Quiz no 2, Partnership

October 6, 2022

Multiple Choice:

1. If a partner is insolvent, the first in the order of preference in the distribution of his assets is:
A. Partnership creditors
B. Partner’s contribution to the partnership
C. Separate creditors of the debtor
D. Pro-rata between the separate creditors and the partnership creditors.
2. Which of the following is not a requisite prescribed by law in order that the partnership may be held liable to a third
party for the acts of one of the partners.
A. The partners bind the partnership by acquiescence for obligations he may have contracted in good faith.
B. The partner must have the authority to bind the partnership.
C. The contract must be in the name of the partnership or for its own account.
D. The partner must act on behalf of the partnership.

3. X, Y and Z are partners in Ace & Co. W represented himself as a partner in the said partnership to A, who on the
faith of such representation, granted P1M loan to the partnership. Assuming only X and Y consented to such
representation, who shall be liable to A?
A. Since the partnership benefited from the credit extended by A, all partners X, Y and Z are liable.
B. Only X, Y and W are partners by estoppel and are liable pro rata.
C. Since the loan was extended to the partnership, all the partners and W are liable.
D. Only W who made the representation shall be liable.

4. A, B, and C are general partners in the merchandising firm. Having contributed equal amounts to the capital, they
also agreed on equal distribution of whatever profit is realized per fiscal period. After two years of operation
however, C conveys her whole interest in the partnership to D, without knowledge and consent of A and B. Is the
partnership dissolved?
A. The partnership is not dissolved because the conveyance of a partner’s interest in the partnership does not of
itself dissolve the partnership.
B. The partnership is not dissolved because the assignment made by C of his whole interest was without the
knowledge and consent of A and B.
C. The partnership was dissolved because the assignee, D automatically becomes a new partner and strictly
speaking, there is a new entity.
D. It is dissolved because C has ceased to be a partner because of the assignment of his whole interest to D.

5. Based on the preceding facts:

A. D can participate in the management of the partnership.
B. D cannot inspect the books nor copy them for any information on the partnership affairs as a partner can.
C. C has ceased to have the rights to use the partnership property.
D. C cannot take part in the control of the business anymore.

6. Still based on the same facts:

A. If A and B want to dissolve the partnership, C as a partner need not consent thereto because he had assigned his
interest to D.
B. D may ask the court for its dissolution being the assignee of C’s interest in the partnership.
C. A, B and D may dissolve the partnership even without the consent of C.
D. A, B and C cannot dissolve the partnership without the consent of D.

7. Spouses A and B formed a limited partnership to engage in real estate business and A contributed P1M only. Is the
partnership between the spouses valid?
A. The partnership is not valid because the spouses cannot enter into a limited partnership.
B. The partnership is valid because spouses can enter into a partnership, limited or general, universal or particular.
 C. The partnership is not valid because spouses cannot enter into any kind of partnership for business except
conjugal partnership.
D. The partnership is valid because spouses are prohibited to enter into a universal partnership only.

8. 1st Statement -A corporation cannot enter into a partnership contract with natural person but with a juridical person
it can.
2nd Statement -A general partner is always the capitalist in a limited partnership.
A. Both statements are false
B. First is true, second is false
C. Both are true
D. First is false, second is true

9. W, X, Y and Z organized a general partnership with W and X as industrial partners and Y and Z as capitalist partners.
Y contributed P.5 M and Z contributed P.2 M to the common fund. By a vote of the partners, W and X were
appointed managing partners, without specification of their duties and powers. A applied as secretary and B applied
as accountant of the partnership. The hiring of A was decided upon by W and X but was opposed by Y and Z. Whose
decision shall prevail?
A. The decision of W and X shall prevail because the hiring is an act of management and as managers they can do
so.
B. That of Y and Z shall prevail because they are the capitalist partners.
C. The decision of Y and Z because they have the controlling interest.
D. The decision of W and X because it is an act of ownership.

10. In the same problem as aforementioned, suppose the hiring of B was decided upon by W and Z, but was opposed by
X and Y, whose decision shall prevail?
A. The decision of W and Z because W is the managing partner and the hiring is an act of administration.
B. The decision of X and Y because in case of tie in the decision of managing partners, that of the controlling interest
shall prevail.
C. That of W and Z because Z is also a capitalist partner.
D. None of the decision because of the statement of equal rights.

11. If a partner is insolvent, the first in the order of preference is:

A. Partnership creditors
B. Partner’s contribution to the partnership.
C. Separate creditors of the partner.
D. Pro rata between the separate creditors and the partnership creditors.

12. A, B and C are partners in partnership “DA KING RAYMOND” to engage in buy and sell of carabao milk. A and B
contributed P10, 000.00 each while C contributed his service. After payment of the partnership liabilities to
creditors, only P6, 000.00 remains. In the absence of stipulation to the contrary the share of C shall be:
A. Equal to the share of A
B. Equal to the share of B
C. P2, 000.00
D. Nothing
13. X, Y and Z are partners who contributed equally to the capital of the partnership. A owes the partnership P9, 000.00.
Z collected from A P3, 000.00 before X and Y could receive anything from A, who later became insolvent and
therefore, they could not collect their shares.
A. Partner Z shall share the P3, 000.00 with his co-partners X and Y.
B. Z cannot be required to share what he already received from A.
C. X and Y should first exhaust all remedies to collect from A.
D. X and Y can automatically deduct from the capital contribution of Z in the partnership their respective shares in
the p3, 000.00.
14. A and B are partners in a real estate business. The partnership owns a parcel of land which C desires to buy. C
contacted A and informed him of his intention to buy the said land. A did not tell B such intention of C. A bought B
out of the partnership and afterwards sold the land to C at a profit.
A. The partnership was dissolved when A became the sole owner.
B. The sale is void because it was without the knowledge of B.
C. A is not liable to B for his share of the profits.
D. A is liable to B for his share in the profits.

15. A, B and C are partners in “RAY MOON” Company to engage in the sale of beer under the full moon on summer days
even in cases of conflagration and very very hot coffee on rainy days even in case of inundation. D represented
himself as a partner in the partnership to E who, on the belief of such representation, extended credit of P50,
000.00 to the partnership. Assuming only B and C consented to such representation, who shall be liable to E?
A. All of A, B, C, and D are liable because of partnership liability for the credit extended to the partnership by E.
B. B, C and D are partners by estoppels and thus, are liable to E.
C. Partners A, B and C are liable to E for the benefit extended to them.
D. Only D who made the representation is liable to E.

16. May contribute money, property or industry to a common fund.

A. Limited partner
B. General partner
C. Both limited and general partner
D. Both limited and industrial partner

17. One of the following incidents as a cause for involuntary dissolution of the partnership,
A. Termination of the definite term of partnership.
B. Insolvency of a partner.
C. Express will of a partner in a partnership at will.
D. Expulsion of a partner for cause as stated in the Articles of part.

18. The following are disqualified to form a universal partnership, except one:
A. Brother and sister
B. Husband and wife
C. Those guilty of adultery or concubinage
D. Those guilty of the same offense, if the partnership is entered into consideration of the same

19. A is a capitalist partner and B the industrial one. A engaged personally in the same kind of business as that of the
partnership:
A. If there are losses, the partnership will bear the losses.
B. If there are profits, they will be shared by A and the partnership.
C. If there are profits, A shall give them to the partnership.
D. A may be excluded from the partnership with liability for damages.

20. Suppose in the same facts as aforementioned, B engages in business on his own account but different from that of
the partnership.
A. If there are profits, B and the partnership shall share equally.
B. If there are losses, B and the partnership shall equally share.
C. B may be excluded from the partnership but without damages.
D. B may be excluded from the partnership with damages.

21. A and B are capitalist partners while C is an industrial partner. Both A and B equally contributed P15, 000.00 to each
to the capital. A contractual liability in favor of X was incurred in the amount of P40, 000.00. After the exhausting
partnership assets there is a balance recoverable from:
A. A and B only
B. A, B and C
C. A, B and C and C can get reimbursement from A and B.
 D. A, b and C without reimbursement from A and B in C’s favour.

22. In the aforementioned facts, suppose A, B and C agreed that one of them shall not be liable to the creditors, is the
agreement valid?
A. The stipulation that one of them shall not be liable to the creditors is voidable at the instance of the creditors.
B. It shall be void agreement even among the partners because partnership is for common benefit and interest.
C. It shall be void insofar as the creditors are concerned.
D. It shall be voidable among the partners themselves.

23. A, B and C are partners in a partnership engaged in retail with each contributing P20, 000.00 each. D is admitted as a
new partner with a contribution of P8, 000.00. At the time of his admission, the partnership has a pre-existing
obligation to E in the amount of P80, 000.00.
A. D is not liable to E for this obligation incurred when he was not yet a partner.
B. D is liable to E up to his personal assets which were not contributed.
C. D is liable up to his capital contribution.
D. D is liable up to his capital contribution in favor of creditors but with right of reimbursement from A, B and C.

24. 1st Statement -The partners are liable to third persons jointly or equally for torts or quasi-delict committed by any
partner in the conduct of the business or with authority of the partners.
2nd Statement - For contractual liability, their liability shall be solidary and all partners are liable.
A. Both are false statements
B. Both are true
C. First is false, second is true
D. First is true, second is false

25. 1st Statement -The partnership shall be bound in the contract entered into by the partner who has no authority
provided the third person is in good faith although the act of the partner is not in usual way of business.
2nd Statement - The partner’s acts although not in the usual way of conducting the business shall bind the partnership
provided he was authorized by his co-partners.
A. Both statements are true
B. Both are false
C. First is true, second is false
D. First is false, second is true

26. A and B are partners with A as the managing partner. C owes A P10, 000.00 and the partnership P30, 000.00 which
are now both due. A issued a receipt for the payment of C in the amount of P10, 000.00 in his own name. The
payment shall be applied to:
A. This partnership credit totally.
B. The credit of A only since the receipt is in his name.
C. The payment shall be applied equally in both credits.
D. The payments shall be applied proportionately to both credits.

27. A, B and C are partners who contributed equally to the capital. D without the knowledge of the death of C
contracted with A who also was unaware of the death of C. The liability of A is P90,000.00. How much can D collect
after exhausting partnership assets in the amount of P60,000.00.
A. P30, 000.00 from any one of A, B and C.
B. P15, 000.00 each from A and B.
C. P10, 000.00 from each of A and B and P10, 000.00 from C’s estate.
D. The partners are not liable beyond their capital contribution because the partnership was already dissolved at
the time of liability.

28. This is the order of priority in general partnership liabilities:

A. Outside creditors, creditor partner, partner’s capital, partner’s profit.
B. Outside creditors, creditor partner, partner’s profit, partner’s capital.
C. Creditor partner, Outside creditor, partner’s profit, partner’s capital.
 D. Creditor partner, Outside creditor, partner’s capital, partner’s profit.
29. C and P are capitalist partners while I is industrial partner, who in addition to his services also contributed capital to
the partnership. There is no agreement as to the profits and losses. The partnership realized profit in the amount of
P21, 000.00. The share of I in the profits shall be:
A. C and P will determine I’s share in the profits.
B. I’s share shall be P7, 000.00.
C. Pro rata to his contributed capital.
D. Just and equitable under the circumstances.

30. In the preceding number, suppose I is only an industrial partner, his share in the profits shall be:
A. Just and equitable under the circumstances.
B. In proportion to the capital contribution of his co-partners.
C. Equal to the least share in the profit of a capitalist partner.
D. The average share of all the capitalist partners.

31. Suppose instead of profit, the partnership suffered loss in the same amount of P21, 000.00 the share of the
capitalist partners in the loss shall be:
A. In accordance to their profit sharing agreement.
B. In accordance with their loss sharing agreement.
C. In proportion to their capital contribution.
D. Equally among them.

32. With still the same facts, as industrial partner, the share of I in the loss shall be:
A. Just and equitable under the circumstances.
B. As agreed upon by the partners before the loss was realized.
C. None, he being an industrial partner.
D. In proportion to his capital contribution.

33. 1st Statement -After dissolution, the partners can still enter into new business transactions in the name of the
dissolved partnership although not for the purpose of winding up partnership affairs.
2nd Statement - Insanity of either general or limited partner in a limited partnership shall dissolve the partnership.
A. Both statements are false
B. Both are true
C. First is false, second is true
D. First is true, second is false

34. A and B orally entered into a partnership with each of them contributing P3, 000.00 each and some personal
properties in the amount of P1, 000.00 each. The partnership contract is:
A. Unenforceable because the amount involved exceeds P500.00.
B. Void because it is not in public instrument.
C. Valid
D. Void, because it is not registered with the SEC.

35. A partnership which must be in public instrument to be valid is:

A. Contribution immovables or real rights therein regardless of the value thereof.
B. Contribution is P3, 000.00 or more or personal property.
C. General partnership
D. Particular partnership

36. 1st Statement -A universal partnership entered into without designation is considered one of profits.
2nd Statement -A limited partner’s surname cannot appear in the partnership name if it is also the surname of a general
partner to prevent misrepresentation to third persons.
A. Both statements are false
B. First is true, second is false
C. Both are true
 D. First is false, second is true

37. Which of the following statements is not correct?

A. A partnership contract is not covered by the Statute of Frauds
B. A limited partner shall not be bound by the obligations of the partnership.
C. A limited partner who takes part in the control of the business shall be liable as a general partner.
D. A stipulation which excludes a partner from sharing in the profits or loss is void.

38. Which of the following is incorrect?

A. An industrial partner who engages in business for himself may be excluded from the firm.
B. An industrial partner may not engage in business for himself unless there is a contrary stipulation.
C. A capitalist partner may engage in the same line of business as that of the partnership.
D. An offending capitalist partner may not be excluded from the firm.

39. 1st Statement -A partner’s interest in the partnership is not assignable unless the other partners consent.
2nd Statement - An act of strict dominion may be performed by a partner without the consent of his co-partners if it
is advantageous to the partnership.
A. Both statements are false
B. Both are true
C. First is true, second is false
D. First is false, second is true

40. 1st Statement -The death, insanity, retirement, insolvency or civil interdiction of a limited partner does not dissolve
the partnership.
2nd Statement -In a general partnership, the fact that the business can only be carried on at a loss does not result in
the dissolution of the partnership.
A. First statement is false, second is true
B. First is true, second is false
C. Both are true
D. Both are false