Partnership Creation

Question 1

An interest in a partnership includes rights:

Answer 1

Rights to participate in management of the partnership

Question 2

Which of the following rights is more characteristic of a partnership arrangement than a lending arrangement?

1. Right to regular payments
2. Right to a share in the profits or losses
3. Right to share in management
4. Right to prevent the entity from doing certain enumerated things
5. 2 and 3 only

Answer 2

2 and 3 only

Question 3

In Meinhard v. Salmon, Judge Cardozo thought that:

Answer 3

Salmon was bound to share the business opportunity with Meinhard since it arose from their initial venture

Question 4

Property is partnership property if:

1. It is acquired in the name of the partnership
2. It is acquired in the name of the partnership by a transfer to the partnership in its name
3. It is purchased with partnership assets
4. It is acquired in the name of a partner with an indication in the instrument transferring title of the person’s capacity as a partner but without an indication of the name of the partnership
5. All of the above

Answer 4

All of the above

Question 5

Which of the following is true?

1. Partnership law is a branch of commercial law
2. Partnerships may be either for profit or nonprofit
3. Corporations may not be partners of a partnership
4. Limited partnerships may not be partners of a partnership
5. Partnerships lack the ability to contract

Answer 5

Partnership law is a branch of commercial law

Question 6

Which of the following is not a rule used in determining whether a partnership is formed?

1. A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment of/for a debt, rent, wages, or interest on a loan
2. Property is partnership property if acquired in the name of the partnership or of one or more partners with an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership but without an indication of the name of the partnership
3. Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property
4. The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived
5. None of the above

Answer 6

None of the above

Question 7

What is the role of “intent” in partnership formation?

Answer 7

A partnership may be formed whether or not the persons intend to form a partnership

Question 8

How is a general partnership (always) created?

Answer 8

By agreement (either express or implied)

Question 9

One difference between a limited partnership and a general partnership is:

1. A limited partnership includes one or more persons who contribute capital and share in profits but who cannot manage the business and are liable only for the amount of their contributions
2. In a limited partnership, all partners participate fully in running the business and share equally in the profits and losses
3. A general partnership includes one or more persons who contribute capital but cannot share in profits and who cannot manage the business
4. A limited partnership does not include one or more persons who control the business and are personally liable for the partnership’s debts
5. In a general partnership, all partners participate fully in running the business but do not share in the profits and losses

Answer 9

A limited partnership includes one or more persons who contribute capital and share in profits but who cannot manage the business and are liable only for the amount of their contributions

Question 10

A partnership is:

Answer 10

An association of two or more persons to carry on as co-owners a business for profit