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 of the following statements is false? A. Dissolution is the term that pertains primarily to the contract of partnership, the brea ing of the vinculum juris, so to spea , between and among the partners in the partnership arrangement. !. "ermination pertains essentially to the partnership as a business enterprise , and defines the time when all matters pertaining to the business enterprise #i.e., the completion of pending contracts, the payment of all obligations and the distribution, if any, of the net assets of the partnership to the partners$ have been completed. %. Winding&up is the process which is commenced by the dissolution of the contract of partnership between and among the partners, and is concluded upon the termination or complete li'uidation of the partnership business enterprise. D. Dissolution which brea s the contractual privity between and among the partners necessarily give rise to winding&up or termination of partnership business enterprise as the dissolution of an e(isting partnership contract may not lead to the constitution of a new partnership contract among the partners who choose to proceed with the partnership business. Which of the following statements is false? 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. !. +ven when the contracting parties agree that their partnership contract would be irrevocable for ten years, under the principle of delectus 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(pulsion of a partner in accordance with the power provided in the partnership agreement, since it can only be e(ercised bona 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 engages in a separate enterprise that is competitive with that of the partnership and even withdraws e'uipment contributed into the partnership enterprise, the other partner-s withdrawal from the partnership is not .ustified and for which the latter can be held liable for damages. Which of the following causes of dissolution is not e'uivalent to rescission of the contract of partnership. A. When a partner has been declared insane in any .udicial proceeding or is shown to be of unsound mind. !. When a partner becomes in any other way incapable of performing his part of the partnership contract. %. When a partner has been guilty of conduct that tends to affect pre.udicially the carrying of the business D. !y the mutual withdrawal by all the partners from the partnership. Which of the following causes is not among those without violation of partnership contract1 A. !y the bona fide e(pulsion of any partner in accordance with the power provided for in the partnership agreement. !. "ermination of the term or particular underta ing specified in the partnership agreement. %. !y the e(ercise in good faith by any partner of the power to withdraw in a partnership at will. D. When a partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that is not reasonably practicable to carry on the business in partnerhsip with him. Which of the following instances is an assignee not recogni3ed to see .udicial dissolution of the partnership? A. At any time, in a partnership at will !. "ermination of the particular underta ing upon which the partnership is e(pressly constituted. %. "ermination of the period upon which the partnershp is e(presly constituted. D. When the business of the partnership can only be carried on at a loss. Which of the following statements is false1 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 has been no breach of the partnership agreement upon the dissolution of the partnership, no partner has a right to insist upon the winding&down of partnership affairs. %. ,n dissolution, the force of the original contract of partnership between the partners as to being mutual agents, as well as the enforceability of the doctrine of delectus personae, are terminated, without pre.udice to a new partnership arrangement being constituted among the remaining partners. D. "he doctrine of delectus personae is an embodiment of the principle of relativity or privity in contracts1 a partnership arrangement being primarily a contractual relationship, then the privity created by its perfection is between and among the partners thereto at the point of 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. 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. Which of the following statements is false1 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 person 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.

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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 nexus upon which the obligatory force of its contracts and transactions are fastened.