Business Law 3301 Test 3 || Already Passed.
Dissociation Partnership correct answers (1) by notifying her partners that she wishes to
withdraw,
(2) due to an event specified in the partnership agreement,
(3) by unanimous vote of the other partners under one or more of the circumstances set forth in
UPA § 601,
(4) by judicial (or arbitral) order, or
(5) due to death, incapacity, bankruptcy, or assigning her partnership interest for the benefit of
creditors.
Wrongful Dissociation correct answers 1) the dissociation constitutes a breach of the partnership
agreement;
(2) the dissociation is premature; or
(3) the partner is expelled by a court or arbitrator or declares bankruptcy.
Dissolution correct answers The formal disbanding of a partnership, which can be brought about
by
(1) the terms of the partnership agreement,
(2) voluntary or involuntary withdrawal,
(3) the addition of one or more new partners,
(4) death of a partner,
(5) bankruptcy of a partner or of the partnership, or
(6) judicial decree
Notice Required: Dissolution requires either express (in words) or implied (by actions) notice to
each partner. In addition, the partnership must give correct answers (1) actual notice to any third
party creditor of the partnership, and
(2) actual or constructive notice to any other third party affected by the dissolution (e.g.,
customers, employees).
Incoming Partners correct answers Newly-admitted partners are liable for debts and obligations
incurred before they joined the partnership only to the extent of their capital contribution.
Joint Liability correct answers If a third party sues an individual partner for, e.g., a partnership
debt, the partner sued has the right to insist that her other partners be joined as defendants (and
share the burden of any judgment).
Joint and Several Liability correct answers A third party may sue one or more individual
partners, without suing all of the partners, and hold any partners sued fully liable for any
judgment.
Partnership Obligations correct answers First - 3rd party creditors
2nd - partner loans to partnership
3rd - return of capital contributions
, 4th - distribution of the balance, if any to partners
LLP correct answers Limited Liability Partnership
LLP Definition correct answers Hybrid form of business that allows for 'pass-through' for tax
purposes, but limits personal liability from malpractice of other partners.
Family Limited Liability Partnership (FLLP) correct answers An LLP in which the majority of
the partners, all of whom must be natural persons, are persons related by blood or marriage or
fiduciaries of persons so related.
Limited Partnership (LP) correct answers One or more general partners, who manage the
business and are personally liable for the partnerships debts, plus one or more limited partners,
who contribute assets and do not participate in management.
Operating Agreement correct answers An agreement among the members of an LLC, addressing
management, profit-sharing, transfer of ownership, dissolution, and other important issues.
The operating agreement may also include provisions governing decisionmaking procedures,
voting rights, members' meetings, and the like.
Even if the relevant state does not require a formal operating agreement, much less a written one,
LLC members are wise to have both to clearly delineate the members' rights and responsibilities.
Member managed correct answers Meaning that all of the owners of the LLC participate in its
management
Manager Managed correct answers meaning that a designated group of persons, some or all of
whom may be non-members, manage the LLC.
No management agreement correct answers In the absence of a contrary agreement, all members
of an LLC are entitled to participate in its management.
LLC Disassociation correct answers Unless the operating agreement says otherwise, a member
may dissociate from the LLC voluntarily. In addition, the Uniform Limited Liability Company
Act (ULLCA) allows members to be dissociated
(1) by vote of the other members,
(2) by judicial (or arbitral) order, or
(3) due to death, incapacity, bankruptcy, or assigning her partnership interest for the benefit of
creditors.
A member's dissociation generally does not cause the LLC to cease doing business.
A member who ceases to be associated with a LLC correct answers (1) is normally entitled to
have the remaining members purchase his interest,
