Partnerships & LLCs

Question 1

A partnership is an association of (i) _____ or more person who (ii) _______ ___ as co-owners in a business for (iii) _______

Answer 1

(i) two; (ii) carry on; (iii) profit

Question 2

A partnership must be two or more persons, but “persons” includes individuals, (i) ______, (ii) _________, or other legal entities.

Answer 2

(i) trusts, (ii) corporations

Question 3

Because a partnership requires no formal document (unless >1 year), it may be difficult to see a partnership. Courts look at the (i) _____ of the parties. Sharing (ii) _____ raises the presumption of a partnership (unless it’s to pay debt or d bill due). However, several factors do not give the presumption fo a partnership, including (iii) _____ tenancy, the use of the term (iv) _______, operations that require (v) ________ ______, and the sharing of (vi) ______ returns.

Answer 3

(i) intent; (ii) profits; (iii) joint; (iv) partner; (v) extensive activities; (vi) gross

Question 4

If profits are shared, but there was never any (i) _____ to form a partnership, the parties can still rebut the profit’s presumption.

Answer 4

(i) intent

Question 5

If property is titled in the name of the (i) _________ or titled in the name of one (or more) partners, and the (ii) ________ transferring title notes the partnership, it is deemed partnership property. Any property purchased with (iii) _______ ________ is presumed to be partnership property. If, in contrast, the property is held in one or more parties names, does not indicate the partnership on the title instrument, and partnership funds are not used, it may be partnership, but it does not along create a presumption.

Answer 5

(i) partnership; (ii) instrument; (iii) partnership funds

Question 6

To determine if untitled property is partnership property, courts will look at factors including: acquisition of property with (i) _______ funds; (ii) ____ of property by the parternship for its business; (iii) entry of the property on the partnership _______ as an _____; (iv) a close relationship between the property and the _________; (v) ________ with partnership funds; (iv) ________ with partnership funds

Answer 6

(i) partnership; (ii) use; (iii) books as an asset; (iv) partnership; (v) improvement; (vi) maintenance

Question 7

Partnership membership can only be changed by (i) _______ consent.

Answer 7

(i) unanimous

Question 8

A Partner’s financial interest in a partnership is treated as (i) _____ property, and can be (ii) _______ without dissolving the partnership, and it is (iii) ________ for security interests.

Answer 8

(i) personal; (ii) transferred; (iii) attachable

Question 9

All partners have (i) ______ rights in the management of the partnership (unless their partnership agreement says otherwise).

Answer 9

(i) equal

Question 10

Partners owe four fiduciary duties to the partnership: (i) ________ (account for profits; no self-dealing; no usurpation); (ii) ____________ (exercise the care of a reasonably prudent person in the position); (iii) _________ (follow the partnership’s wishes, in scope); (iv) __________ (provide complete and accurate data).

Answer 10

(i) loyalty; (ii) care; (iii) obedience; (iv) information

Question 11

The partnership must (i) ______ every partner with regard to reasonable expenses incurred in partnership business.

Answer 11

(i) indemnify

Question 12

The act of (i) ____ partner, for (ii) _________ carrying on in the (iii) _________ _______ of the partnership or business, or business of the (iv) ______ carried out by the partnership, (v) _______ the partnership, unless, the partner had (vi) ____ __________ to act on the matter, and the 3d party (vii) _____ or had received (viii) _________ that the partner lacked authority.

Answer 12

(i) any; (ii) apparently; (ii) ordinary course; (iv) kind; (v) binds; (vi) no authority; (vii) knew; (viii) notice

Question 13

If partnership property is improperly transferred, partners can (i) _________ the property from the initial transferred, but cannot reclaim the property from a (ii) ______ ______ purchaser.

Answer 13

(i) reclaim; (ii) bona fide

Question 14

A statement of (i) _______ grants a partner’s authority to enter into transactions on behalf of the partnership. It is filed with the (ii) ____ of ________ and for property records with the (iii) _______ ________. The statement can also expressly limit partner authority, and give real property purchasers (iv) _________ knowledge of the lack of authority.

Answer 14

(i) authority; (iii) Secretary of State; (iii) county clerk; (iv) constructive

Question 15

Partnership liability is (i) _____ and (ii) _______

Answer 15

(i) joint; (ii) several

Question 16

An (i) ________ partner is not personally liable for past liabilities. An (ii) ______ partner remains liable for obligations arising from his time a partner, unless there has been a payment, release, or novation.

Answer 16

(i) incoming; (ii) outgoing

Question 17

Partners are generally not liable for the (i) ______ of others partners committed within the scope of business, unless the other partners participated as principals or accessories.

Answer 17

(i) crimes

Question 18

A partner (i) _________ by oral or written notice that the partner’s (ii) ______ will is to withdraw; or (iii) the happening of an agreed ________; or (iv) valid ______ of the partner; or (v) the partner’s _________; or (vi) the partner’s _____ or ________; or (vii) a ______ order; or (viii) ________ of an entity that is a partner.

Answer 18

(i) disassociates; (ii) express; (iii) event; (iv) explosion; (v) bankruptcy; (vi) death or incapacity; (vii) court; (viii) termination

Question 19

A dissociated partner can bind the partnership for (i) ____ years if it was the sort of act the partner had authority to agree to, and the 3d party (ii) ________ believed the dissociated partner was still a partner, and the 3d party had no (iii) _______ of the disassociation.

Answer 19

(i) two; (ii) reasonably; (iii) notice

Question 20

A partner can file a (i) ______ of _______ with the Secretary of State, and 90 days thereafter all persons are deemed to have notice of the dissociation.

Answer 20

(i) notice of dissociation

Question 21

A partnership (i) at-_____ can be dissolved at any time by the express will (notice of dissolution) of any (ii) _______.

Answer 21

(i) will; (ii) partner

Question 22

A partnership can be dissolved by (i) _______ of a partner and an (ii) ________ will to withdraw as partner; in a partnership for a specific term/event, (iii) __________ of that term or (iv) _______ consent to dissolve, or if within (v) ______ days of partner’s death, bankruptcy, or wrongful dissociation at least (vi) _____ of the remaining partners wish to dissolve; a happening that makes it (vii) ______ to carry on the partnership; or on the application of a partner, a (vii) _______ ________ that the partnership is likely to be frustrated, impracticable.

Answer 22

(i) notice; (ii) express; (iii) termination; (iv) unanimous; (v) 90; (vi) half; (vii) unlawful; (viii) judicial decree

Question 23

In distributing partnership assets on wind down, first (i) _____ are paid, and then (ii) ________. Partners who paid more than their fair share of the debts are entitled to equalizing contributions.

Answer 23

(i) creditors; (ii) partners

Question 24

In contrast to a partnership, an LL Partnership must be (i) _____ with the Secretary of State, including the (ii) ____ of the partnership, and an election to be an LLP

Answer 24

(i) filed; (ii) name

Question 25

In a General Partnership with Limited Partners, the (i) _______ partners are not personally liable, and the (ii) _____ partner is jointly and severally liable for all obligations of the limited partnership.

Answer 25

(i) limited; (ii) general

Question 26

A general partner owes his limited partners the duties of care and loyalty, but he does ____. violate the duty of loyalty merely by furthering his own interests.

Answer 26

not

Question 27

In a General Partnership, the approval of all general partners and limited partners I need for fundamental changes, including (i) _______ the partnership agreement, (ii) _____ the partnership to a LLLP, (iii) disposing of all or __________ all of the partnership’s property; (iv) ________ a new partner; or (v) return an invalid distribution.

Answer 27

(i) amending; (ii) converting; (iii) substantially; (iv) adding

Question 28

An (i) _____ is a hybrid business association, (ii) ____ like a partnership, offering its (iii) ________ limited liability like shareholders of a corporation, and can be run as either a (iv) _______ or a _______.

Answer 28

(i) LLC; (ii) taxes; (iii) members; (iv) partnership or corporation

Question 29

In a manager-managed LLC, the members do not owe duties of (i) _____ and _____- to each other.

Answer 29

(i) loyalty and care