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Partnership Liability
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Partnership Liability

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Questions and Answers

What is the order of priority of payment under Article 1863?

  • Limited partners' capital contributions, partnership creditors, and then other creditors
  • Partnership creditors, limited partners' capital contributions, and then other creditors (correct)
  • Other creditors, partnership creditors, and then limited partners' capital contributions
  • Partnership creditors, other creditors, and then limited partners' capital contributions

    • What happens if a limited partner receives a return of his capital contributions?

  • The returned amount is exempt from being used to pay partnership liabilities
  • The returned amount is fully exempt from being used to pay partnership liabilities
  • The returned amount, including interest, can still be used to pay partnership liabilities (correct)
  • The returned amount is only-half exempt from being used to pay partnership liabilities

    • What is the consequence if a limited partner receives an amount greater than his fair share in the partnership profits?

  • He has to keep the excess amount and it is all his
  • He can choose to return the excess amount, but it is not obligatory
  • He is obliged to return the excess amount, and it is held in trust for the partnership (correct)
  • He is obliged to return the excess amount, but it is not held in trust for the partnership

    • What right does an assignee of a limited partner's interest have?

    <p>The right to receive the share of profits or return of contribution only</p> Signup and view all the answers

    Under what condition can an assignee become a substituted limited partner?

    <p>With the consent of all members</p> Signup and view all the answers

    What is the effect of a substituted limited partner's ignorance of certain liabilities?

    <p>The substituted limited partner is not liable for liabilities he was ignorant of</p> Signup and view all the answers

    What is the requirement for an assignee to become a substituted limited partner?

    <p>The assignee must have the certificate amended in accordance with Article 1865</p> Signup and view all the answers

    What is the consequence when the certificate is appropriately amended?

    <p>The assignee becomes a substituted limited partner</p> Signup and view all the answers

    What happens if a person intended to be a limited partner but was not duly constituted due to an error?

    <p>They are not bound by the partnership's obligations unless they fail to renounce their interest in the profits.</p> Signup and view all the answers

    What is the significance of Article 1848 in relation to limited partnerships?

    <p>It imposes liability on limited partners who take part in the control of the business.</p> Signup and view all the answers

    What is the consequence if a person exercises the rights of a limited partner but is not duly constituted as one?

    <p>They are not bound by the partnership's obligations unless they fail to renounce their interest in the profits.</p> Signup and view all the answers

    What must a person do to avoid becoming a general partner in a situation where they intended to be a limited partner but were not duly constituted?

    <p>Renounce their interest in the profits of the business or other compensation by way of income.</p> Signup and view all the answers

    What is the effect of a person's mistake in not being duly constituted as a limited partner?

    <p>They are not bound by the partnership's obligations unless they fail to renounce their interest in the profits.</p> Signup and view all the answers

    What is the consequence of taking part in the control of the business as a limited partner?

    <p>The limited partner is liable as a general partner.</p> Signup and view all the answers

    What is the purpose of Article 1853?

    <p>There is no information about Article 1853 in the text.</p> Signup and view all the answers

    What is the significance of a person's intention in becoming a limited partner?

    <p>It affects their rights and obligations in the partnership.</p> Signup and view all the answers

    What is the consequence of a limited partner's surname appearing in a partnership name contrary to provisions?

    <p>The limited partner is liable as a general partner to partnership creditors.</p> Signup and view all the answers

    Who is liable for a false statement in a certificate?

    <p>Any party to the certificate who knew the statement to be false.</p> Signup and view all the answers

    What is the remedy for a person who suffers loss due to a false statement in a certificate?

    <p>To hold liable any party to the certificate who knew the statement to be false.</p> Signup and view all the answers

    What is the condition for a limited partner to become liable as a general partner?

    <p>If the limited partner takes part in the control of the business.</p> Signup and view all the answers

    What does 'taking part in the control of the business' mean?

    <p>Performing the usual management functions necessary in the operation of the business.</p> Signup and view all the answers

    What is the effect on a limited partner's liabilities if their surname appears in the partnership name contrary to provisions?

    <p>The limited partner incurs the liabilities, but not the rights, of a general partner.</p> Signup and view all the answers

    Who is liable for the losses suffered by a person who relied on a false statement in a certificate?

    <p>Any party to the certificate who knew the statement to be false.</p> Signup and view all the answers

    What is the condition for a limited partner to avoid liability as a general partner?

    <p>If the limited partner does not take part in the control of the business.</p> Signup and view all the answers

    What can be redeemed with the separate property of a general partner?

    <p>Charged interest of a limited partner</p> Signup and view all the answers

    Who is entitled to payment first after dissolution?

    <p>Creditors</p> Signup and view all the answers

    What is the priority order for payment to limited partners?

    <p>Capital contributions, then income on their contributions</p> Signup and view all the answers

    How do limited partners share in the partnership assets?

    <p>In proportion to their claims for capital and profits</p> Signup and view all the answers

    What is the priority for payment to general partners?

    <p>Capital, then profits</p> Signup and view all the answers

    What is the purpose of Article 1863?

    <p>To determine the priority of payment after dissolution</p> Signup and view all the answers

    What is the result of all limited partners ceasing to be such?

    <p>Cancellation of the certificate</p> Signup and view all the answers

    What is the purpose of Article 1865?

    <p>To outline the process of amending a certificate</p> Signup and view all the answers

    Who must sign an amendment to substitute a limited partner?

    <p>All members and the assigning limited partner</p> Signup and view all the answers

    What happens if a person designated to execute a writing refuses to do so?

    <p>The person may petition the court to order the amendment</p> Signup and view all the answers

    What is the role of the court in a petition to cancel or amend a certificate?

    <p>To order the cancellation or amendment of the certificate</p> Signup and view all the answers

    What is the result of a court ordering the cancellation of a certificate?

    <p>The certificate is cancelled and recorded with the Office of the Securities and Exchange Commission</p> Signup and view all the answers

    What must be filed for record in the Office of the Securities and Exchange Commission when a certificate is amended?

    <p>A certified copy of the court's decree setting forth the amendment</p> Signup and view all the answers

    What is the purpose of signing a writing to cancel a certificate?

    <p>To confirm the cancellation of the certificate by all members</p> Signup and view all the answers

    Study Notes

    Liability of Limited Partners

    • A limited partner whose name appears in the partnership name, contrary to the provisions, is liable as a general partner to creditors who extend credit without actual knowledge of their limited partner status.
    • A limited partner who takes part in the control of the business is liable as a general partner.

    Consequences of False Statements

    • If a certificate contains a false statement, anyone who suffers a loss due to reliance on that statement can hold liable any party to the certificate who knew the statement was false.
    • The injured person can hold liable any party who:
      • Knew the statement was false at the time of signing
      • Failed to cancel or amend the certificate within a reasonable time after discovering the falsity

    Rights and Liabilities of Limited Partners

    • A limited partner is not liable as a general partner unless they take part in the control of the business.
    • A person who contributes to the capital of a business, believing they are a limited partner, is not a general partner unless they:
      • Take part in the control of the business
      • Fail to renounce their interest in the profits or other compensation after discovering the mistake

    Priority of Payment

    • After dissolution, partnership liabilities are paid in the following order:
      • Creditors (except limited partners on account of their contributions and general partners)
      • Limited partners (share of profits and other compensation by way of income)
      • Limited partners (capital contributions)
      • General partners (other than capital and profits)
      • General partners (profits)
      • General partners (capital)

    Assignment of Limited Partners' Interests

    • A limited partner's interest is assignable.
    • A substituted limited partner has all the rights and powers, and is subject to all the restrictions and liabilities, of their assignor.
    • An assignee becomes a substituted limited partner when the certificate is appropriately amended.
    • The substituted limited partner is liable for all the liabilities of their assignor, except those they were ignorant of at the time of becoming a limited partner.

    Cancellation and Amendment of Certificate

    • Cancellation of the certificate occurs when all limited partners cease to be such.
    • Amendment of the certificate reflects minor changes that the limited partnership can survive.
    • A petition to the court can be made to order a cancellation or amendment of the certificate if any person designated refuses to execute the writing.

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    Related Documents

    05-Limited Partnership.pdf

    Description

    A quiz about the liability of limited partners in a partnership, particularly when their surname appears in the partnership name contrary to provisions.

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