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SET B

BUSLAW2 MIDTERM EXAM 3RD Term AY 2004 IRAP


Write only your Name, Student No. and Section on the upper left-hand corner of this page. Write your answers on the Answer
Sheet. Except for the above-mentioned entries, together with the Answer Sheet, please return the questionnaire UNMARKED,
otherwise you will get a failing grade for the Midterms. Cheating shall be severely dealt.
1.

a.
b.

A-P5000; B-P3000; C-P2000; D-nothing


A-P2500; B-P2500; C-P2500; D-P2500
2.

a.
b.
c.
d.

b.
c.
d.

d.

c. Capitalist-Industrial partner
d. Industrial partner

The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in
the business, except where such profits were received in payment:

A partnership which comprises all the profits that the partners may acquire by their work or industry
during the existence of the partnership is called

Universal partnership of all present property


Universal partnership of profits
9.

a.
b.

In case of imminent loss of the business, the following partners must give additional capital, except:

As a debt by installments
As wages of an employee or rent to a landlord
As an annuity to a widow or representative of a deceased partner
All of the above
8.

a.
b.

Without the written consent or ratification of the specific act by all limited partners, general partner(s) have
no authority to:

Capitalist partner
General partner
7.

a.
b.
c.
d.

A partnership is dissolved without violation of the partnership agreement by:

Do any act in contravention of the certificate


Do any act making it impossible to carry on the ordinary partnership business
Confess judgment against the partnership
All of the above
6.

a.
b.

All partners are solidarily liable with the partnership for the purpose of making good a loss:

Termination of its definite term or particular undertaking


Express will of any partner, acting in good faith, when no definite term or particular undertaken is specified
Express will of all the partners who have not assigned their interests, before or after the end of any fixed term or
undertaking
Bona fide expulsion of any partner from the partnership business
5.

a.
b.
c.
d.

One or more but less than all the partners have no authority to perform the following acts, except:

Where a partner acting within the scope of his apparent authority receives money/property of a 3 rd person and
misapplies it
Where the partnership in the course of its business receives money/property of a 3 rd person and it is
misappropriated by a partner while the money/property in partnership custody
Where by any wrongful act or omission of any partner acting in the ordinary course of partnership business or with
the consent of his partners, loss or injury is caused to a person who is not a partner in the partnership
All of the above
4.

a.
b.
c.

c. A-P4000; B-P3000; C-P2000; D-P1000


d. A-P4000; B-P4000; C-P2000; D-nothing

Any act that would make it impossible to carry on the ordinary partnership business
Submit a partnership claim or liability to arbitration
Renounce a partnership claim
Convey partnership property in the ordinary course of partnership business
3.

a.

A, B, C and D are partners. Their contributions: A-P50,000; B-P30,000; C-P20,000; and D-services. They
have unpaid partnership debts. After exhausting partnership assets, there remained an unpaid balance of
P10000. Who should pay and how much each?

c. Particular partnership
d. Partnership at will

A partnership without definite period of existence & that can be dissolved at any time by any of the
partners is called:

Universal partnership of all present property


Universal partnership of profits

c. Particular partnership
d. Partnership at will

10. A partner who has all the rights, power and subject to all the restrictions of a general partner but whose
liability is, among themselves, limited to his capital contribution is called:
a.
b.

General partner
Limited partner

c. General-limited partner
d. Dormant partner

11. Refers to persons who represent themselves, or consent to another or others to represent them to anyone
that they are partners:
a.

General partnership

c. Partnership by estoppel

2
b.

Limited partnership

d. None of the above

12. Can only be made with the consent of all the partners:
a.
b.

Waiver or compromise
Sell equipment

c. Borrow money
d. None of the above

13. A partner who is not liable for the payment of partnership debts to the extent of his separate property after
the partnership assets are exhausted is called:
a.
b.

Managing partner
Limited partner

c. General partner
d. Silent partner

14. A, B and C are partners. Their contributions: A-P60,000; B-P40,000; C-services. They did not agree on how
to divide profits and losses. If there is a P10,000 loss, how should they share the loss?
a.
b.

A-P6000; B-P4000; C-nothing


A-P3000; B-P2000; C-P5000

c. A-P3500; B-P3500; C-P3000


d. A-P3500; B-P2000; C-P4000

a.
b.
c.
d.

15. As a general rule, a partner cannot ask for a formal accounting of the affairs of the partnership during its
existence and before it is dissolved, except:
When he is wrongfully excluded from the partnership business
When the right exists under the terms of any agreement
When circumstances render it just and reasonable
All of the above
16. A partnership is automatically dissolved, except:

a.
b.
c.
d.

By the death of any partner


By the insolvency of any partner or of the partnership
By the civil interdiction of any partner
By the insanity of any partner
17. If a partner is insolvent, the 1st order of preference in the distribution of his assets is:

a.
b.
c.
d.

Partners contribution to the partnership


Partnership creditor
Separate creditor of the partner
Pro-rata between the separate creditors and partnership creditors
18. May be required additional contribution in case of imminent loss:

a.
b.

Capitalist partner
Limited Partner

c. Industrial partner
d. Expulsion of any partner

19. Which of the following may be a cause for involuntary dissolution?


a.
b.

Express will of any partner


Insolvency of any partner

c. Termination of the term


d. Expulsion of any partner

20. A substituted limited partner is:


a.
b.
c.
d.

A person admitted as a partner by the other partners


A buyer of right of a deceased partner
An assignee admitted to all the rights of a limited partner
All of the above
21. A partnership is dissolved on the death of a:

a.
b.

General partner
Industrial partner

c. General-limited partner
d. All of the above

22. A partnership
a.
b.
c.
d.

Is created by agreement of the partners


Has juridical personality separate and distinct from that of each of the partners
May be constituted in any form as a general rule
All of the above
23. The following persons are disqualified to form a universal partnership, except:

a.
b.
c.
d.

Brother and Sister


Husband and Wife
Those guilty of adultery and concubinage
Those guilty of the same criminal offense, if the partnership is entered into in consideration of the same
24. 3 of the following are rights of a partner, except:

a.
b.

To associate another person to his share


To admit another partner

c. To inspect and copy partnership books


d. To ask dissolution of the firm at the proper time

3
25. Which of the following is not an element of a partnership?
a.
b.

Valid contract
Contribution of money, property or industry to common fund
26. Sometimes termed dormant partner:

a.
b.

Limited partner
Capitalist partner

c. Intent to engage in lawful business


d. None of the above

c. Secret partner
d. None of the above

27. In 3 of the following instances, the certificate of a limited partnership may be amended. Which is the
exception?
a.
b.
c.
d.

Change in the character of the business


There is a false or erroneous statement in the certificate
Death of a general partner
A person is substituted as a limited partner
28. A partner who contributes his work, labor or industry to the common fund of the partnership is called:

a.
b.

Industrial partner
Capitalist partner

c. Capitalist-Industrial partner
d. Ostensible partner

29. A partnership having for its object determinate things, their use or fruits, or a specific undertaking, or the
exercise of a profession or vocation is called:
a.
b.

Partnership by estoppel
Particular partnership

c. Universal partnership of all present property


d. Universal partnership of profits

30. A partner in a limited partnership cannot contribute:


a.
b.

Cash
Property and services

c. Partly cash and partly property


d. None of the above

31. A, B and C are partners. Their contributions: A-P60,000; B-P40,000; C-services. They agreed to divide
profits and losses this way: A-35%; B-25% and C-40%. If there is a P10,000 profit, how should they share
the profit?
a.
b.

A-P6000; B-P4000; C-nothing


A-P3000; B-P2000; C-P5000

c. A-P3500; B-P2500; C-P4000


d. A-P3500; B-P3500; C-P3000

32. On application by or for a partner the court shall decree a dissolution whenever:
a.
b.
c.
d.

A partner becomes in any other way incapable of performing his part of the partnership contract
A partner has been guilty of such conduct as it tends to affect prejudicially the carrying on of the business
A partner willfully or persistently commits a breach of the partnership agreement that it is not reasonably
practicable to carry on the business in partnership with him
All of the above
33. M is an industrial partner. Besides his services, he also contributed capital to the partnership. There is no
agreement as to profits or losses. The share of M in the profit is:

a.
b.
c.
d.

The remaining partners will determine his share in the profits


Combination of letter c and letter d below
Such share as may be just and equitable under the circumstances
Pro-rata to his contributions
34. Every contract of partnership having a capital of P3000 or more in money or property shall appear in a
public instrument which must be recorded in the SEC. Failure to comply with said requirements

a.
b.
c.
d.

Will not affect the liability of a partnership and the members thereof to 3 rd persons
Will render the partnership void
Will not give the partnership a legal personality
Will give the partnership a de facto existence
35. A partner whose connection with the partnership is open and public, such as by including his name in the
firm name of the partnership:

a.
b.

Nominal partner
Ostensible partner

c. Secret partner
d. Dormant partner

36. A partner who does not participate in the management of the affairs of the partnership and whose
connection with it is not made known to the public is called:
a.
b.

Ostensible partner
Secret partner

c. Silent partner
d. Dormant partner

37. 3 of the following listings are rights of a general partner in a limited partnership that are also enjoyed by a
limited partner. Which among them does a limited partner not enjoy?

4
a.
b.
c.
d.

a.
b.
c.
d.

To have partnership books kept at principal place of business & at a reasonable hour to inspect and copy them
To have on demand true and full info of all things affecting partnership affairs under reasonable and just
circumstances.
To have dissolution and winding up by decree of the court
To have all the rights and be subject to all the restrictions and liabilities of a partner in a partnership without limited
partners.
38. A, B and C are partners in X Company. D owes the partnership P4500. A received from D a share of P1500
ahead of B and C, by giving D a receipt for his share only. D became insolvent subsequently.
A can be required to share the P1500 with B and C
A cannot be required to share the P1500 with B and C
B and C should exhaust first all remedies to collect from D
B & C can automatically deduct their share in the P1500 from As capital contribution in the partnership
39. A partner who has no voice or say in the management of partnership affairs is called:

a.
b.

Nominal partner
Secret partner

c. Silent partner
d. Dormant partner

40. A person who, not a partner, is made liable for partnership debts to 3 rd persons by reason of his acts or
omissions:
a.
b.

Ostensible partner
Nominal partner

c. Silent partner
d. Dormant partner

41. A partner who contributes money or property to partnership capital is called:


a.
b.

Industrial partner
Capitalist partner

c. Capitalist-Industrial partner
d. Nominal partner

42. A and B are partners, with A as managing partner. D owes A P10000 and the partnership P5000. Both debts
are due and demandable. D paid A P3000. A issued a receipt in the partnerships name to D. How should
the P3000 be applied?
a.
b.
c.
d.

It should be applied to the indebtedness of D to A.


It should be applied to the indebtedness of D to the partnership
P2000 should be applied top the indebtedness of D to the partnership and P1000 to Ds indebtedness to A
P1000 should be applied top the indebtedness of D to the partnership and P2000 to Ds indebtedness to A
43. Which of the following is not a property right of a partner?

a.
b.
c.
d.

His rights in specific partnership property


His interest in the partnership
His right to participate in the management
To demand true and full information of all things affecting the partnership
44. Except when authorized by the other partners, one or more but less than all the partners have no authority
to:

a.
b.

Assign the partnership property in trust for creditors


Dispose of the goodwill of the business

c. Compromise a partnership claim or liability


d. All of the above

45. A limited partner shall not become liable as a general partner unless:
a.
b.

He takes part in the control of the business


He contributes his services to the capital of the firm

c. His surname appears in the partnership name


d. All of the above

46. A, B and C are partners. A contribute P10000; B, P5000; and C, his services. After payment of partnership
debts, P6000 remained as profits. IN the absence of a contrary stipulation, Cs share is:
a.

That of B
c. That of A
P2000
d. Nothing
47. A partner who contributes money or property as well as his work to partnership capital is called:

a.
b.

Industrial partner
Capitalist partner

c. Capitalist-Industrial partner
d. Managing partner

48. A partnership suffered losses in the 1 st year of operations. X, a capitalist partner became insolvent. Can he
be obliged to sell his interest to the others partners on the ground of 1 st refusal/pre-emptive right?
a.
b.
c.
d.

Yes. Xs refusal to contribute additional capital reflects lack of interest to continue the business
No, there is actually no imminent loss of the business
Yes, provided X is paid the value of his interest
No, Xs refusal is justifiable

a.
b.
c.
d.

49. Which of the following is considered prima facie proof of partnership existence?
Payment of interest on a loan varies with the profits of the business
Receipts by a person of a share in the profits
Sharing of gross returns of the business
The parties are established as co-owners of a property.

a.
b.
c.
d.

50. A, B and C are partners in X Company. D represented himself as a partner to E, who believing D, lent
P10000 to X Company. A and B consented to such representation. Who is liable to E?
All partners including D
A, B and D are partners by estoppel and are pro-rata liable to E
Only D. He alone made the representation
A, B and C. They benefited from the credit E extended.
GD LUCK!