Bar Exam (Next Generation) Quiz: Termination
11 questions · exam conditions
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TerminationQuestion 1 of 11

P, Q, and R are equal partners in an at-will partnership that operates a restaurant. Without prior discussion, R emails P and Q: 'Effective immediately, I am withdrawing from the partnership.' P and Q reply that they reject R's withdrawal and intend to keep operating the restaurant as partners.

Under the Revised Uniform Partnership Act, what is the effect of R's withdrawal?

The partnership continues because P and Q rejected the withdrawal, and R may not withdraw without all partners' consent.
The partnership is dissolved by R's express will to withdraw; P and Q cannot prevent dissolution by refusing to consent, and the partnership must be wound up.
The partnership is dissolved, but R remains a partner with full management rights until winding up is completed.
The partnership is not dissolved because R's withdrawal was wrongful, having been made in bad faith to abandon the restaurant without notice.
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Bar Exam (Next Generation) Quiz

Bar Exam (Next Generation) Quiz: Termination

Practice Termination in Bar Exam (Next Generation) 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 Termination, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Next Generation).

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

P, Q, and R are equal partners in an at-will partnership that operates a restaurant. Without prior discussion, R emails P and Q: 'Effective immediately, I am withdrawing from the partnership.' P and Q reply that they reject R's withdrawal and intend to keep operating the restaurant as partners.

Under the Revised Uniform Partnership Act, what is the effect of R's withdrawal?

  1. The partnership continues because P and Q rejected the withdrawal, and R may not withdraw without all partners' consent.
  2. The partnership is dissolved by R's express will to withdraw; P and Q cannot prevent dissolution by refusing to consent, and the partnership must be wound up. (correct answer)
  3. The partnership is dissolved, but R remains a partner with full management rights until winding up is completed.
  4. The partnership is not dissolved because R's withdrawal was wrongful, having been made in bad faith to abandon the restaurant without notice.
Explanation: Whenever you see a question about partner withdrawal under the Revised Uniform Partnership Act (RUPA), focus on the distinction between an at-will partnership and a term partnership. In an at-will partnership, any partner has the absolute power to withdraw and dissolve the partnership by expressing their will—regardless of the other partners' objections. Here, R's email is an unequivocal expression of intent to withdraw. Under RUPA, this immediately dissolves the at-will partnership. P and Q's rejection of the withdrawal is irrelevant because consent is not required for a partner to withdraw from an at-will partnership; the partnership must then be wound up. Now, examine the incorrect choices. The choice stating that "the partnership continues because P and Q rejected the withdrawal, and R may not withdraw without all partners' consent" fails because it assumes unanimous consent is required—it is not. The choice claiming "the partnership is dissolved, but R remains a partner with full management rights until winding up is completed" is wrong because a withdrawing partner ceases to be a partner immediately upon withdrawal; they do not retain management rights during winding up—the remaining partners or a court-appointed liquidator handle that process. Finally, the choice that says "the partnership is not dissolved because R's withdrawal was wrongful, having been made in bad faith" is a classic trap. Even if R's withdrawal were wrongful (e.g., violating a partnership agreement), a wrongful withdrawal still dissolves the partnership, though the wrongdoer may be liable for damages. Here, since it's an at-will partnership, the withdrawal is not wrongful at all. Study tip: In an at-will partnership, the power to dissolve is absolute—consent is never required. When analyzing withdrawal questions, separate the issue of whether the dissolution is effective (always yes upon express will) from whether it was wrongful (which only affects liability, not dissolution).

Question 2

Corner Corp has 1,000 shares of voting common stock outstanding and no other class of shares. Its board adopts a resolution recommending dissolution and calls a special shareholders meeting. At the meeting, 750 shares are present. On the proposal to dissolve, 400 shares vote in favor and 350 vote against. The articles of incorporation contain no supermajority requirement. Under the Model Business Corporation Act, was the dissolution proposal approved by the shareholders?

Was the dissolution proposal approved by the shareholders?

  1. Yes, because a majority of the votes present and voting approved the proposal.
  2. Yes, because 400 shares out of 750 present is a majority of the quorum.
  3. No, because approval requires affirmative vote of two-thirds of all shares entitled to vote, and 400 is less than 667.
  4. No, because approval requires affirmative vote of a majority of all shares entitled to vote, not merely of votes cast or shares present; 400 is less than 500. (correct answer)
Explanation: When you see a shareholder approval question, the key is to identify the exact voting requirement the statute imposes—especially whether it turns on votes cast, shares present, or all shares outstanding. Under the Model Business Corporation Act, dissolution generally requires approval by a majority of all votes entitled to be cast on the plan. With 1,000 voting shares outstanding, that means more than half of all outstanding votes—over 500—must affirmatively approve. Here only 400 shares voted in favor, so the proposal was not approved even though it carried among votes cast. The correct answer is the one saying approval requires a majority of all shares entitled to vote,not merely votes cast or shares present. Since 400 is far short of the needed majority of the 1,000 outstanding shares, the dissolution failed. The 350 no votes and the 250 absent shares all effectively count against the proposal under this rule, because the statute does not reduce the denominator to those present or voting. The first wrong answer—that a majority of the votes present and voting approved—mistakenly applies the ordinary default rule for most shareholder action, but dissolution has a special outstanding-shares requirement. The second wrong answer—that 400 out of 750 present is a majority of the quorum—confuses quorum with the voting threshold;quorum only validates the meeting,it does not lower the approval standard. The third wrong answer—that two-thirds of all shares is required—overstates the MBCA requirement; dissolution does not need two-thirds unless the articles impose a supermajority requirement, which they do not here. Your study takeaway: when the statute says "majority of all votes entitled to be cast," treat absent shares and abstentions as votes against. Always compare the favorable votes to all outstanding voting shares, not to votes cast or shares present.

Question 3

Peak LLC has two members, Tara and Uma. Under their operating agreement, each is obligated to contribute $50,000 as capital. Tara paid her full contribution; Uma paid only $30,000. Peak has been dissolved, having $90,000 in debts and $50,000 in assets.

Under the Uniform Limited Liability Company Act (2013), which statement best describes the members' obligations after dissolution?

  1. Tara has no further obligation to Peak; Uma remains obligated to contribute the remaining $20,000, and Peak may enforce that obligation during winding up. (correct answer)
  2. Tara and Uma are personally liable to Peak's creditors for the unpaid debts because dissolution does not discharge members' obligations to creditors.
  3. Uma's obligation to contribute the remaining $20,000 was extinguished when Peak dissolved; members' obligations to contribute do not survive dissolution.
  4. Tara is personally liable to creditors for $40,000 because her paid contribution, combined with Peak's assets, is insufficient to cover Peak's debts.
Explanation: When you see a question about LLC members' obligations after dissolution, recall that under the Uniform Limited Liability Company Act (2013), winding up does not erase enforceable capital promises. The LLC itself may collect unpaid contributions during winding up, and those funds are used to pay creditors. Here, Tara paid her entire $50,000 contribution, so she owes nothing more to Peak. Uma paid only $30,000, leaving an enforceable $20,000 obligation. After dissolution, Peak may pursue that remaining contribution as part of its winding-up process — the obligation survives dissolution and becomes an asset of the LLC. Thus, Tara has no further duty, while Uma’s $20,000 obligation remains enforceable by Peak. Now consider the distractors. The statement that Tara and Uma are personally liable to Peak's creditors confuses members' obligations to the LLC with direct liability to third parties. LLC members generally are not personally liable for company debts merely because the LLC has dissolved. Similarly, the claim that Uma's obligation was extinguished at dissolution misstates the law; capital contribution obligations are specifically preserved for winding up. Finally, the suggestion that Tara owes creditors $40,000 is wrong both because Tara already fulfilled her full contribution and because members do not owe creditors directly. For study, remember this pattern: dissolution terminates the LLC's ordinary business but not its ability to call in unpaid contributions. On exam day, any answer saying a member's unfilled capital promise disappears at dissolution is a trap — the LLC can still enforce it during winding up.

Question 4

Able owes Banco $500,000, secured by a mortgage on Able's warehouse. Able executes a written instrument appointing Banco as his agent with power to sell the warehouse, apply the proceeds to the debt, and remit any surplus to Able. The instrument states that the agency is coupled with an interest and is irrevocable until the debt is paid. Able later dies. Banco, not knowing of Able's death, enters into a contract to sell the warehouse to Carol for fair market value. Carol knows nothing of Able's death.

Does Banco's sale to Carol transfer title to the warehouse free of Able's estate's claim?

  1. No, because Able's death terminated Banco's agency immediately, even if neither Banco nor Carol knew of the death.
  2. No, because Banco holds an interest adverse to Able and cannot act as Able's agent to sell the warehouse.
  3. Yes, because Banco's power was coupled with an interest; such a power survives the principal's death and can be exercised to convey title. (correct answer)
  4. Yes, because Banco had actual authority when the contract was made and death does not terminate agency as to third parties who lack notice of death.
Explanation: Whenever you see a question about an agent's power after the principal dies, first ask whether the agency is "coupled with an interest." Ordinary agencies terminate immediately at death, but a power coupled with an interest—where the agent holds a present property interest or security interest in the subject matter—survives the principal's death. Here, Banco holds a mortgage on Able's warehouse, and the written instrument expressly gives Banco a power of sale to enforce the debt and remit the surplus. That makes Banco's power coupled with an interest, not a bare agency. Because such a power is irrevocable until the debt is paid, Able's death does not extinguish it. Banco may convey title to Carol, and Able's estate cannot defeat the sale. The first wrong choice says Able's death terminated the agency immediately even if neither party knew. That is the general rule for ordinary agency, but it ignores the coupled-with-an-interest exception. The second wrong choice claims Banco's adverse interest disqualifies him from acting as Able's agent. A secured creditor with a sale power is not "adverse" in a disabling sense; the power is designed to protect Banco's security interest while benefiting the estate by applying proceeds to the debt and returning any surplus. The fourth wrong choice says Banco had actual authority at contract time because death does not affect third parties lacking notice. Death does terminate ordinary actual authority, but the coupled power survives on its own; lack of notice is not the reason and is not required. Study tip: when you see "coupled with an interest" and "irrevocable," remember the power is tied to a property/security interest and outlives the principal.

Question 5

Omega Corp has three directors, each elected by one of three shareholders. The directors are deadlocked over whether to renew a lease essential to Omega's only profitable product. If not renewed, Omega will likely become insolvent. The shareholders have been unable to agree on a replacement director. Sidney, one of the shareholders, petitions for judicial dissolution. Under MBCA, which statement best describes Sidney's entitlement?

Which statement best describes Sidney's entitlement to judicial dissolution?

  1. Sidney may obtain dissolution only if she proves the directors acted illegally, oppressively, or fraudulently; deadlock alone is not a ground.
  2. Sidney may obtain dissolution only if all other shareholders join the petition; a minority shareholder lacks standing to seek judicial dissolution.
  3. Sidney may obtain dissolution only after filing a derivative suit against the directors for breach of duty and having it dismissed or excused.
  4. Sidney may obtain dissolution if the deadlock is irreparable and threatens irreparable injury to Omega, or makes its business affairs unable to be conducted to advantage of shareholders. (correct answer)
Explanation: When you see a question about judicial dissolution under the MBCA, think of it as a last-resort remedy for shareholder deadlock or oppression—not a penalty for director misconduct. The statute (MBCA § 14.30) allows dissolution when directors are deadlocked such that they cannot act, the deadlock is irreparable, and either the business is threatened with irreparable injury or its affairs can no longer be conducted to the shareholders' advantage. That's exactly what the facts show: a lease essential to the only profitable product, a deadlocked board, and shareholders unable to break the tie. Sidney doesn't need to prove illegality, fraud, or oppression—deadlock alone is a sufficient statutory ground, provided the irreparable/injury or disadvantage condition is met. Now the wrong answers: The choice saying "only if she proves the directors acted illegally, oppressively, or fraudulently" misstates the standard—those grounds are separate alternatives, not prerequisites for deadlock dissolution. The one requiring "all other shareholders join the petition" is wrong because the MBCA allows any shareholder to petition under § 14.30(2), not just majority or unanimous shareholders. The derivative-suit requirement is also a trap—there's no prerequisite that you first sue directors for breach of duty; dissolution is an independent statutory remedy, not a derivative action. Your study tip: Memorize the two prongs of deadlock dissolution—irreparable deadlock plus either irreparable injury or inability to conduct affairs to advantage. If a question describes a hopeless board split with real economic harm, that's the answer.

Question 6

A, B, and C are equal partners in a construction partnership. They unanimously agree to dissolve and designate A to handle winding up. While completing a partially built house for an existing customer, A purchases lumber from Lumber Co on credit; the lumber is needed to complete the house.

Is the partnership bound to pay for the lumber under RUPA?

  1. No, because after dissolution a partner's actual authority terminates, and only a court-appointed liquidator can bind the partnership.
  2. No, because a purchase of new lumber is not appropriate for winding up; winding up allows only collecting debts and paying existing obligations.
  3. Yes, because completing an existing construction contract is appropriate for winding up, and A's act binds the partnership. (correct answer)
  4. Yes, because A retained authority to operate the business in the ordinary course until winding up is complete.
Explanation: Whenever you see a post-dissolution partnership question under RUPA, ask yourself: is the partner's act appropriate for winding up? Dissolution does not instantly end the partnership; it triggers the winding-up phase. Here, A is the designated winding-up partner, and the house was already partially built for an existing customer. Buying lumber needed to finish that house is squarely within winding up, because completing existing contracts is a normal and necessary winding-up activity. Therefore, A's act binds the partnership. The wrong answer claiming that only a court-appointed liquidator can bind the partnership misunderstands RUPA: partners themselves may wind up, and no court appointment is required. The answer saying winding up allows only collecting debts and paying existing obligations is too narrow; winding up also includes completing existing projects, selling assets, and paying liabilities. Finally, the answer that A retained authority to operate the business in the ordinary course until winding up is complete overstates the authority — after dissolution, ordinary-course authority generally ends, and A's authority is limited to acts appropriate for winding up. Study tip: remember RUPA's key distinction — dissolution ends ordinary business authority, not the partnership itself. On the exam, look for acts that finish existing obligations, not acts that continue the business as usual.

Question 7

Dynamo Corp's board and shareholders validly approve dissolution under MBCA, and articles of dissolution are filed. At filing time, Dynamo is defending a lawsuit brought by Supplier, owns a warehouse, and has an outstanding customer order for goods already manufactured. Dynamo's directors intend to wind up the business. Which statement best describes Dynamo's status and powers after filing?

Which statement best describes Dynamo's status and powers after filing?

  1. Dynamo's corporate existence ended when the articles were filed; all contracts and pending litigation abate automatically.
  2. Dynamo continues to exist solely to wind up; it may defend suits, dispose of assets, and complete existing contracts, but may not enter new business unrelated to winding up. (correct answer)
  3. Dynamo continues to exist until final distribution, but its directors lose authority to manage upon dissolution; only a court-appointed receiver may act.
  4. Dynamo continues to exist and may carry on any business that generates funds to pay creditors, including new lines of business, until all claims are satisfied.
Explanation: When you see a question about corporate dissolution under the MBCA, remember that filing articles of dissolution does not instantly kill the corporation. Instead, the corporation enters a statutory "winding up" phase—a sort of corporate afterlife limited to finishing its affairs. The best statement is the one describing Dynamo as continuing to exist solely to wind up. That is exactly what the MBCA provides: after dissolution, Dynamo may defend lawsuits, sell the warehouse, collect assets, and complete existing contracts like the outstanding customer order. What it may not do is start new business unrelated to winding up. This preserves the bargain made with creditors and shareholders: the corporation can settle its obligations but cannot reinvent itself as an ongoing enterprise. Each wrong answer misses that limited-continuity rule. The statement that Dynamo's corporate existence ended when articles were filed, with all contracts and litigation abating automatically, is wrong because dissolution does not abate pending suits or void existing contracts. The claim that directors lose authority and only a court-appointed receiver may act is wrong because the directors ordinarily remain in charge during winding up; a receiver is not required. Finally, the idea that Dynamo may carry on any business generating funds to pay creditors, including new lines of business, is wrong because the MBCA limits post-dissolution activity to winding up, not profit-making ventures beyond existing affairs. Study tip: on dissolution questions, look for the "winding up" boundary—powers exist to finish, not to expand.

Question 8

A, B, and C are partners in a printing business. For several years, B has purchased all partnership paper from PaperCo on credit at market terms. The partners unanimously agree to dissolve and begin winding up, but they give no notice to PaperCo. While winding up, B orders another shipment of paper from PaperCo on credit at market terms, without disclosing the dissolution. PaperCo ships the paper. Under RUPA, can PaperCo enforce payment against the partnership?

Can PaperCo enforce payment against the partnership?

  1. No, because after dissolution B's authority terminated as to all third parties, and only liquidation purchases authorized by a court may bind the partnership.
  2. Yes, because PaperCo had extended credit to the partnership before dissolution and had not received notice of dissolution; B's apparent authority continued as to PaperCo. (correct answer)
  3. Yes, but only if the paper was necessary to complete an existing contract; ordinary replenishment purchases cannot bind a dissolved partnership.
  4. No, unless A and C separately ratified B's order after dissolution; a single partner cannot bind a dissolved partnership.
Explanation: Whenever a partner binds a dissolved partnership, focus on the third party's prior dealings and whether notice was given. Under RUPA, dissolution does not immediately strip partners of power to bind the firm. For someone like PaperCo that extended credit to the partnership before dissolution and never received notice, B's apparent authority continues. Therefore PaperCo can enforce payment against the partnership—B's order was in the ordinary course, and PaperCo reasonably relied on the established relationship. The answer "after dissolution B's authority terminated as to all third parties" is wrong because RUPA expressly protects prior creditors without notice; internal liquidation limits don't erase apparent authority. The "only if necessary to complete an existing contract" answer is wrong because RUPA imposes no such requirement—ordinary purchases during winding up can bind the partnership if the creditor falls in the protected class. The "unless A and C separately ratified" answer is wrong because apparent authority alone suffices; a single partner can bind the partnership without ratification when a prior-creditor relationship exists. For exam day, remember the "old creditor" rule: a pre-dissolution creditor with no notice may hold the partnership liable for ordinary-course transactions made during winding up. Spot the two key facts—prior credit and lack of notice—and the answer follows.

Question 9

Lone Star LLC has one member, Dara. Dara dies unexpectedly. Her will names Elena as executor. The LLC's operating agreement is silent on member death. Thirty days after Dara's death, Elena gives written notice that she, as executor, will continue the LLC.

Under the Uniform Limited Liability Company Act (2013}, what is the effect on the LLC?

  1. The LLC continues because Elena, as Dara's legal representative, agreed in a record to continue the LLC within90 days of Dara's death. (correct answer)
  2. The LLC dissolved immediately on Dara's death, because a single-member LLC cannot exist without a member.
  3. The LLC dissolved when Dara died, but Elena's notice retroactively reinstates the LLC as of Dara's death.
  4. The LLC continues only if Dara's estate agrees to remain liable for all LLC debts; otherwise it dissolves at the end of 90 days.
Explanation: Whenever a question involves the death of the sole member of an LLC, the key is the Uniform Limited Liability Company Act's special survival rule: the last member's legal representative gets 90 days to act. Dara died, the operating agreement was silent, and Elena as executor gave written notice within 30 days. Under ULLCA 2013, that timely agreement in a record is exactly what prevents the LLC from dissolving. So the LLC continues because Elena, as Dara's legal representative, agreed to continue it within 90 days. The choice saying the LLC dissolved immediately because a single-member LLC cannot exist without a member ignores that statutory window—the LLC is not automatically terminated on death. The choice saying Elena's notice retroactively reinstates the LLC is also wrong: there is no reinstatement because the timely agreement means dissolution never takes effect in the first place. And the choice requiring Dara's estate to remain liable for all LLC debts invents a condition the statute does not impose; continuation does not require the estate to assume the company's obligations. On exam day, when you see a sole-member LLC and member death, immediately look for whether a legal representative agreed in writing within 90 days. Don't assume death alone dissolves the LLC—timely action can keep it alive.

Question 10

Principal hired Agent to buy and sell inventory for Principal's retail business. For two years, Agent negotiated several supply contracts with Supplier on Principal's behalf. Principal then fired Agent, effective immediately, but did not tell Supplier. The next day, Agent entered into another standard supply contract with Supplier at market prices. Supplier had no reason to know of the termination. Principal refuses to honor the contract.

Is Principal bound to honor the contract with Supplier?

  1. No, because Agent's actual authority terminated when Principal fired Agent, and no ratification occurred.
  2. No, because Supplier had notice of Agent's authority from prior dealings and was required to inquire whether authority continued.
  3. Yes, because Agent had apparent authority; and Agent's termination was not effective as to Supplier until Supplier received actual or constructive notice. (correct answer)
  4. Yes, because Agent retained actual authority until Principal gave notice to third parties; termination requires notice to be effective.
Explanation: Whenever you see an agency question about a fired agent, separate actual authority from apparent authority. Firing an agent ends actual authority immediately, but it does not necessarily end the power to bind the principal with third parties who previously dealt with the agent. Here, Supplier had dealt with Agent for two years and had no reason to know of the termination. Because Principal's failure to notify Supplier allowed Agent to appear still authorized, Agent had apparent authority to enter the standard supply contract at market prices. Therefore Principal is bound. The key rule: termination of an agent's authority is effective against third parties only when they receive actual or constructive notice. The first wrong answer, "No, because Agent's actual authority terminated," confuses actual authority with apparent authority—termination ends the former but not the latter. The second wrong answer, "No, because Supplier had notice of Agent's authority from prior dealings," gets it backwards: prior dealings are what create apparent authority, and they do not impose a duty to inquire unless something puts Supplier on notice. The final wrong answer, "Yes, because Agent retained actual authority," is incorrect because Principal's immediate firing did terminate actual authority; the contract is binding due to apparent authority, not continuing actual authority. Study tip: on agency questions, always ask two questions—Did the agent have actual authority? If not, did the principal's conduct or silence create apparent authority? Notice to third parties is the trigger for cutting off apparent authority.

Question 11

Maple LLC has two members, Mia and Noah. Its operating agreement designates Mia as sole manager and states: 'Mia has exclusive and plenary authority to manage the business and affairs of the LLC and may take any action Mia deems necessary or appropriate.' The agreement is silent on dissolution. Mia, believing the LLC's business model is no longer viable, executes articles of dissolution and files them, without Noah's knowledge or consent.

Under the Uniform Limited Liability Company Act (2013), is the dissolution effective?

  1. Not effective, because absent an operating-agreement provision authorizing manager dissolution, voluntary dissolution requires consent of all members; Noah did not consent. (correct answer)
  2. Effective, because in a manager-managed LLC the manager may bind the company unless a member objects within 30 days; Noah did not object.
  3. Effective, because Mia's plenary managerial authority includes authority to dissolve the LLC; dissolving is an act of managing business affairs.
  4. Not effective, because a manager-managed LLC cannot be voluntarily dissolved; it may be dissolved only by judicial decree after creditors are paid.
Explanation: Whenever you see a question about LLC dissolution, distinguish between ordinary business management and fundamental organic changes. Under ULLCA (2013), voluntary dissolution is a default member-level decision, not a managerial one, unless the operating agreement explicitly says otherwise. Here, the operating agreement gives Mia plenary authority to manage the business and affairs, but it is silent on dissolution. The statute's default rule requires the affirmative vote or consent of all members for voluntary dissolution. Because Noah did not consent, the dissolution is ineffective, regardless of Mia's managerial title. The trap is confusing "plenary" with "unlimited." Plenary authority covers day-to-day management and ordinary contracts, but dissolving the LLC terminates its existence—a fundamental change that the default rules reserve for members. The choice suggesting that a manager may bind the company unless a member objects within 30 days misstates the law: that rule applies to unauthorized acts binding the LLC to third parties in the ordinary course, not to internal dissolution, which requires member consent. The choice claiming a manager-managed LLC cannot be voluntarily dissolved is wrong; they can be dissolved by member consent or judicial decree, and paying creditors is part of winding up, not a prerequisite to dissolution. Study tip: Memorize that voluntary dissolution defaults to unanimous member consent under ULLCA. Managerial authority, even "plenary," does not include the power to dissolve unless the operating agreement specifically delegates it.