Bar Exam (Uniform) Quiz: Partnership Governance
20 questions · exam conditions
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Partnership GovernanceQuestion 1 of 20

A law firm operates as a general partnership with three partners. One partner, in the course of representing a client, commits malpractice by negligently missing a statute of limitations deadline, causing the client to lose a valid claim worth $300,000. The client obtains a judgment against the partnership for $300,000. The partnership's assets are only $60,000. The personal assets of the three partners are well in excess of the remaining liability.

What is the extent of the other two partners' personal liability for the remaining $240,000 of the judgment? Select one.

They are not personally liable because the malpractice was committed by a single partner.
They are each personally liable for one-third of the total judgment, amounting to $100,000 each.
They are jointly and severally liable for the entire remaining $240,000 of the partnership's debt.
They are liable only to the extent of their capital contributions to the partnership.
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Bar Exam (Uniform) Quiz

Bar Exam (Uniform) Quiz: Partnership Governance

Practice Partnership Governance in Bar Exam (Uniform) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Partnership Governance, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Uniform).

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

A law firm operates as a general partnership with three partners. One partner, in the course of representing a client, commits malpractice by negligently missing a statute of limitations deadline, causing the client to lose a valid claim worth $300,000. The client obtains a judgment against the partnership for $300,000. The partnership's assets are only $60,000. The personal assets of the three partners are well in excess of the remaining liability.

What is the extent of the other two partners' personal liability for the remaining $240,000 of the judgment? Select one.

  1. They are not personally liable because the malpractice was committed by a single partner.
  2. They are each personally liable for one-third of the total judgment, amounting to $100,000 each.
  3. They are jointly and severally liable for the entire remaining $240,000 of the partnership's debt. (correct answer)
  4. They are liable only to the extent of their capital contributions to the partnership.
Explanation: The correct answer is C. In a general partnership, partners are jointly and severally liable for all obligations of the partnership, including torts committed by a partner in the ordinary course of the partnership's business. This means that a creditor can sue any one partner for the entire amount of the partnership's debt after exhausting partnership assets. While the partners may have rights of contribution among themselves, each is fully liable to the third-party creditor. Choice A is incorrect because the partnership is liable for the torts of a partner acting in the ordinary course of business, and all partners are liable for partnership obligations. Choice B describes contribution rights between partners, not the liability to a third party. Choice D describes the liability of a limited partner or a member of an LLC, not a general partner.

Question 2

A consultant represents to a potential client that he is in a partnership with a well-known expert in the field. The expert is not a partner and is unaware of the consultant's representation. Relying on the purported association with the expert, the client hires the consultant for a large project and pays a $25,000 advance. The consultant absconds with the money.

Can the client hold the expert liable for the $25,000 loss under a partnership-by-estoppel theory? Select one.

  1. Yes, because the consultant held the expert out as a partner to the client.
  2. Yes, because the expert had a duty to monitor the use of her name in the industry and prevent such misrepresentations.
  3. No, because the expert did not consent to the representation nor was she aware of it. (correct answer)
  4. No, because the client did not conduct due diligence to confirm the existence of the partnership.
Explanation: The correct answer is C. Liability under a partnership-by-estoppel theory requires that the person held out as a partner either consented to the representation or knew of it and failed to take reasonable steps to deny it. Here, the expert was completely unaware of the consultant's misrepresentation. Without knowledge or consent, the expert cannot be held liable as a partner by estoppel. Choice A is insufficient; the representation must be made by or with the consent of the person being held out as a partner. Choice B incorrectly creates a broad duty to monitor that does not exist in partnership law. Choice D incorrectly shifts the burden to the victim; while due diligence is wise, its absence does not create liability for the non-consenting expert.

Question 3

A partner in an accounting firm, while performing an audit for a partnership client, discovered that the client's CFO was embezzling funds. The partner decided not to mention this in the audit report or to his own partners, fearing it would cause the lucrative client to leave the firm. Six months later, the embezzlement was discovered after the CFO had stolen an additional $500,000. The client sued the accounting firm for negligence.

Which fiduciary duty, owed among the partners of the accounting firm, did the partner most clearly breach by his silence? Select one.

  1. The duty of loyalty, by placing his interest in keeping a client above the firm's interest in performing its duties properly.
  2. The duty of care, by failing to conduct the audit in a non-grossly negligent manner.
  3. The duty of disclosure, by failing to furnish material information concerning the partnership's business to his partners. (correct answer)
  4. The duty to account, by failing to hold partnership property in trust for the partnership.
Explanation: The correct answer is C. RUPA codifies a partner's duty to furnish, without demand, any information concerning the partnership's business and affairs reasonably required for the proper exercise of the other partners' rights and duties. The discovery of embezzlement by a major client is material information that the other partners would need to properly manage the firm's business and legal exposure. The partner's failure to disclose this information is a direct breach of this duty. While the conduct may also touch on loyalty (A) and care (B), the most direct and clear breach related to the silence among partners is the duty of disclosure. The duty to account (D) typically relates to holding partnership property or profits, which is not the primary issue here.

Question 4

Your client is a partner in a general partnership that operates a construction business. The partnership agreement allows for the expulsion of a partner by a majority vote for conduct that 'harms the business.' Your client was recently expelled by a majority vote after he publicly advocated for stricter environmental regulations that, if passed, would increase the partnership's operating costs. Your client believes the expulsion was in bad faith.

What is your client's strongest argument that his expulsion was wrongful? Select one.

  1. That a partner cannot be expelled from a partnership without a unanimous vote, regardless of the agreement's terms.
  2. That the expulsion provision in the agreement is void as against public policy.
  3. That the power of expulsion, even if authorized by the agreement, must be exercised in good faith. (correct answer)
  4. That his advocacy was protected political speech and cannot be the basis for expulsion from a private partnership.
Explanation: The correct answer is C. While a partnership agreement can provide for the expulsion of a partner, the partners' power to expel must be exercised in good faith and fair dealing. An expulsion motivated by a desire to deprive the expelled partner of his share of the business's future profits or to punish him for exercising his rights could be considered a breach of this duty. Your client's strongest argument is that the other partners used the provision as a pretext to expel him in bad faith. Choice A is incorrect because a partnership agreement can change the default unanimity rule. Choice B is unlikely to succeed, as such clauses are common. Choice D, while appealing, is less likely to succeed because constitutional free speech protections generally do not apply to actions by private entities like a partnership.

Question 5

A partner in a three-person law firm partnership made a decision that resulted in a significant financial loss to the firm. The decision, which involved choosing a high-risk investment for firm funds, was made honestly but was ultimately a poor business judgment. There is no evidence of fraud, self-dealing, or illegal conduct. The other two partners seek to hold him personally liable for the loss.

Is the partner liable to the partnership for the financial loss? Select one.

  1. Yes, because partners are fiduciaries and must act as reasonably prudent persons in managing partnership affairs.
  2. Yes, because any action taken by a partner that results in a loss to the partnership constitutes a breach of the duty of care.
  3. No, because the business judgment rule protects a partner from liability for decisions made in good faith.
  4. No, because a partner is not liable to the partnership for losses arising from simple negligence or poor judgment in the ordinary course of business. (correct answer)
Explanation: The correct answer is D. A partner owes a duty of care to the partnership. However, under RUPA, this duty is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law. A partner is not liable for simple negligence or for business judgments that turn out badly, as long as they were made in good faith. The facts describe a poor business judgment, not gross negligence or intentional misconduct. Choice C is incorrect because while the principle is similar, the 'business judgment rule' is a term of art typically applied to corporate directors, not partners, though the underlying concept is analogous. Choices A and B state an incorrect, higher standard of care (ordinary negligence) than what RUPA requires.

Question 6

Three friends, an accountant, a marketer, and a chef, decide to open a restaurant together. They sign a detailed partnership agreement that allocates profits and losses equally. The agreement also states that any expenditure over $10,000 requires unanimous consent of the partners. One day, the chef, without consulting the others, signs a contract to purchase a new oven for $15,000 from a supplier who has never dealt with the restaurant before and is unaware of the partnership agreement's terms.

Is the partnership bound by the contract for the oven? Select one.

  1. Yes, because the chef had apparent authority to purchase equipment for the restaurant in the ordinary course of business. (correct answer)
  2. No, because the chef lacked actual authority to enter into a contract exceeding $10,000 without unanimous consent.
  3. No, because the supplier had a duty to inquire about the extent of the chef's authority before entering into a significant contract.
  4. Yes, because all partners are agents of the partnership and can bind it in any transaction related to the business.
Explanation: The correct answer is A. Under the Revised Uniform Partnership Act (RUPA), a partner is an agent of the partnership. A partner's act for apparently carrying on in the ordinary course the partnership business binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had received a notification that the partner lacked authority. Here, purchasing a new oven is an ordinary business activity for a restaurant. The supplier was unaware of the internal restriction in the partnership agreement. Therefore, the chef acted with apparent authority, and the partnership is bound. Choice B is incorrect because while the chef lacked actual authority, apparent authority is sufficient to bind the partnership to a third party. Choice C incorrectly imposes a duty of inquiry on the third party. Choice D is too broad; a partner's authority to bind the partnership is limited to acts in the ordinary course of business.

Question 7

A partner in a three-person law firm partnership made a decision that resulted in a significant financial loss to the firm. The decision, which involved choosing a high-risk investment for firm funds, was made honestly but was ultimately a poor business judgment. There is no evidence of fraud, self-dealing, or illegal conduct. The other two partners seek to hold him personally liable for the loss.

Is the partner liable to the partnership for the financial loss? Select one.

  1. Yes, because partners are fiduciaries and must act as reasonably prudent persons in managing partnership affairs.
  2. Yes, because any action taken by a partner that results in a loss to the partnership constitutes a breach of the duty of care.
  3. No, because the business judgment rule protects a partner from liability for decisions made in good faith.
  4. No, because a partner is not liable to the partnership for losses arising from simple negligence or poor judgment in the ordinary course of business. (correct answer)
Explanation: The correct answer is D. A partner owes a duty of care to the partnership. However, under RUPA, this duty is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law. A partner is not liable for simple negligence or for business judgments that turn out badly, as long as they were made in good faith. The facts describe a poor business judgment, not gross negligence or intentional misconduct. Choice C is incorrect because while the principle is similar, the 'business judgment rule' is a term of art typically applied to corporate directors, not partners, though the underlying concept is analogous. Choices A and B state an incorrect, higher standard of care (ordinary negligence) than what RUPA requires.

Question 8

Your client is a partner in a general partnership. He paid a $15,000 partnership debt in full from his personal funds to prevent a creditor from seizing partnership assets. The partnership agreement is silent on reimbursement and indemnification. He now seeks to be repaid by the partnership.

What are your client's rights regarding the $15,000 payment? Select one.

  1. He is entitled to be indemnified by the partnership for the full $15,000. (correct answer)
  2. He is entitled to contribution from the other partners for their pro-rata shares of the debt.
  3. He is considered a volunteer and is not entitled to any repayment from the partnership.
  4. He is entitled to treat the payment as a loan to the partnership that accrues interest at the statutory rate.
Explanation: The correct answer is A. Under RUPA's default rules, a partnership must indemnify a partner for liabilities incurred by the partner in the ordinary course of business on behalf of the partnership. Paying a legitimate partnership debt is such a liability. Therefore, the partnership as an entity owes the partner the full $15,000. Choice B describes the secondary right of contribution among partners if the partnership itself cannot pay, but the primary right is indemnification from the partnership. Choice C is incorrect; a partner paying a partnership debt is not a volunteer. Choice D is incorrect because the right is to indemnification, not necessarily a loan, although a payment made by a partner that is in excess of their required capital contribution can be treated as a loan.

Question 9

Your client is a partner in a general partnership that operates a construction business. The partnership agreement allows for the expulsion of a partner by a majority vote for conduct that 'harms the business.' Your client was recently expelled by a majority vote after he publicly advocated for stricter environmental regulations that, if passed, would increase the partnership's operating costs. Your client believes the expulsion was in bad faith.

What is your client's strongest argument that his expulsion was wrongful? Select one.

  1. That a partner cannot be expelled from a partnership without a unanimous vote, regardless of the agreement's terms.
  2. That the expulsion provision in the agreement is void as against public policy.
  3. That the power of expulsion, even if authorized by the agreement, must be exercised in good faith. (correct answer)
  4. That his advocacy was protected political speech and cannot be the basis for expulsion from a private partnership.
Explanation: The correct answer is C. While a partnership agreement can provide for the expulsion of a partner, the partners' power to expel must be exercised in good faith and fair dealing. An expulsion motivated by a desire to deprive the expelled partner of his share of the business's future profits or to punish him for exercising his rights could be considered a breach of this duty. Your client's strongest argument is that the other partners used the provision as a pretext to expel him in bad faith. Choice A is incorrect because a partnership agreement can change the default unanimity rule. Choice B is unlikely to succeed, as such clauses are common. Choice D, while appealing, is less likely to succeed because constitutional free speech protections generally do not apply to actions by private entities like a partnership.

Question 10

Three friends, an accountant, a marketer, and a chef, decide to open a restaurant together. They sign a detailed partnership agreement that allocates profits and losses equally. The agreement also states that any expenditure over $10,000 requires unanimous consent of the partners. One day, the chef, without consulting the others, signs a contract to purchase a new oven for $15,000 from a supplier who has never dealt with the restaurant before and is unaware of the partnership agreement's terms.

Is the partnership bound by the contract for the oven? Select one.

  1. Yes, because the chef had apparent authority to purchase equipment for the restaurant in the ordinary course of business. (correct answer)
  2. No, because the chef lacked actual authority to enter into a contract exceeding $10,000 without unanimous consent.
  3. No, because the supplier had a duty to inquire about the extent of the chef's authority before entering into a significant contract.
  4. Yes, because all partners are agents of the partnership and can bind it in any transaction related to the business.
Explanation: The correct answer is A. Under the Revised Uniform Partnership Act (RUPA), a partner is an agent of the partnership. A partner's act for apparently carrying on in the ordinary course the partnership business binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had received a notification that the partner lacked authority. Here, purchasing a new oven is an ordinary business activity for a restaurant. The supplier was unaware of the internal restriction in the partnership agreement. Therefore, the chef acted with apparent authority, and the partnership is bound. Choice B is incorrect because while the chef lacked actual authority, apparent authority is sufficient to bind the partnership to a third party. Choice C incorrectly imposes a duty of inquiry on the third party. Choice D is too broad; a partner's authority to bind the partnership is limited to acts in the ordinary course of business.

Question 11

A partner in a two-person IT consulting partnership decides to retire. She rightfully dissociates from the partnership, which does not dissolve and is continued by the remaining partner. Six months after her dissociation, the remaining partner enters into a large contract with a new client. The business subsequently fails, and the partnership defaults on the contract. The new client was aware that the retired partner had been a partner but was unaware of her dissociation.

Is the dissociated partner liable to the new client on the post-dissociation contract? Select one.

  1. No, because a dissociated partner is never liable for debts incurred after dissociation.
  2. No, because more than 90 days have passed since her dissociation.
  3. Yes, because the client was unaware of her dissociation and the contract was entered into within two years of her dissociation. (correct answer)
  4. Yes, because she failed to provide the client with direct, written notice of her dissociation.
Explanation: The correct answer is C. A dissociated partner may be liable for a partnership obligation incurred within two years after dissociation if, at the time of the transaction, the other party reasonably believed the dissociated partner was still a partner and did not have notice of the dissociation. Here, the client knew she had been a partner and was unaware she had left. The transaction occurred within the two-year window. Therefore, she has lingering apparent authority and is liable. To cut off this liability, the dissociated partner (or the partnership) can file a public statement of dissociation, which provides constructive notice to all third parties 90 days after filing. Choice B refers to this 90-day period, but there is no indication such a statement was filed. Choice A is an incorrect statement of the law. Choice D is incorrect as there is no requirement for direct, written notice to every potential future creditor.

Question 12

Your client is one of three partners in a general partnership that runs a successful consulting business. The partnership agreement is silent on the admission of new partners and the division of profits. The other two partners want to admit a fourth person as a partner to expand the business. Your client objects to the admission of this specific person.

Despite your client's objection, the other two partners vote to admit the new partner. Is this action valid? Select one.

  1. Yes, because admitting a new partner is an ordinary business decision requiring only a majority vote.
  2. Yes, because the partnership agreement is silent on the issue, the default rule allowing for expansion controls.
  3. No, because the admission of a new partner requires the unanimous consent of all existing partners. (correct answer)
  4. No, because any matter on which there is an equal division of votes among partners cannot proceed.
Explanation: The correct answer is C. Under the default rules of the Revised Uniform Partnership Act (RUPA), which apply when the partnership agreement is silent, admitting a new partner is an extraordinary matter that requires the unanimous consent of all partners. It is not an ordinary business decision that can be made by a majority vote. Therefore, the action of the other two partners is not valid without your client's consent. Choice A is incorrect because admitting a partner is considered an extraordinary matter, not an ordinary one. Choice B is incorrect because the default rule requires unanimity. Choice D is incorrect because the division of votes was two-to-one, not an equal division, but more importantly, the issue is the unanimity requirement, not a deadlock.

Question 13

A partner in an accounting firm, while performing an audit for a partnership client, discovered that the client's CFO was embezzling funds. The partner decided not to mention this in the audit report or to his own partners, fearing it would cause the lucrative client to leave the firm. Six months later, the embezzlement was discovered after the CFO had stolen an additional $500,000. The client sued the accounting firm for negligence.

Which fiduciary duty, owed among the partners of the accounting firm, did the partner most clearly breach by his silence? Select one.

  1. The duty of loyalty, by placing his interest in keeping a client above the firm's interest in performing its duties properly.
  2. The duty of care, by failing to conduct the audit in a non-grossly negligent manner.
  3. The duty of disclosure, by failing to furnish material information concerning the partnership's business to his partners. (correct answer)
  4. The duty to account, by failing to hold partnership property in trust for the partnership.
Explanation: The correct answer is C. RUPA codifies a partner's duty to furnish, without demand, any information concerning the partnership's business and affairs reasonably required for the proper exercise of the other partners' rights and duties. The discovery of embezzlement by a major client is material information that the other partners would need to properly manage the firm's business and legal exposure. The partner's failure to disclose this information is a direct breach of this duty. While the conduct may also touch on loyalty (A) and care (B), the most direct and clear breach related to the silence among partners is the duty of disclosure. The duty to account (D) typically relates to holding partnership property or profits, which is not the primary issue here.

Question 14

A partner in a three-person real estate development partnership learns of an opportunity to purchase a parcel of land that is perfect for a new development project. The project fits squarely within the partnership's business scope. Without informing her partners, she purchases the land in her own name and later develops it herself, making a substantial profit.

Have the partner's actions violated any fiduciary duty owed to the partnership? Select one.

  1. No, because partners are free to pursue their own business interests as long as they do not use partnership funds.
  2. No, because she did not formally present the opportunity to the partnership, so it was not a partnership opportunity.
  3. Yes, because she breached her duty of care by failing to act as a prudent businessperson.
  4. Yes, because she breached her duty of loyalty by usurping a partnership opportunity. (correct answer)
Explanation: The correct answer is D. Partners owe a fiduciary duty of loyalty to the partnership and the other partners. This duty includes refraining from usurping a partnership opportunity. An opportunity belongs to the partnership if it is closely related to the partnership's line of business. Here, the land development project was squarely within the partnership's scope. By taking the opportunity for herself without first offering it to the partnership and obtaining their consent, she violated her duty of loyalty. Choice A is incorrect; partners are not free to pursue interests that conflict with the partnership's business. Choice B is incorrect because the duty to disclose the opportunity is part of the duty of loyalty; she cannot avoid liability by failing to disclose it. Choice C is incorrect because this is a classic breach of the duty of loyalty (self-dealing/usurping an opportunity), not the duty of care, which relates to negligent or reckless conduct in managing partnership business.

Question 15

A consultant represents to a potential client that he is in a partnership with a well-known expert in the field. The expert is not a partner and is unaware of the consultant's representation. Relying on the purported association with the expert, the client hires the consultant for a large project and pays a $25,000 advance. The consultant absconds with the money.

Can the client hold the expert liable for the $25,000 loss under a partnership-by-estoppel theory? Select one.

  1. Yes, because the consultant held the expert out as a partner to the client.
  2. Yes, because the expert had a duty to monitor the use of her name in the industry and prevent such misrepresentations.
  3. No, because the expert did not consent to the representation nor was she aware of it. (correct answer)
  4. No, because the client did not conduct due diligence to confirm the existence of the partnership.
Explanation: The correct answer is C. Liability under a partnership-by-estoppel theory requires that the person held out as a partner either consented to the representation or knew of it and failed to take reasonable steps to deny it. Here, the expert was completely unaware of the consultant's misrepresentation. Without knowledge or consent, the expert cannot be held liable as a partner by estoppel. Choice A is insufficient; the representation must be made by or with the consent of the person being held out as a partner. Choice B incorrectly creates a broad duty to monitor that does not exist in partnership law. Choice D incorrectly shifts the burden to the victim; while due diligence is wise, its absence does not create liability for the non-consenting expert.

Question 16

A three-person partnership operating a retail store is in the process of winding up its affairs after dissolution. The partnership agreement is silent on the authority of partners during this phase. One partner, without the consent of the others, enters into a contract with a marketing firm for a new, long-term advertising campaign designed to 're-launch' the brand. The marketing firm is aware that the partnership is in the process of dissolving.

Is the partnership bound by the contract with the marketing firm? Select one.

  1. Yes, because any partner can bind the partnership to contracts entered into after dissolution.
  2. No, because the contract was for a new business initiative, not an act appropriate for winding up the partnership. (correct answer)
  3. No, because after dissolution, the unanimous consent of all partners is required for any action.
  4. Yes, because the marketing firm was not given formal written notice of the dissolution.
Explanation: The correct answer is B. After dissolution, a partner's authority to bind the partnership is limited to acts that are appropriate for winding up the partnership's business (e.g., selling assets, paying creditors). Entering into a new, long-term advertising campaign is not an act appropriate for winding up; it is an act of continuing the business. Therefore, the partner lacked authority to bind the partnership to this contract. Furthermore, because the marketing firm knew of the dissolution, it could not rely on any lingering apparent authority. Choice A is incorrect because authority is limited during winding up. Choice C is incorrect; while extraordinary acts require unanimity, this act was simply unauthorized. Choice D is incorrect because the firm's actual knowledge of the dissolution is sufficient to negate the partner's apparent authority.

Question 17

Two individuals form a partnership for a definite term of five years to develop a software application. Two years into the term, one partner decides the project is not progressing fast enough and withdraws from the partnership to start a competing company. The partnership agreement is silent on the consequences of early withdrawal.

What is the legal characterization of the partner's withdrawal? Select one.

  1. A rightful dissociation, because any partner has the power to withdraw at any time.
  2. A wrongful dissociation, because the withdrawal occurred before the expiration of the partnership's term. (correct answer)
  3. An event of dissolution, because the withdrawal of a partner automatically dissolves the partnership.
  4. A non-binding action, because a partner cannot withdraw from a partnership for a definite term without the other partner's consent.
Explanation: The correct answer is B. A partner has the power to dissociate at any time, but whether the dissociation is rightful or wrongful depends on the circumstances. In a partnership for a definite term or a particular undertaking, a partner's withdrawal before the completion of the term or undertaking is a wrongful dissociation. Because the partner withdrew before the end of the five-year term, the dissociation is wrongful. A partner who wrongfully dissociates is liable for any damages caused by the dissociation. Choice A is incorrect because while the partner has the power to dissociate, he does not have the right to do so without consequences. Choice C is incorrect because dissociation does not automatically cause dissolution. Choice D is incorrect because a partner can withdraw; the issue is whether it is wrongful.

Question 18

A partnership consists of three partners who share profits equally. The partnership agreement is silent on management rights. A dispute arises over whether to hire a new administrative assistant. Two partners vote in favor of the hire, but the third partner strongly objects, arguing it is an unnecessary expense.

Is the decision to hire the administrative assistant binding on the partnership? Select one.

  1. Yes, because hiring an employee is an ordinary business matter that is decided by a majority of the partners. (correct answer)
  2. No, because any decision affecting partnership finances requires unanimous consent.
  3. No, because a difference of opinion on an ordinary matter results in a deadlock, and the status quo must be maintained.
  4. Yes, but only if the two partners who voted in favor agree to personally cover the assistant's salary.
Explanation: The correct answer is A. Under the default rules of RUPA, each partner has equal rights in the management and conduct of the partnership's business. A difference arising as to a matter in the ordinary course of business of a partnership may be decided by a majority of the partners. Hiring a low-level employee like an administrative assistant is clearly an ordinary business matter. Therefore, the two-to-one majority vote is sufficient to bind the partnership. Choice B is incorrect; unanimity is generally required only for extraordinary matters or acts outside the ordinary course of business. Choice C incorrectly describes the effect of a majority vote. Choice D is a nonsensical condition not supported by partnership law.

Question 19

A partner in a two-person IT consulting partnership decides to retire. She rightfully dissociates from the partnership, which does not dissolve and is continued by the remaining partner. Six months after her dissociation, the remaining partner enters into a large contract with a new client. The business subsequently fails, and the partnership defaults on the contract. The new client was aware that the retired partner had been a partner but was unaware of her dissociation.

Is the dissociated partner liable to the new client on the post-dissociation contract? Select one.

  1. No, because a dissociated partner is never liable for debts incurred after dissociation.
  2. No, because more than 90 days have passed since her dissociation.
  3. Yes, because the client was unaware of her dissociation and the contract was entered into within two years of her dissociation. (correct answer)
  4. Yes, because she failed to provide the client with direct, written notice of her dissociation.
Explanation: The correct answer is C. A dissociated partner may be liable for a partnership obligation incurred within two years after dissociation if, at the time of the transaction, the other party reasonably believed the dissociated partner was still a partner and did not have notice of the dissociation. Here, the client knew she had been a partner and was unaware she had left. The transaction occurred within the two-year window. Therefore, she has lingering apparent authority and is liable. To cut off this liability, the dissociated partner (or the partnership) can file a public statement of dissociation, which provides constructive notice to all third parties 90 days after filing. Choice B refers to this 90-day period, but there is no indication such a statement was filed. Choice A is an incorrect statement of the law. Choice D is incorrect as there is no requirement for direct, written notice to every potential future creditor.

Question 20

Your client and her friend started a catering business as a general partnership. There is no written agreement. Your client managed all the finances, while her partner handled cooking and events. After a year of operations, your client wants to leave the partnership. She gives her partner 30 days' written notice of her express will to withdraw.

What is the legal effect of your client's withdrawal from this partnership? Select one.

  1. Her withdrawal is a wrongful dissociation because it violates the implied agreement to continue the business.
  2. Her withdrawal causes the dissolution of the partnership, and its business must be wound up. (correct answer)
  3. Her withdrawal has no legal effect until her partner consents to the dissociation.
  4. Her withdrawal entitles her to a buyout of her partnership interest, but she remains liable for past debts.
Explanation: The correct answer is B. This business is a partnership at will because it has no definite term or particular undertaking specified in an agreement. Under RUPA, in a partnership at will, a partner's notice of express will to withdraw causes both dissociation and dissolution of the partnership. Once dissolution occurs, the partnership must wind up its affairs. Choice A is incorrect because dissociation from a partnership at will is not wrongful. Choice C is incorrect because a partner has the power to dissociate at any time. Choice D is partially correct that she is entitled to payment for her interest and remains liable for past debts, but it misses the critical effect in a partnership at will: her dissociation triggers dissolution, not just a buyout with continuation of the business.