agreement between himself, the partnership creditor, and the person continuing the business.

A

TRUE

24
Q

Who may wind up partnership affairs?

A
  1. Partners designated by agreement
  2. All the partner that acted in good faith
  3. the legal representative of the last surviving partner or the assignee if there’s one.
25
Q

TRUE OR FALSE. Winding up the dissolved partnership may be done extrajudicially.

A

FALSE. IT IS DONE EXTRAJUDICIALLY (PARTNERS) AND JUDICIALLY (COURT)

26
Q

TRUE OR FALSE. Managing partner or winding-up partner has no right to sell the firm property even after the life of the partnership has expired.

A

FALSE. THEY HAVE A RIGHT.

27
Q

TRUE OR FALSE. Persons extending credit prior to dissolution are entitled to notice of the dissolution.

A

TRUE

28
Q

TRUE OR FALSE. When the dissolution is caused in any way, except in contravention of the agreement of the partners, each partner may have the partnership property applied to pay its liabilities, and the surplus of the partnership property unless otherwise stipulated.

A

TRUE

29
Q

A partner who has caused the

dissolution wrongfully shall have:

A
  1. If the business is not continued by the remaining partners, he is liable for the damages.
  2. If the business I continued, his value of share less the damages.
30
Q

Rights of the partner who have caused dissolution wrongfully are safeguarded by?

A
  1. The bond approved by the court

2. The payment of his interest at the time of the dissolution less the damages

31
Q

What are the rights of the partners who have not caused dissolution wrongfully?

A
  1. To have rights to the partnership property and receive the surplus excess from the partnership liabilities when the partnership property is sold.
  2. Right for the damages against the guilty partner.
  3. Right to continue the business
32
Q

TRUE OR FALSE. If one is induced by fraud or misrepresentation to become a partner, the contract can be rescinded.

A

FALSE. THE CONTRACT IS VOIDABLE.

33
Q

What are the rights of the partners who are entitled to rescind when the contract is rescinded on the ground of fraud or misrepresentation?

A
  1. To lien on or right to retention of the surplus after satisfying the partnership liabilities.
  2. To stand as an ordinary creditor to receive the amount he paid in satisfying the partnership liabilities.
  3. To be indemnified by the guilty partner.
34
Q

TRUE OR FALSE. General rule - when the partner retires from the partnership, he is not entitled to the payment of what may be due to him before the liquidation.

A

FALSE. A RETIRED PARTNER IS ENTITLED TO RECEIVE THE PAYMENT THAT IS DUE TO HIM AFTER THE LIQUIDATION

35
Q

What are the rules that shall be observed in settling the accounts between partners after dissolution unless otherwise stipulated?

A
  1. Partnership assets are made up of:
    a. Partnership property
    b. Partners’ contribution
  2. Partnership liabilities must be paid in the order of:
    a. Partnership creditors who are not partners
    b. partners except for their profits and capital,
    c. Partners in respect of their capital
    d. Partners in respect of their profits.
  3. The settlement of the partnership liabilities must be paid using the partnership property first then the partners’ contribution.
  4. The partners shall contribute the amount of the partnership liabilities.
  5. The assignee or persons authorized by the court may enforce the contribution
  6. The partner or his legal representative may enforce the contribution to the extent of his payment to the partnership liabilities.
  7. The individual properties of the deceased partner are liable for number 4.
  8. When the partnership property and individual property are in the hands of the court, the partnership creditors have rights to the PS property while individual creditors have rights to the individual property.
  9. When the partner or his estate becomes insolvent, his separate property shall be used to pay his individual creditor first then the partnership creditors and the partners as a way of contribution.
36
Q

TRUE OR FALSE. The right to an account of his interest shall accrue to any partner, or his legal representative against the winding-up partners, surviving partners, or persons continuing the business at the date of the winding-up, in the absence of the contrary.

A

FALSE. IT IS AT THE TIME OF THE DISSOLUTION.

37
Q

What are the rights of the retiring of properties of the deceased or retiring partner?

A
  1. The value of his interest in the partnership at the time of dissolution.
  2. To receive the amount of the value of his share in the partnership or the profits.
38
Q

TRUE OR FALSE. No liquidation is needed when there is a settlement as to what the retiring partner shall receive.

A

TRUE

39
Q

Where can the partner or the legal representative account for his interest?

A
  1. WINDING UP PARTNERS
  2. SURVIVING PARTNERS
  3. PARTNERS WHO CONTINUE THE BUSINESS
40
Q

What are the cases where the creditors of the dissolved partnership are the creditors of the continuing partners of the business:

A
  1. When a new partner or assignee, or legal representative, or 3rd person is admitted and continues the business without liquidation.
  2. When all but one partner retires or dies and assigns the interest to the partner or assignee and the business is continued without liquidation.
  3. When any partner retires or dies and the business is continued with his or the legal representative’s consent but without assigning of his right in the partnership.
  4. When all partners retire or die, the partners or their legal representative assigned their rights to the 3rd party who promised to pay for the partnership liabilities and continues the business.
  5. When the guilty partner wrongfully caused dissolution and the remaining partners continue the business without liquidation.
  6. When the expelled partner and the remaining partners continue the business without liquidation

BUSINESS LAW (17 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions