Partnership Flashcards by Kyla Villanueva

Generally, a contract of partnership is:
A. A preparatory and a consensual contract
B. An aleatory and a consensual contract
C. A preparatory and a formal contract
D. An aleatory and a formal contract

How well did you know this?

Not at all

Perfectly

A, B, and C formed ABC Partnership. They are also the major stockholders of ABC Corporation. Which of the following statements is true?

A. ABC Partnership is a person separate and distinct from A,B, and C. This is not true with ABC Corporation.
B. ABC Corporation is a person separate and distinct from A, B, and C. This is not true with ABC Partnership
C. ABC Corporation and ABC Partnership are considered as a person separate and distinct from A, B, and C, but the law treats ABC Corporation and ABC partnership as one entity.
D. ABC Corporation and ABC Partnership are considered as a person separate and distinct from A, B, and C. Further, the law treats ABC Corporation and ABC Partnership as separate from each other.

How well did you know this?

Not at all

Perfectly

As distinguished from a partnership, a joint venture:

A. Generally relates to a continuing business
B. Is usually limited to a single transaction
C. Does not allow corporation to become venturers
D. Operates with legal personality

How well did you know this?

Not at all

Perfectly

As distinguished from a corporation, a partnership:

A. Is created by agreement of the parties and not by operation of law
B. Is created by operation of law and not agreement of the parties
C. Distributes its profits to those who contributed capital to the business.
D. Does not distribute profits to those who contributed capital to the business

How well did you know this?

Not at all

Perfectly

As distinguished from stockholders of a corporation, the partners of a partnership:

A. Have limited liability
B. Have unlimited liability
C. Cannot generally exercise management of the partnership unless appointed as managing partners
D. May transfer his interest without consent of the other partners

How well did you know this?

Not at all

Perfectly

Statement 1: The partnership can exist even before the existence of a common fund.
Statement 2: In order to constitute a partnership, there must be an actual profit to be divided

Only Statement 1 is true

How well did you know this?

Not at all

Perfectly

What is the primary purpose of establishing a partnership?

A. To contribute money, property, or industry
B. To establish a common fund
C. To obtain profits and divide the same among the parties
D. To conduct a business and practice a profession

How well did you know this?

Not at all

Perfectly

Henry and Ian are the heirs of Gary. Gary passed onto both Henry and Ian an undivided parcel of land measuring 500 square meters. Pending the settlement of the estate, the parcel of land earned income amounting to P2,000,000, which Henry and Ian split in half amongst themselves. Is there partnership between Henry and Ian?

A. Yes. Co-ownership is a form of partnership
B. No. Co-ownership does not itself establish a partnership.
C. Yes. The fact that there is sharing of profits is the hallmark of a partnership
D. No. Such is not registered with the Securities and Exchange Commission

How well did you know this?

Not at all

Perfectly

In which of the following cases is receipt by a person of a share in the profits prima facie evidence that he is a partner?

A. Receipt as payment of debt by installment
B. Receipt as one of the managing professionals of a professional firm
C. Receipt by way of rent to a landlord
D. Receipt of wages of an employee

(Prima facie means something that appears true, valid, or sufficient when first examined)

How well did you know this?

Not at all

Perfectly

In a universal partnership of all profits, which of the following is contributed?

I. Ownership of all the property
II. All that may be acquired by the partners by their industry or work
III. Usufruct over the property of the partners

II and III only.

(Usufruct is the right to use and benefit from a property, while the ownership of which belongs to another person).

How well did you know this?

Not at all

Perfectly

Bobby and Teddy entered into a universal partnership of all present property. After the constitution of the partnership, Bobby inherited from her grandmother a parcel of land amounting to P20,000,000. Subsequently, the parcel of land earned P2,500,000 after being inherited by Bobby. Which of the following is true?

A. Bobby and Teddy may stipulate that the parcel of land and the income from such property be included in the composition of the universal partnership.
B. Bobby and Teddy may stipulate that the parcel of land be included in the composition of the universal partnership, but not the net income from such.
C. Bobby and Teddy may stipulate that the income from the parcel of land be included in the composition of the universal partnership, but not the parcel land itself.
D. Bobby and Teddy cannot stipulate that the parcel of land and the income from such property be included in the composition of the universal partnership.

How well did you know this?

Not at all

Perfectly

Jane, Karen, and Lucy formed a partnership for a fixed term of two (2) years. After two years, Jane, Karen, and Lucy continued the partnership without any express agreement. Which of the following statements is true?

A. Any contract that the partners may enter into after the two-year period is unenforceable for being entered into with lack of authority.
B. Any contract that the partners may enter into after the two-year period is voidable because of the defect in the consent of the partnership.
C. Any contract that the partners may enter into after the two-year period is void since there is no more partnership to speak of.
D. Any contract that the partnership may enter into after the two-year period is valid since the continuation after the expiration of the term constitutes renewal.

How well did you know this?

Not at all

Perfectly

Which of the following partnerships has complied with all the requisites for its lawful establishment?

A. Partnership de facto
B. Partnership de jure
C. Open partnership
D. Universal partnership

How well did you know this?

Not at all

Perfectly

It is a partner who does not take active part in the business of the partnership, but may be known to be a partner by third persons

A. Secret partner
B. Silent partner
C. Dormant partner
D. Ostensible partner

How well did you know this?

Not at all

Perfectly

When immovable property or real rights are contributed, the partnership contract:
A. May be entered into orally
B. Must be in writing
C. Must appear in a public instrument
D. Must appear in a public instrument with an affidavit of good faith

How well did you know this?

Not at all

Perfectly

The partnership contract must appear in a public instrument where the capital is:

A. At least P3,000
B. More than P3,000
C. At least P5,000
D. More than P5,000

How well did you know this?

Not at all

Perfectly

Generally, a contract of partnership:
A. Can be entered into in any form
B. Is required to be in writing
C. Is required to be in a public instrument
D. Requires delivery of the money and property to be contributed for its perfection

How well did you know this?

Not at all

Perfectly

Failure to comply with the requirement for a partnership contract to appear in a public instrument where the amount of capital is at least P3,000:

A. Will result to the invalidation of the contract of partnership
B. Will not affect the liability of the partnership and the partners with third persons
C. Will not be able to produce any legal effect with respect to the contracts of the partnership with third persons
D. Will make the managing partners liable for damages to the partnership in good faith.

How well did you know this?

Not at all

Perfectly

The managing partners may be appointed:

A. Only in the articles of partnership
B. Only after constitution of the partnership
C. Either in the articles of partnership or after constitution of the partnership
D. In the articles of partnership and after the constitution of the partnership

How well did you know this?

Not at all

Perfectly

Severus, Albus, and Harry entered into a contract of partnership for the establishment of a wizardry shop. The articles of partnership did not specify who the managing partners are. Subsequent to the constitution of the partnership, Severus was appointed by the partners as the managing partner. Subsequently, Harry wanted to take over the management of the business. Albus agrees. Harry and Albus holds the controlling interest in the partnership. Can Harry and Albus remove Severus as the managing partner?

A. No. the facts do not show in any just or lawful cause
B. Yes. The partners may do so at any time and for any cause
C. No. Severus has a vested right over the management of the partnership
D. Yes. The removal is subject to approval by the Securities and Exchange Commission

How well did you know this?

Not at all

Perfectly

Paul, Peter, John, and Lucas formed a partnership. Paul owns 10% interest in the partnership, Peter owns 60%, John owns 15%, and Lucas owns 15%. Paul and John were delegated as managing partners without a stipulation as to their specific duties. Paul seeks to bind the partnership by entering into a contract of sale of merchandise. John opposed. For the sale to be allowed,

A. Paul and Lucas must vote in favor of the contract
B. Peter must vote in favor of the contract
C. All of the partners must vote in favor of the contract
D. No vote required. Paul is authorized to bind the partnership.

In case there is a stipulation that none of the managing partners shall act without the consent of others:

A. The concurrence of all is necessary for the validity of the acts
B. The concurrence of majority of the number of partners is necessary for the validity of the acts
C. The concurrence of the controlling interest in the partnership is necessary for the validity of the acts
D. The stipulation is void

When the manner of management is not agreed upon:
A. The party who has the controlling interest will be considered as the agent of the partnership.
B. All capitalist partners will be considered as agents of the partnership
C. All industrial partners will be considered as agents of the partnership
D. All partners will be considered as agents of the partnership.

Felix, George, and Heidi are partners of FGH Partnership. FGH Partnership through Felix, entered into a service contract with JKL Accounting Firm whereby JKL Accounting Firm will provide payroll services to the partnership. The service contract provides a stipulation that no party shall terminate the contract without a 30-day prior notice. Subsequently, a letter from JKL Accounting Firm was received by Heidi, stating that the service contract is being terminated 30 days after the date of receipt of the latter. Thirty days have passed and JKL Accounting Firm effectively stopped rendering accounting services to FGH Partnership. Shocked, Felix questioned the cessation of the required work as it is seriously hampering the giving out of salaries of the employees of FGH Partnership. Felix sued JKL Accounting Firm for damages for failure to comply with the 30-day notice rule. Is JKL Accounting Firm liable?

A. Yes. The notice should have been sent to all the partners
B. Yes. The notiese should have been sent to Felix, the person who has contracted with JKL Accounting Firm
C. No. Notice to Heidi is notice to the entire partnership.
D. No. Even without the 30-day prior notice, rescission is a remedy in contracts of sales of services.

Which of the following should first be considered in determining how profits and losses shall be distributed? A. Agreement B. Whether the partners are capitalist or industrial C. Amount of capital contribution D. Amount of interest in the partnership

When an unlawful partnership is dissolved by a judicial decree, the profits: A. Shall be confiscated in favor of the State B. Shall be given to the partner who did not know of the illegality C. Shall be distributed to each of the partners less payment of penalties D. Shall be distributed to each of the partners

Who among the following is not liable for losses? A. Capitalist partner B. Industrial partner C. General Partner D. Limited Partner

Statement I: A stipulation excluding one or more partners from any share in the profits or losses is void. Statement II: If only the share in the losses has been stipulated, the share in the profits shall be in the same proportion

Only Statement I is true.

Upon exhaustion of the partnership assets in a partnership with all general partners: A. All partners are liable pro rata and subsidiarily with their personal property. B. All partners are liable pro rata and primarily with their personal property. C. All partners, except industrial partners are liable pro rata and primarily with their personal property D. All partners, except industrial partners are liable pro rata and subsidiarily with their personal property

Ned, Ophelia, and Patrick are partners in NOP Partnership. Subsequently, Quincy was admitted to the partnership. At the time of her admission, NOP Partnership already had a debt of P200,000 to Randy. Subsequently, the partnership was dissolved and liquidated, and the partnership’s debt to Randy ballooned to P500,000. After the partnership’s assets were exhausted, the remaining amount due to Randy was P350,000. Can Randy collect from the personal assets of Quincy? A. Yes, but only to satisfy the P150,000 debt incurred after Quincy’s admission B. Yes, to satisfy the P350,000 debt to Randy C. No, since there is no stipulation allowing Randy to collect from Quincy D. No, Quincy’s capital distribution and her personal assets shall not be used to satisfy the debt to Randy

Statement 1: Any stipulation against individual liability of the partners is valid against third persons. Statement 2: Any stipulation against individual liability of the partners is void among the partners

Both statements are NOT true

Mario, Luigi, and Peach are partners in MLP Partnership. The partnership was established for the purpose of carrying a furniture business. The managing partner designated is Mario. Luigi, representing himself as a partner in MLP Partnership, contacted Xavier, who is an operator of a dormitory. He was able to convince Xavier to purchase 1,000 pieces of furniture at a discounted price. Mario, noting that the contract Luigi entered into is prejudicial to the partnership, seeks to not bind the partnership on the contract. Is MLP Partnership bound by the contract entered into by Luigi? A. Yes, considering that what Luigi did is merely an act of dominion which is covered by his authority as a partner. B. Yes , considering that this is apparently for the carrying on of the usual business of the partnership C. No, considering that Luigi is not a managing partner D. No, considering that Luigi exceeded his authority by entering into a contract prejudicial to the interest of the partnership and the partners

Statement I: Partners representing the controlling interest are authorized to enter into a compromise concerning a partnership claim or liability. Statement 2: Partners representing the controlling interest are authorized to dispose of the goodwill of the business

Both statements are NOT true

The partnership can recover real property conveyed by any partner in the name of the partnership when: A. The grantee does not have knowledge that the partner exceeded his authority, and the grantee is a holder for value B. The partner has authority to carry out the usual business of the partnership C. The real property has been conveyed by the grantee to a holder for value D. The person claiming the right under the grantee does not know that the partner has exceeded his authority

Melissa, Hero, and Sandara are partners of MHS Partnership. Partnership had a long-time supplie named Direk. Direk made his payment for the merchandise he brought to Sandara for P300,000, considering that for years, it was Sandara who had collected the amounts with no problems. However, Sandara used the funds for her European tour. Can the partnership recover from Direk? A. No. The partnership is liable for loss because Sandara was acting within the scope of her apparent authority B. Yes. Direk is liable for loss because Sandara was acting within the cope of her apparent authority C. No. The partnership is liable for loss because there was no showing that Sandara was not authorized to collect from Direk D. Yes. Direk is liable for loss beacuse Derek should have known that Sandara was not authorized to collect from Direk

For wrongful acts of a partner in the ordinary course of the business of the partnership which causes loss or injury to any person A. Only the erring partner is liable. B. Only the partnership is liable. C. Both the erring partner and the partnership is liable, jointly. D. Both the erring partner and the partnership is liable, solidarily

Brienne, Charlie, and Dina are friends. Brienne and Charlie are known to Dina as coming from wealthy families, so Dina misrepresenting herself to be partners of Brienne and Charlie, approached Elise and told Elise that they are engaged in the buying and selling of ivory statues. Elise called Charlie, and Charlie confirmed that he, together with Brienne and Dina, is indeed engaged in such business. Elise, interested in interior decorations, gave P320,000 to Dina for the latter to purchase ivory statues. subsequently, Dina failed to deliver. From the facts who is liable for the contract with Elise?

Charlie and Dina only.

Statement I: Partnership creditors are preferred on partnership property. Statement 2: Partner’s individual creditors are preferred on partner’s individual property.

Both statements are true

It is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the business. A. Winding up B. Liquidation C. Termination D. Dissolution

Which of the following losses would dissolve a partnership by operation of law? A. Loss of a generic thing which a partner had promised to contribute before delivery B. Loss of a specific thing which a partner had promised to contribute before delivery C. Loss of a generic thing which a partner had promised to contribute after delivery D. Loss of specific thing which a partner had promised to contribute after delivery

Which of the following does not dissolve a partnership by operation of law? A. Death of any partner B. Insolvency of a partner C. Civil interdiction of a partner D. Absence of a partner

Statement 1: The courts can declare a partnership dissolved. Statement 2: A partner acting in good faith may unilaterally cause the dissolution of a partnership

Aside from the partner designated in the agreement or those who have not wrongfully dissolved the partnership, who else can wind up the partnership affairs? A. The partner owning controlling interest B. The legal representative of the last surviving solvent partner C. The spouse of the partner who has not wrongfully dissolved the partnership D. The industrial partners who must also be managing partner

Andres, Jose, and Marcelo are partners of AJM Partnership. One of their long-time suppliers is Emilio. On October 30, 2020, the partners decided to discontinue the partnership. Days after dissolution, Jose entered into a contract with Emilio for the purchase of supplies. Emilio did not have personal notice of the dissolution of the partnership, but two days before, Andres had caused the dissolution to be advertised in a newspaper of general circulation. Does the contract with Emilio bind the partnership? A. Yes, because Emilio did not have personal notice of the dissolution B. Yes, because the law requires that the dissolution be advertised in a newspaper of general circulation thrice. C. No, because the dissolution was already advertised in a newspaper of general circulation. D. No, because even without the publication, the partnership has no longer juridical and legal existence.

The limited partners: A. Shall not be bound by the obligations of the partnership. Their personal assets and capital contributions shall not be used to satisfy partnership debts. B. Shall not be bound by he obligations of the partnership. Their personal assets shall not be used to satisfy partnership debts. However, their capital contributions shall may be used to satisfy partnership debts. C. Shall not be bound by the obligations of the partnership. Their capital contributions shall may shall not be used to satisfy partnership debts. However, their personal assets maybe used to satisfy partnership debts. D. Shall be bound by the obligations of the partnership

A limited partnership: A. Shall have no general partners B. Shall have two or more limited partners C. Shall have one or more limited partners D. Shall have an equal number of general and limited partners

Statement 1: A limited partner has no right to participate in the management of the partnership. Statement 2: A limited partner cannot become an industrial partner

Both statements are true

Failure to file the certificate required for a limited partnership with the Securities and Exchange Commission: A. The partnership becomes a general partnership B. The partnership becomes a general partnership, but only with respect to third persons C. The partnership becomes a general partnership, but only with respect to the the partners themselves D. the partnership does not obtain leal existence

Which of the following acts may not be done by a limited partner? A. Loan money to the partnership B. Inspect and copy the partnership books at a reasonable time C. Assign a substituted limited partner D. Receive or hold as collateral security any partnership property

In the settlement of accounts of a limited partnership, upon dissolution, which of the following is the correct order of payment after satisfaction of creditors’ claims? I. Those to general partners, in respect to their share of the profits II. Those to general partners, in respect to their capital contribution III. Those to limited partners, in respect to their share of the profits IV. Those to limited partners, in respect to their capital contribution A. III, IV, I, II B. III, I, IV, II C. I, II, III, IV D. I, III, II, IV