Partnership + LLC Flashcards
- On January 1, 2021, Abel, Baker and Charlie formed a general partnership in State that codified UPA (1997) without modifications. On January 1, 2022, Abel wrongfully dissociated from the partnership.
Which of the following is not necessarily a result of Abel’s wrongful dissociation?
(a)The partnership must be promptly wound up.
(b)Abel’s interest in the partnership must be bought by the partnership.
(c)Abel’s duty of loyalty to the partnership has ended.
(d)Abel remains liable for pre-dissociation debts owed by the partnership, unless the creditors to whom such debts are owed release Abel from that liability.
UPA 701, 703, 603
correct answer= a
reasoning: A partnership does not necessarily have to be wound up when a partnership disassociates but they have to be able to buy out even if they wrongfully dissociates but wrongfully the buyout is going to be the appraised value minus the damages of the wrongful disassociation and if cannot agree on that number will have a battle of the experts in court to argue the correct number
reminder: always have the power to disassociate but not always the power to get damages from it
- Which of the following best describes how ordinary course of business decisions are made in a limited partnership?
(a) They are made by the limited partners.
(b) They are made by the general partner(s).
(c) They are made by the limited partners and the general partner(s).
(d) They are made by all non-silent limited partners and the general partner(s).
B is the correct answer, in a limited partnership there is only silent partners but this is different than an LLP
How is the role of a limited partner in a limited liability partnership (LLP) different from the role of a limited partner in a limited partnership (LP)?
A. A limited partner in an LLP is not required to make a capital contribution to become a partner. B. A limited partner in an LLP does not have personal liability for the liabilities of the partnership. C. A limited partner in an LLP can participate in the business decisions of the partnership. D. There are no differences in the role of a limited partner in an LLP and that of a limited partner in an LP.
C= correct answer
A limited partner in an LLP can participate in these business decisions, ex: law partners have a say in what happens in a partnership
A limited partner can have a say in how the partnership operates
- Which of the following is the best informal description of a limited liability company (LLC)?
(A) A cross between a limited partnership (LP) and a limited liability partnership (LLP).
(B) A cross between a partnership and a corporation.
(C) A cross between a sole proprietorship and a corporation.
(D) A cross between a C-corp and an S-corp
correct answer=
- Which, if any, of the following is the correct statement of the law regarding profit-sharing in an LLC?
(A) Profit sharing terms must be memorialized in the article of organization filed with the Secretary of State.
(B) Members who contribute sweat equity for their membership cannot receive a distribution, but can receive compensation for their services.
(C) Under the ULLCA, the default rule is that profits are shared amongst members in equal shares.
(D) None of the above is a correct statement of law.
Correct answer=
