Practice Test 1

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Questions and Answers

Which action is permitted in relation to partnership books?

Manage the day-to-day operations

Inspect and copy partnership books (correct)

Change the partnership's business model

Terminate any general partner at will

What is the consequence for limited partners if there is falsity in the certificate of a limited partnership?

Limited partners are liable as general partners

The partnership is dissolved

There is no liability as a general partner; only statutory penalties apply (correct)

All partners are equally liable for the false statement

What happens when a limited partner becomes a general partner?

He has the rights and powers of a general partner and is subsidiarily liable to creditors (correct)

He loses all rights as a limited partner

He must dissolve the partnership

He cannot contribute more capital to the partnership

Which type of partnership refers to the inclusion of all present property and future profits?

Universal partnership of all present property Signup and view all the answers

Which of the following is not a requirement for the amendment of the Certificate or Articles of Limited Partnership?

Verbal agreement between partners Signup and view all the answers

In a case of a false statement in the certificate, what sort of penalties can be expected?

Only statutory penalties apply without general partnership liability Signup and view all the answers

Who is expressly prohibited from entering into a universal partnership?

Persons prohibited from making donations, such as husband and wife Signup and view all the answers

What constitutes prima facie evidence of a partnership?

Sharing of profits from a business Signup and view all the answers

According to the law, what must the object or purpose of a partnership be?

A lawful object or purpose established for the common benefit of the partners Signup and view all the answers

What is the legal standing of associations with secret articles where members contract in their own name?

They have no separate juridical personality and are governed by co-ownership laws Signup and view all the answers

When does a partnership generally begin?

When the contract is executed Signup and view all the answers

What is the primary purpose of settling business affairs after dissolution?

To distribute remaining assets and settle debts Signup and view all the answers

If a partnership for a fixed term continues after its expiration without a new agreement, it is classified as what?

A partnership at will Signup and view all the answers

When does termination of a partnership occur?

When all debts are paid and contracts are completed Signup and view all the answers

What liability does a partner incur if they fail to contribute a promised sum of money?

Interest and damages Signup and view all the answers

Which scenario is not a cause of dissolution without violating the agreement?

Death of a partner Signup and view all the answers

What ground can lead to court-ordered dissolution of a partnership?

Insanity of a partner Signup and view all the answers

What happens to a partner's authority after partnership dissolution?

Partners lose authority to act for the partnership except to wind up affairs Signup and view all the answers

What is the result of a partner's liability after dissolution if the remaining partners continue business without an agreement?

The partner remains liable for all partnership debts Signup and view all the answers

If dissolution occurs without agreement violation, what right does a partner retain?

Right to receive cash equivalent for their interest Signup and view all the answers

What is the impact of a partner's insolvency on the partnership?

The insolvent partner's interest is liquidated, partnership may continue Signup and view all the answers

What condition must be met for an industrial partner to engage in business for himself?

The partnership allows it Signup and view all the answers

In the absence of any agreement, how do partners contribute to the partnership?

Equally Signup and view all the answers

If a partner receives payment for both his own and the partnership's credit, how is the payment applied?

Both credits proportionally Signup and view all the answers

What happens if a partner receives his share of a partnership credit and the debtor becomes insolvent?

He must return what he received to the partnership Signup and view all the answers

In the absence of an agreement, how is the share of each partner in profits and losses determined?

The amount they contributed Signup and view all the answers

Can a partner associate another person with him in his share of the partnership?

Yes, with the consent of all partners Signup and view all the answers

What must a capitalist partner do if he engages in business similar to the partnership for his own account?

Bring any profits to the partnership Signup and view all the answers

What does 'dissolution' refer to in the context of a partnership?

Change in the relationship of partners due to any partner ceasing involvement Signup and view all the answers

What is the consequence of a partnership having a separate juridical personality according to Article 1768?

The partnership is treated as a separate legal entity, capable of owning property and entering into contracts. Signup and view all the answers

Which situation requires a partnership to be constituted in a public instrument according to Article 1771?

When immovable property or real rights are contributed. Signup and view all the answers

Which of the following does NOT help determine the existence of a partnership as outlined in Article 1769?

Receipt of profits as an employee’s wage. Signup and view all the answers

What is the implication if a contract of partnership does not attach an inventory of immovable properties as required under Article 1773?

The contract of partnership is void. Signup and view all the answers

Which of the following best defines a partnership as per Article 1767?

A contract between two or more persons to contribute money, property, or industry to a common fund, with the intention of dividing profits. Signup and view all the answers

Under Article 1771, what must be true for a partnership to not require a public instrument?

No immovable properties are contributed. Signup and view all the answers

Which characteristic is essential for the validity of a partnership contract as per Article 1769?

Agreement on the sharing of gross returns. Signup and view all the answers

When evaluating the legal status of a partnership, which aspect is most critical?

The partnership's recognition as a separate legal entity. Signup and view all the answers

Study Notes

General Provisions of Partnership

Article 1767 defines a partnership as a contract among two or more individuals to pool resources with the aim of sharing profits.
Existence of a partnership is not determined by sharing gross returns or employee wages; co-ownership of property is relevant.
Article 1768 grants partnerships a separate legal personality, allowing them to own property and enter contracts independently of partners.
A partnership must be formalized in a public instrument when immovable property is contributed, as stated in Article 1771.
Failing to attach an inventory of contributed immovable properties makes the partnership contract void, per Article 1773.

Universal Partnerships

Universal partnership of all present property includes both current assets and future profits, as defined in Article 1777.
Certain individuals, such as spouses or those prohibited from making donations, cannot enter a universal partnership according to Article 1782.
Sharing profits from a business serves as prima facie evidence of a partnership, as outlined in Article 1769.

Obligations of Partners

A partnership's existence typically starts when the contract is executed, not when the business begins.
If a fixed-term partnership continues post-expiration without a new agreement, it is classified as a partnership at will.
A partner failing to provide an agreed financial contribution may incur liability for interest and damages.
Industrial partners may only engage in independent business activities if the partnership explicitly permits it.
In absence of an agreement, partners share profits and losses in proportion to their contributions.

Partner Authority and Liability

A partner receiving payment for both personal and partnership obligations must proportionally distribute the payment.
Upon receiving a share of partnership credit, if the debtor becomes insolvent, the partner must return the received amount to the partnership.
If dissolution occurs without breach of agreement, partners retain the right to receive cash equivalent of their interest upon dissolution.

Dissolution and Liquidation

Dissolution signifies a change in the partnership relationship due to a partner ceasing involvement.
Winding-up refers to the proceedings to settle business affairs after dissolution.
Termination occurs when all debts are settled and contracts fulfilled, not merely when a partner departs.
Insanity of a partner can serve as grounds for court-ordered dissolution.
Following dissolution, partners lose authority for partnership actions, aside from those necessary for winding up.
Remaining partners who continue business after dissolution remain liable for partnership debts incurred before the dissolution.

Limited Partnerships

Limited partners may gain general partner rights if they also participate in the management, making them liable for debts.
Limited partners' liabilities may change if they fail to comply with the stipulated requirements of their status.

These notes encapsulate critical points related to the formation, obligations, and dissolution of partnerships, providing a comprehensive overview for study.

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Description

This quiz covers the essential articles of partnership law, including definitions and requirements outlined in the relevant articles. Participants will gain insights into the legal framework governing partnerships, including separate legal personality and universal partnerships.