Law on Partnerships Flashcards by Stussy Aubrey

What si an essential difference between a partnership and a corporation?
A. A partnership is created by voluntary agreement of the partners, whereas a corporation is always
created by some express legislative authority either in the form of a special law or of a general law.
B. Stockholders are usually liable to corporation’s creditors not only to the extent of their contribution but even with
their own private property, whereas the partners, after they have paid for their contributions, are not subject ot any further liability, unless otherwise provided by law.
C. The third person to whom a stockholder has transferred his interest does not become a stockholder without the consent of all other stockholders, whereas the third person to whom a partner has transferred his interest becomes automatically a partner even without the consent of the other partners.
D. The death or bankruptcy of a stockholder usually causes the dissolution of the corporation, whereas the death or bankruptcy of a partner does not result in such dissolution.

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First Statement: As a general rule, the partners are the agents of the partnership; hence, acts of the partners orf eht account of the partnership are binding not only on the partnership but also on the partners.
Second Statement: Whatever acts the stockholders might execute for the account of the corporation, either individually or collectively, are not binding on the corporation.
A. Only the first statement is true.
B. Only the second statement is true.
C. Both statements are true.
D. None of the statements is true

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As to object, a partnership may be:
A. General or limited
B. Universal or particular
C. Capitalist or industrial
D. Managing or silent

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It refers to a partnership which comprises al that the partners may acquire by their industry or work during the existence of the partnership.
A. Universal partnership of profits
B. Particular partnership of profits
C. Partnership of all present property
D. Partnership of all present profits

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It refers to partners who can be held liable for partnership obligations even to the extent of their privateproperty.
A . General
B. Limited
C. Capitalist
D. Industrial

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it refers to partners who contribute only their skill or industry to the common fund.
A. Capitalist
B. Managing
C. Silent
D. Industrial

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It refers to partners who manage or administer partnership affairs.
A. Silent
B. Ostensible
C. Secret
D. Managing

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It refers to partners whose connection with the partnership is not known.
A . Secret
B. Ostensible
C. Managing
D. Silent

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It refers to partners who represent themselves, or consent to another or others representing them to anyone as partners either in an existing partnership or in one that is fictitious or apparent.
A. Partners by estoppel
B. Secret
C. Ostensible
D. Managing

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First Statement: If the partnership is general, it may be constituted in any form, except where immovable property or real rights are contributed to the common fund, in which case a public instrument, to which is attached an inventory of said property, signed by any of the partners, shall be necessary for validity.
Second Statement: If the general partnership has a capital of P3,000 or more, ti must appear ni a public instrument, which shall be recorded in the office of the SEC. However, it is not necessary for its validity.

A. Only the first statement is true.
B. Only the second statement is true
C. Both statements are true.
D. None of the statements is true.

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First Statement: If the partnership is limited, it is required that the contracting parties, in addition to the formalities prescribed for the organization of a general partnership, shall execute a certificate of limited partnership which must be recorded in the office of the SEC.
Second Statement: The formalities for a limited partnership must be complied with, otherwise, the partnership is not limited but general.

A. Only the first statement is true.
B. Only the second statement is true.
C. Both statements are true.
D. None of the statements is true.

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If there is agreement only with respect to the profits, how shall the losses be distributed?
A. Same proportion as their share in the capital
B. Same proportion as their share in the profits
C. Partners shall meet and determine the shares
D. No loss shall be distributed

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If there is no agreement as to the distribution of profits and losses, how are the profits distributed to the capitalist partner?
A. Just and equitable under the circumstances
B. No entitlement
C. Profits go to the reserve fund.
D. In proportion to what he may have contributed to the common fund

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If there is no agreement as to the distribution of profits and losses, how shall the losses be distributed to the industrial partner?
A. In proportion to what he may have contributed to the common fund
B. Just and equitable under the circumstances
C. No liability
D. Profits go to the reserve fund.

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What is the status of an agreement whereby one or more partners shall not share in the profits and losses?
A. Void
B. Valid
C. Voidable
D. Unenforceable

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When can an industrial partner engage in business for himself?
A. When the partnership expressly permits him to do so.
B. When the partnership impliedly permits him to do so.
C. When the industrial partner still has available time to engage ni another business
D. When the industrial partner engages in another business with one of the capitalist partners.

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Can a capitalist partner engage in a business similar to the kind of business in which the partnership is engaged?
A. Yes, if he has extra available capital.
B. Yes, if he brings with him another capitalist partner.
C. No, unless there is a stipulation to the contrary.
D. Never, as the prohibition is absolute.

Jean and John are partners in a certain business, Jean being the managing partner. Ruth owes Jean P50,000 and the partnership P100,000, and both credits are demandable. Ruth pays Jean P30,000 and Jean issues a receiptin her name. How much is Jean entitled to apply to her credit?
A. P10,000
B. P20,000
C. P30,000
D. Nothing

Jean and John are partners in a certain business, Jean being the managing partner. Ruth owes Jean P50,000 and the partnership P100,000, and both credits are demandable. Ruth pays Jean P30,000 and Jean issues a receipt ni the partnership’s name. How much should Jean apply to the partnership’s credit?
A. Nothing
В. P30,000
C. P20,000
D. P10,000

Jean and John are partners in a certain business, Jean being the managing partner. Ruth owes Jean P50,000 (more onerous) and the partnership P100,000 and both credits are demandable. Ruth pays Jean P30,000 and Jean issues a receipt in the partnership’s name. How much should Jean apply to the partnership’s credit?
A. Nothing
B. P30,000
C. P20,000
D. P10,000

The management of the partnership may be vested (1) in the articles of the partnership/or (2) after the partnership had already been constituted
A. 1 only
B. 2 only
C. Neither of 2
D. Either of 2

If there is no agreement on who will manage the partnership, it is vested in
A. The partner with highest contribution
B. The partners with majority stake
C. All of the partners
D. The oldest partner

Ruth, Carlo, Maricel, and Dustin organized a general partnership, with Ruth and Carlo as industrial partners and Maricel, who contributed P30,000 to the common fund, and Dustin, who contributed P10,000 to the common fund as a capitalist partners. Ruth and Carlo were both appointed managing partners without any specification of their respective duties. When the firm commenced business operations, the 2 appointed Olive as accountant of the firm. A year later, Ruth decided to dismiss Olive, but this was opposed by Carlo. How can the conflict between Ruth and Carlo be resolved?

A. Dustin and Maricel will decide
B. Ruth and Carlo will decide
C. Maricel will decide
D. Ruth prevails

Gem, Mondy, and Maddie formed a general partnership with the following contributions to the common fund: Gem, P20,000; Mondy, P40,000; Maddie, P60,000. There was agreement on the division of profits and apportionment of losses proportionate to their capital contributions. After some years of business operations, the assets of the partnership dwindled to P30,000, so the partners agreed to stop their business. The partnership is indebted to Sansa for a loan of P120,000. Under the circumstances, how much can Sansa collect from the partners?

A. Gem, P15,000; Mondy, P30,000; Maddy, P45,000
B. Gem, P20,000; Mondy, P40,000; Maddy, P60,000
C. Gem, P30,000; Mondy, P30,000; Maddy, P30,000
D. Gem, P40,000; Mondy, P40,000; Maddy, P40,000

Ruth, Carlo, Maricel, and Dustin organized a general partnership, with Ruth and Carlo as industrial partners and Maricel, who contributed P30,000 to the common fund, and Dustin, who contributed P10,000 to the common fund as capitalist partners. Nobody was appointed managing partner. When the firm commenced business operations, Ruth and Carlo appointed Olive as accountant of the firm. A year later, Ruth decided to dismiss Olive, but this was opposed by Carlo. How can the conflict between Ruth and Carlo be resolved in case of a tie? A. Majority of the partners will decide B. Dustin and Maricel will decide C. Maricel will decide D. Ruth prevails

Rosh, Juju, and Anna formed a partnership where Rosh's participation is 40%; Juju, 40%; and Anna, 20%. Rosh and Juju would supply the entire capital. Anna would contribute her management expertise and be manager for the first 5 years without compensation. They also agreed that Anna shall not liable for losses. Unfortunately, the partnership became bankrupt. Who can remove Anna as manager? A. Rosh B. Juju C. None D. The partners with controlling interest

Rosh, Juju, and Anna formed a partnership where Rosh's participation is 40%; Juju, 40%; and Anna, 20%. Rosh and Juju would supply the entire capital. Anna would contribute her management expertise and be manager for the first 5 years without compensation. They also agreed that Anna shall not liable for losses. Unfortunately, the partnership became bankrupt. What is the status of the agreement exempting Anna from losses? A. Valid B. Void C. Voidable D. Unenforceable

It refers to that moment when partnership affairs are wound up A. Winding up B. Dissolution C. Termination D. Liquidation

When does the right of a person to demand an accounting of the partnership business prescribes? A. 4 years upon the dissolution of the partnership when the final accounting is done. B. 4 years upon the dissolution of the partnership before the final accounting is done. C. 5 years upon the dissolution of the partnership when the final accounting is done D. 5 years upon the dissolution of the partnership before the final accounting is done

Distinguish between a general partner and a limited partner A. A general partner can be held personally liable for partnership obligations after all the assets of the partnership have been exhausted, where a limited partner cannot be held liable B. A general partner may not participate in the management of the partnership whereas a limited partner may C. A general partner may contribute money or other property only to the common fund, whereas a limited partner may contribute money, property, or industry D. The name of a general partner may not appear in the firm name, whereas that of a limited partner may

First Statement: The interest of a limited partner is assignable Second Statement: An assignee of a limited partner has the right to become a substituted limited partner if all the members consent thereto or if the assignor, being thereunto empowered by the certificate limited partnership, gives the assignee that right. A. Only first statement is true B. Only second statement is true C. Both statements are true D. None of the statements is true

If the partnership is a general partnership, the order of payment is as follows, those owing to: (1) creditors other than partners, (2) partners other than for capital and profits, (3) partners in respect of capital, and (4) partners in respect of profits. A. 1, 2, 3, 4 B. 1, 2, 4, 3 C. 1,3, 2, 4 D. 1, 3, 4, 2

If the partnership is a limited partnership, the order of payment is as follows, those to: (1) creditors, in the order of priority as provided by law, except those to limited partners on account of their contributions, andto general partners, (2) limited partners in respect to their share of the profits and other compensation by way of income on their contributions, (3) limited partners in respect to the capital of their contributions, (4) general partners other than for capital and profits, (5) general partners ni respect to profits, and (6) general partners in respect to capital. A. 1, 2, 3, 4, 5, 6 B. 1, 2, 3, 4, 6, 5 C. 1, 2, ,4 3, 5, 6 D. 1, 2, 3, 5, 4,

Dissolution is caused when a specific thing, which had promised to contribute to the partnership, perishes A. Upon the delivery B. Before the delivery C. After the delivery D. After the partnership acquires ownership thereof

On application by or for a partner, the court shall decree a dissolution whenever: A. A partner becomes in any other way capable of performing his part of the partnership contract. B. A partner has been innocent of such conduct as tends to affect prejudicially the carrying on of the business. C. A partner has been declared insane in any judicial proceeding or is shown to be of unsound mind. D. A partner unwillfully or persistently commits breach of the partnership agreement, or otherwise so conducts himself in matter relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him.

First Statement: The court can decree a dissolution if the business of the partnership can only be carried on at a loss. Second Statement: The court can decree a dissolution fi the circumstances render a dissolution equitable. A. Only first statement is true. B. Only second statement is true. C Both statements are true D. Both statements are false

On the application of the purchaser of a partner's interest, dissolution is caused (1) at the termination of the specific term or particular undertaking, or (2) at any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued. A. 1only B. 2 only C. None of them D. Both of them

The dissoLution of the partnership terminates all authority of the managing partner or of any partner, as the case may be, to act for the partnership, except (1) acts necessary to wind up partnership affairs, (2) acts necessary to complete transactions begun but not then finished, and (3) acts or transactions which would bind the partnership fi dissolution had not taken place. A. 1and 2 only. B. 1 and 3 only C. 2 and 3 only D. All three

If the winding up or liquidation of partnership affairs si judicial, who has the right or duty to wind up orliquidate partnership affairs? A. Partner or legal representative or assignee designated by the partners B. Partner or legal representative or assignee designated by the court C. Managing partner D. Notary public

When there is no managing partner, or even when there is, he dies, the right or duty to wind up or liquidatepartnership affairs devolves upon the (1) partners who have not wrongfully dissolved the partnership, or (2) legal representative of the last surviving partner, not insolvent. A. 1 only B. 2 only C. Any of the two D. None of the two