Questions Quiz 6, Partnership Law-

PARTNERSHIP LAW University of Makati Atty. Aris S. Manguera

PARTNERSHIP LAW QUIZ # 6

I. Multiple Choice. Write the letter of the best answer on the space provided before each number.

1.

Which Which of the the follo followi wing ng state statemen ments ts is fals false? e?  A. “Dissolution” is the term that pertains primarily to the contract of partnership, partnership , the breaing of the vinculum juris, juris , so to spea, between and among the partners in the partnership arrangement. !. “"ermi “"erminat nation ion”” pertain pertains s essenti essentiall ally y to the  partnership as a business enterprise, enterprise , and defines the time when all matters pertaining to the business enterprise #i.e., the completion of pending contracts, the payment of all obliga obligatio tions ns and the distri distribut bution ion,, if any, of the net assets assets of the partnersh partnership ip to the partners partners$$ have have been been completed. %. “Winding&up “Winding&up”” is the process which is commenced commenced by the dissolut dissolution ion of the contract contract of partnership partnership between between and among the partners, and is concluded upon the termination or complete li'uidation of the partnership business enterprise. D. Dissol Dissoluti ution on which which breas breas the contrac contractua tuall privit privity y betwe between en and among the partne partners rs necess necessari arily ly give give rise rise to winding&up winding&up or terminatio termination n of partnershi partnership p business business enterprise enterprise as the dissolution dissolution of an e(isting e(isting partnershi partnership p contract may not lead to the constitution of a new partnership contract among the partners who choose to proceed with the partnership business.

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Which Which of the the follo followi wing ng state statemen ments ts is fals false? e?  A. *artnership being primarily a contractual relationship between and among the partners, the various modes of dissolution is ain to the general principles covering the extinguishment of contracts. contracts . !. +ven +ven when when the contrac contracti ting ng partie parties s agree agree that that their their partnershi partnership p contra contract ct would be irrevo irrevocab cable le for ten years, years, under the principle of delectus personae, personae, any partner even without cause can see to terminate his relationship by withdrawing from the partnership thereby causing its dissolution. %. n case of e(pulsio e(pulsion n of a partner in accordan accordance ce with the power power provided provided in the partnershi partnership p agreement, agreement, since since it can only be e(ercised bona fide, fide , it could only mean that the partner was e(pelled “for cause” and conse'uently, he would be dis'ualified from participating in the winding&up of the affairs of the partnership business. D. When a partner partner engages engages in a separat separate e enterpr enterprise ise that that is competi competitiv tive e with with that that of the partners partnership hip and even withdraws withdraws e'uipment e'uipment contribute contributed d into the partnership partnership enterprise, enterprise, the other partner-s partner-s withdrawal withdrawal from the partnership is not ustified and for which the latter can be held liable for damages.

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Which of the the following following causes causes of dissolution dissolution is not e'uiva e'uivalent lent to rescissi rescission on of the contract contract of partnershi partnership. p.  A. When a partner has been declared insane in any udicial proceeding or is shown to be of unsound mind. !. When a partner partner becomes becomes in any other way incapabl incapable e of performing performing his part part of the partnership partnership contract contract.. %. When a partner has been guilty guilty of conduct conduct that tends tends to affect preudicia preudicially lly the carrying carrying of the business business D. !y the mutual mutual withdr withdrawal awal by all all the partners partners from from the partnershi partnership. p.

0.

Which of the the following following causes causes is not among those those “without “without violat violation ion of partnershi partnership p contract” contract”  A. !y the bona bona fide fide e(pulsion e(pulsion of any partner partner in accordance with with the power provided provided for in the partnership partnership agreement. !. "erminatio "ermination n of the term or particul particular ar undertaing undertaing specifi specified ed in the partnershi partnership p agreement. agreement. %. !y the e(ercise e(ercise in good faith faith by any partner partner of the power power to withdraw withdraw in a partnership partnership at will. will. D. When a partne partnerr willf willfull ully y or persis persisten tently tly commit commits s a breach breach of the partner partnershi ship p agreem agreement ent,, or otherwi otherwise se so conducts himself in matters relating to the partnership business that is not reasonably practicable to carry on the business in partnerhsip with him.

2.

Which of the followin following g instances instances is an assignee not recogni3ed recogni3ed to see udicial udicial dissolu dissolution tion of the partnershi partnership? p?  A. At any time, in in a partnership at will will !. "erminatio "ermination n of the particular particular undertaing undertaing upon which which the partnership partnership is e(pressly e(pressly constitut constituted. ed. %. "erminatio "ermination n of the period period upon which which the partnershp partnershp is e(presly e(presly constit constituted. uted. D. When the the business business of the partners partnership hip can only be carried carried on at a loss. loss.

4.

Which Which of the the follo followi wing ng state statemen ments ts is fals false e  A. Dissolution of a partnership does not undermine e(isting contracts, nor modify or e(tinguish then e(isting obligations of the partnership and partners5 and that the completion or performance of e(isting contracts and the settlement of partnership obligations are in fact integral parts in the winding&up process. !. When there there has been been no breach breach of the partners partnership hip agreeme agreement nt upon the dissol dissoluti ution on of the partners partnership hip,, no partner has a right to insist upon the winding&down of partnership affairs. %. n dissolutio dissolution, n, the force of the original original contract contract of partnership partnership between between the partners partners as to being mutual mutual agents, agents, as well as the enforceability of the doctrine of delectus personae, personae, are terminated, without preudice to a new partnership arrangement being constituted among the remaining partners. D. "he "he doc doctrin rine of delectus delectus personae personae is an embodi embodimen mentt of the  principle of relativity or  privity in contracts contracts  a partnership arrangement being primarily a contractual relationship, then the privity created by its perfection is between between and among among the partners partners thereto at the point of perfection5 perfection5 and that such privity cannot be e(tended beyond the original partners without the consent of all the parties to the contract of partnership.

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PARTNERSHIP LAW University of Makati Atty. Aris S. Manguera 6.

Which of the following statements is false?  A. When the dissolution is caused by the bona fide e(pulsion of a partner, the e(pelled partner is without power or authority to insist upon the formal winding&up and li'uidation of the partnership business enterprise5 and that the choice whether to continue with the business enterprise or to formally wind&up is with the remaining partners. !. +ach partners who has not caused the dissolution wrongfully shall have the right to particiapte in the net assets of the partnership after discharge of all partnership liabilities and to damages for breach of the agreement, as agaisnt each partner who caused the dissolution wrongfully. %. "he partners who have not caused the dissolution wrongfully, may if they so desire continue the business in the same name either by themselves or ointly with others, during the rest of the agreed term for the partnership. D. A partner who has caused the dissolution wrongfully shall not have the rights of a partner for share in the net assets of the partnership after payment of all its liabilities.

7.

Which of the following statements is false?  A. A partner who has caused the dissolution wrongfully shall only have, if the business is continued, the right as against his co&partners and all claiming through them in respect of their interests in the partnership, to have the value of his interest in the partnership, less any damage caused to his co&partners by the dissolution, ascertained and paid to him in cash, or the payment, secured by a bond approved by the court, and to be released from all e(isting liabilities of the partnership. !. "he general rule is that the dissolution rule is of the partnership does not of itself discharge the e(isting liability of any of the partners. %. Whatever may have been the cause of the dissolution of the partnership, third parties that are aware of the dissolution of the partnership who enter into any contract or transaction with the partnership through any of the partners, are protected in their contractual e(pectations that the contract is valid and binding against the partnership. D. During the winding&up stage, every partner authori3ed to wind&up partnership affairs has full authority to enter into any contract or transaction that is consistent with the winding&up of partnership affairs, and such contracts and transactions shall be valid and binding upon the partnership and those of the partners.

8.

Which of the following statements is false  A. Although a partner may be bound personally to the liabilities incurred with third parties who act in good faith, nonetheless, such liability is limited in the sense that the liability of a partner shall be satisfied out of partnership assets alone when such partner had been prior to dissolution, unnown as a partner to the pers on with whom the contract is made and so far unnown and inactive in partnership affairs that the business reputation of the partnership could not be said to have been in any degree due to his connection with it. !. When partnership property and the individual properties of the partners are in possession of a court for distribution, partnership creditors shall have priority on partnership property and separate creditors on individual property, saving the right of lien of secured creditors. %. A share in a partnership can be returned only after the completion of the latter-s dissolution, li'uidation and winding up of the business. D. "he surname of a limited partner shall not appear in the partnership name even if it is also the surname of a general partner.

19. Which of the following statements is false?  A. "he limited liability feature of the limited partnership is achieved by taing away from the limited partners most of the ey features of partnerships in general, namely, mutual agency, delectus personae, and the right to manage partnership affairs. !. :nder our present law, it is not re'uired as an essential element to establish a limited partnership, that the firm name should contain the names of the general partners, or of any of them. %. A limited partner whose surname appears in a partnership name shall not be liable as a general partner to the partnership creditors who e(tend credit to the partnership without actual nowledge that he is not a general partner.

D. The firm name of every partnership is the very means by which its existence as a juridical  person, separate and distinct from its members, and distinguishable from other firms and  juridical persons, constitutes the essence of the “person” of the partnership and thereby the ne xus upon which the obligatory force of its contracts and transactions are fastened.

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