RFBT Law On Partnership Test Bank - Compress

Law on Partnership
Regulatory Framework for Business Transactions
It is one where it will exist until the purpose is accomplished

a. Partnership for a particular undertaking
b. Partnership with a fixed term
c. Partnership at will
d. De facto partnership
The correct answer is: Partnership for a particular undertaking
ARTICLE 1783. A particular partnership has for its object:

a) determinate things, their use or fruits, or
b) a specific undertaking, or
c) the exercise of a profession or vocation.
Those who are not really partners but represent themselves. Or consent to
another or others representing them to anyone as partners in an existing
partnership or in one that is fictitious or apparent.
a. De facto partner
b. Real partner
c. Partner by estoppel
d. Secret partner
The correct answer is: Partner by estoppel
KINDS OF PARTNERS
AS TO LIABILITY
1. General partner − Liability to 3rd persons extends to his separate
property
2. Limited partner − Liability to 3rd persons is limited to his capital
contribution
3. General-limited − all the rights of a general partner except that
partner in respect to his contribution, he shall have
the rights against the other members which he
would have had if he was a limited partner
AS TO CONTRIBUTION
1. Capitalist contributes money or property to a common fund.
Partner
2. Industrial Contributes only his industry or personal service
Partner
OTHER CLASSIFICATIONS
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Law on Partnership
1. Managing Partner − manages the business or the affairs of the

partnership
2. Liquidating partner − takes charge of the winding up of the
partnership
3. Partner by estoppel − AKA Nominal; not a partner but who may
become liable as to the third person
4. Ostensible Partner − Takes active part & known to the public as
partner in the business
5. Secret partner − Takes active part but is not known to be a
partner by outside parties
6. Silent Partner − Does not take active part in the business
although he may be to be a partner
7. Dormant partner − Does not take active part in the business and
is not known or held out as a partner
8. Continuing partner − One who continues the business after it has
been dissolved by reason of the admission of a
new partner, retirement, death or expulsion of
one of the partners
9. Surviving partner − Remains after a partnership has been dissolved
by death of any partner
10. Subpartner − Not a member of the Ⓟ who contracts with a
partner with reference to the latter’s share in
the partnership
It means that the contribution of each partner, whether money, property, or

industry, is considered as the equivalent of the contribution of the other
partners.
a. Consensual
b. Preparatory
c. Commutative
d. Principal
The correct answer is: Commutative

CHARACTERISTICS OF A PARTNERSHIP
1. Consensual − perfected by mere consent or meeting of the
minds between parties
2. Bilateral − AKA or Multilateral; reciprocal obligations
between 2 or more parties
3. Nominate − Special name given by law
4. Principal − its existence does not depend on the existence of
another contract
5. Onerous − certain contributions have to be made
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Law on Partnership
6. Preparatory − Means by which other contracts will be entered

into
7. Commutative − the contribution of each partner, whether money,
property, or industry, is considered as the
equivalent of the contribution of the other
partners
It is one where it will exist until the purpose is accomplished

a. Partnership for a particular undertaking
b. Partnership with a fixed term
d. De facto partnership

PARTICULAR PARTNERSHIP AS TO DURATION
1. Partnership for a fixed − a period for its duration is fixed
term
2. Partnership for a − organized for a certain undertaking which,
particular undertaking when attained will cause the termination
of the partnership
3. Partnership at will − no period is fixed by the parties for its
duration
Those who are not really partners but represent themselves. Or consent to
another or others representing them to anyone as partners in an existing
partnership or in one that is fictitious or apparent.
a. De facto partner
b. Real partner
d. Secret partner
The correct answer is: Partner by estoppel

OTHER CLASSIFICATIONS OF PARTNERS
partnership
partnership
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Law on Partnership

been dissolved by reason of the admission
of a new partner, retirement, death or
expulsion of one of the partners
9. Surviving partner − Remains after a partnership has been
dissolved by death of any partner
10. Subpartner − Not a member of the Ⓟ who contracts with
a partner with reference to the latter’s share
in the partnership
X, Y, and Z are partners who contributed P10,000 each to the capital of the
partnership. D owes the partnershipP3,000. Z collected from D P1,000
before X and Y could receive anything from D, who later became insolvent
and therefore, they could not collect their shares.
a. X and Y can automatically deduct from the capital contribution of Z in
the partnership their respective shares of P333.33
b. X and Y should first exhaust all remedies to collect from D.
c. Z cannot be required to share what he already received from D.
d. Z shall share the P1,000 with his co-partners X and Y.
The correct answer is: Z shall share the P1,000 with his co-partners X and Y.
Those partner in an existing legal partnership.

a. Secret partner
b. De facto partner
d. Real partner
The correct answer is: Real partner
It is one where the life or period of existence of the partnership has been
agreed upon by the partners.
a. De facto partnership
b. Partnership at will
c. Partnership for a particular undertaking
d. Partnership with a fixed term
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Law on Partnership
The correct answer is: Partnership with a fixed term

term
of the partnership
duration
A group of men pursuing learned art as a common calling in the spirit of

public service.
a. Profession
b. Artists
c. Business
d. Service
The correct answer is: Profession
The birth and life of a partnership at will is predicated on the mutual desire
and consent of the partners.
a. Partnership for a fixed term
b. Partnership for a particular undertaking
d. None of the above
The correct answer is: Partnership at will

term
of the partnership
duration
Those who does not take active part in the business and is not known to the
public as partner. Thus, they are both a secret and silent partner.
a. Ostensible partner
b. Dormant partner
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Law on Partnership
c. Secret partner
d. Liquidating partner
The correct answer is: Dormant partner

OTHER CLASSIFICATIONS OF PARTNERS
partnership
partnership
been dissolved by reason of the admission
of a new partner, retirement, death or
expulsion of one of the partners
9. Surviving partner − Remains after a partnership has been
dissolved by death of any partner
10. Subpartner − Not a member of the Ⓟ who contracts with
a partner with reference to the latter’s share
in the partnership
A, B and C are general partners in ABC partnership. X is a debtor to their

partnership in the amount of P180,000. A received from debtor X the sum of
P60,000 and issued a receipt identifying the amount collected as P60,000.
a. B and C can deduct from the capital of A their share of P60,000.
b. A can be compelled to share with B and C their P60,000.
c. A cannot be compelled to share the P60,000 with B and C.
d. B and C should automatically sue X to collect the P120,000.
The correct answer is: A cannot be compelled to share the P60,000 with B
and C.
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Law on Partnership
With still the same facts, as industrial partner, the share of C in the loss
shall be:
a. In proportion to his capital contribution
b. Just and equitable under the circumstances.
c. As agreed upon by the partners before the loss was realized
d. None, he being an industrial partner.
The correct answer is: None, he being an industrial partner.
It is one where it will exist until the purpose is accomplished,

a. Partnership with a fixed term
b. Partnership at will
c. None of the above
d. Partnership for a Particular undertaking
The correct answer is: Partnership for a Particular undertaking
In extra-judicial liquidation, the following will wind-up the partnership

except:
a. The managing partner who has the controlling interest
b. The liquidating partners or partners as agreed upon by all of the
partners.
c. The legal representative of the last surviving partner who is
insolvent
d. The partners who have not wrongfully dissolved the partnership.
The correct answer is: The managing partner who has the controlling
interest
The following are obligations of partners, except:

a. To engage in any business which is of the kind in which the
partnership is engaged
b. Not to convert partnership money to their own use.
c. To account and hold as trustee for any profits derived without
the consent of the other partners.
d. To give their promised contribution
The correct answer is: To engage in any business which is of the kind in
which the partnership is engaged
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Law on Partnership
Where a partnership contract is rescinded on the ground of fraud or

misrepresentation of one of the parties thereto, the party entitled to rescind
is entitled to, except:
a. Right of subrogation
b. Right of indemnification
c. Right of dissolution
d. Right of lien or right of retention
The correct answer is: Right of dissolution
A and B capitalist partners while C is an industrial partner, both A and B

equally contributed P50,000. A contractual liability in favor of X was incurred
in the amount of P150,000. After exhausting partnership assets, there is a
balance recoverable from:
a. A, B and C
b. B and C only.
c. A, B and C and C can get reimbursement from A and B.
d. A and B only
The correct answer is: A, B and C and C can get reimbursement from A and
B.
A, B, and C formed a partnership. They contributed P250,000 each. They also

agreed on equal distribution of profit. After 5 years of operation however, C
conveys her whole interest in the partnership D, without knowledge and
consent of A and B. is the partnership dissolved?
a. The partnership was dissolved because the assignee, D automatically
becomes a new partner.
b. It is dissolved since C has ceased to be a partner because of the
assignment of his whole interest to D.
c. 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.
d. The partnership is not dissolved because the conveyance of a partner`s
interest in the partnership does not of itself dissolve the partnership.
The correct answer is: The partnership is not dissolved because the
conveyance of a partner`s interest in the partnership does not of itself
dissolve the partnership.
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Law on Partnership
A and B are partners with A as the managing partner. C owes A P100,000

and the partnership P300,000 which are now both due. A issued a receipt for
the payment of C in the amount of P100,000 in his own name. The payment
shall be applied to:
a. The credit of A only since the receipt is in his name.
b. The payment shall be applied proportionately to both credits.
c. The payment shall be applied equally in both credits.
d. The partnership credit totally.
The correct answer is: The payment shall be applied proportionately to both
credits.
Those who became members of the partnership after its establishment.

a. Partner by estoppel
b. De facto partner
c. Secret partner
d. Incoming partner
The correct answer is: Incoming partner
A, B, and C formed a partnership. They contributed P250,000 each. They also

agreed on equal distribution of profit. After 5 years of operation however, C
conveys her whole interest in the partnership D, without knowledge and
consent of A and B. Which of the following is correct?
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. A, B and C can ask for judicial dissolution of the partnership.
c. D may ask the court for its dissolution being the assignee of C`s
interest in the partnership
d. A, B and C may dissolve the partnership even without the
consent of D.
The correct answer is: 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.
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Law on Partnership
Three of the following are property rights of a partner. Which is not?

a. Right to specific partnership property.
b. Right to participate in the management.
c. Right to demand formal accounting of partnership affairs.
d. Interest of the partner in the partnership
The correct answer is: Right to demand formal accounting of partnership

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

a. Outside creditors, credit 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 profits, partner`s capital.
d. Creditor partner, outside creditor, partner`s capital, partner`s profit.
The correct answer is: Outside creditors, credit partner, partner`s capital,
partner`s profit.
Those who contribute only their industry or labor to the common fund.
a. Capitalist partner
b. General partner
c. Limited partner
d. Industrial partner
The correct answer is: Industrial partner
A and B are partners with A as the managing partner. C owes A P100,000

and the partnership P300,000 which are now both due. A issued a receipt for
the payment of C in the amount of P100,000 in his own name. The payment
shall be applied to:
a. The credit of A only since the receipt is in his name.
b. The payment shall be applied proportionately to both credits.
c. The payment shall be applied equally in both credits.
d. The partnership credit totally.
The correct answer is: The payment shall be applied proportionately to

both credits.
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Law on Partnership
The three final stages of a partnership are the following except:

a. Termination
b. Dissolution
d. Winding up
The correct answer is: None of the above
A is a capitalist partner and B the industrial one. Supposed B engages in

business on his own account but different from that of the partnership.
a. B may be excluded from the partnership with damages.
b. If there are profits B and the partnership shall share equally.
c. B may be excluded from the partnership but without damages.
d. If there are losses, B and the partnership shall equally share.
The correct answer is: B may be excluded from the partnership with
damages.
The following are instances, except one, when a partnership is unlawful.

Which is the exception?
a. A partnership formed for the purpose of buying lands
b. A partnership formed for selling smuggled cars.
c. A partnership formed to create illegal gambling
d. A partnership formed for the purpose of selling illegal drugs.
The correct answer is: A partnership formed for the purpose of buying
lands
X and Y verbally entered into a partnership with each of them contributing

P2,000 each and some personal properties in the amount of P500 each. The
partnership contract is:
a. Void, because it is not registered with the SEC.
b. Valid
c. Unenforceable because the amount involved exceeds P500,00.
d. Void because it is not in public instrument
The correct answer is: Valid
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Law on Partnership
A, B, C, and D organized a general partnership with A and B as industrial

partners and C and D as capitalist partners. C contributed P800,000 and D
contributed P600,00 to the common fund. A and B were appointed managing
partners. J applied as office assistant and K applied as accountant of the
partnership. Suppose the hiring of K was decided upon by A and D, but was
opposed by B and C, whose decision shall prevail?
a. The decision of A and D because A is the managing partner and the
hiring is an act of administration.
b. That of A and D because D is also a capitalist partner.
c. The decision of A and B because they are the managing partners.
d. The decision of B and C because in case of tie in the decision of
managing partners, that of the controlling interest shall prevail.
The correct answer is: The decision of B and C because in case of tie in the
decision of managing partners, that of the controlling interest shall prevail.
A and B are capitalist partners while C is an industrial partner. There is no

agreement as to the profits and losses. The partnership realized profit in the
amount of P150,000. The share of C in the profits shall be:
a. C`s share shall be P150,000
b. Pro rata to his contributed capital
c. A and B will determine C`s share in the profits.
d. Just and equitable under the circumstances.
The correct answer is: Just and equitable under the circumstances.
A, B, C, and D organized a general partnership with A and B as industrial

partners and C and D as capitalist partners. C contributed P800,000 and D
contributed P600,00 to the common fund. A and B were appointed managing
partners. J applied as office assistant and K applied as accountant of the
partnership. The hiring of J was decided upon by A and B but was opposed by
C and D. whose decision shall prevail?
a. The decision of C and D because they have the controlling interest.
b. The decision of C and D shall prevail because they are the capitalist
partners.
c. The decision of A and B because it is an act of ownership.
d. The decision of A and B shall prevail because they are the managers.
The correct answer is: The decision of A and B shall prevail because they
are the managers.
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Law on Partnership
A partnership is dissolved, except:

a. Death of a partner
b. Partnership business can only be carried on at a loss.
c. Insolvency of a partner or of the partnership
d. Partnership business has become unlawful.
The correct answer is: Partnership business can only be carried on at a

loss.
Those who takes active part and known to the public as a partner in the
partnership.
b. Liquidating partner
c. Secret partner
d. Dormant partner
The correct answer is: Ostensible partner
The following are the rights of partners, except:

a. Right to demand a formal account.
b. Right to ask for the dissolution of the partnership at the proper time.
c. Right to have access to and inspect and copy partnership books on
Sundays and holidays.
d. Right to associate with another person in their share.
The correct answer is: Right to have access to and inspect and copy
partnership books on Sundays and holidays.
A, B, C, and E are partners. They contributed to the capital as follows: A-

P50,000; B-P100,000; C-P150,000; and E as the industrial partner, his
services. The partnership obligation to outsiders exceeds the total net assets
byP200,000. Who and by how much will the partners be liable for the payment
of the P200,000?
a. A-P45,000; B-P45,000; C-P55,000; E-P55,000
b. A-P50,000; B-P50,000; C-P50,500; E-P50,000
c. A-P33,333; B-P66,666; C-P100,000; E-zero
d. A-zero; B-zero; C-zero; E-zero
The correct answer is: A-P50,000; B-P50,000; C-P50,500; E-P50,000
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Law on Partnership
Those who contribute money or property and industry or both money,

property and industry to the common fund.
a. General- limited partner
b. Industrial partner
c. Capitalist-industrial partner
d. Capitalist partner
The correct answer is: Capitalist-industrial partner
Those who takes charge of the winding up or liquidation of the partnership

affairs after dissolution.
a. Secret partner
b. Dormant partner
c. Ostensible partner
The correct answer is: Liquidating partner

a. Obligation of a managing partner to credit to the partnership the
payment made by a debtor who owes them and the partnership.
b. Not to engage in any business which is of the kind in which the
partnership is engaged.
c. Pay for damages suffered by the partnership without their fault.
d. Obligation to share with the other partner the share of the partnership
credit which they have received from an insolvent partnership debtor.
The correct answer is: Pay for damages suffered by the partnership
without their fault.
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 profits, they will be shared by A and the partnership.
b. If there are profits, A shall give them to the partnership.
c. If there are losses, the partnership will bear the losses.
d. A may be excluded from the partnership with liability for damages.
The correct answer is: If there are profits, A shall give them to the
partnership.
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Law on Partnership

agreement as to the profits and losses. The partnership suffered loss in the
amount of P150,000, the share of the capitalist partners in the loss shall be:
a. In accordance with their loss sharing agreement.
b. Equally among them.
c. In proportion to their capital contribution.
d. In accordance to their profit-sharing agreement.
The correct answer is: In proportion to their capital contribution.
A, B and C formed a commercial partnership, D represented himself as a

partner in the partnership to E who, on the belief of such representation,
extended credits of P50,000 to the partnership. Assuming only B and C
consented to such representation, who shall be liable to E?
a. Only D who made the representation is liable to E.
b. All of A, B, C, and D are liable because of partnership liability for the
credit extended to the partnership by E.
c. Only partners A, B and C are liable to E for the benefit extended to
them.
d. B, C and D are partners by estoppel and thus, are liable to E.
The correct answer is: All of A, B, C, and D are liable because of

partnership liability for the credit extended to the partnership by E.

a. Capitalist-industrial partners
b. Limited partners
c. Industrial partners
d. General partners
The correct answer is: Capitalist-industrial partners
A partnership that does not fix its term.

a. Partnership at will
b. None of the above
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Law on Partnership
The following are the legal relations created by a contract of partnership,

except:
a. Relations between the partners on one hand and the partnership on
the other hand.
b. Relations between third persons.
c. Relations between the partner on one hand and third persons on other
hand.
d. Relations between the partnership and the third persons.
The correct answer is: Relations between third persons.

a. Rights in specific partnership property
b. Right to participate in the management.
c. Appraisal right
d. Interest in the partnership
The correct answer is: Appraisal right
X and Y verbally agreed to form a contract of partnership 18months from

today, each one to contribute P15,000. At the arrival of the said date, if one
refuses to go ahead with the agreement, can the other enforce the
agreement?
a. No, because the agreement was merely verbal.
b. Yes, because the prior agreement was voluntarily made.
c. Yes, since the agreement is to be enforced after one year from the
making thereof, the same should be inwriting to be enforceable.
d. Yes, because the contract of partnership is not governed by the statute
of frauds.
The correct answer is: No, because the agreement was merely verbal.
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 partner-debtor
d. Pro-rata between the separate creditors and the partnership creditors.
The correct answer is: Separate creditors of the partner-debtor
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Law on Partnership
Those who contribute only their industry or labor to the common fund
a. Industrial partners
b. Limited partners
c. Capitalist-industrial partners
d. General partners
The correct answer is: Industrial partners
It is one where persons, by words spoken or written or by conduct

represents themselves, or consents to another representing them to anyone,
as partners I an existing partnership or with one or more persons not actual
partners.
a. Partnership sole
b. Closed partnership
c. Partnership by estoppel
d. Partnership by prescription
The correct answer is: Partnership by estoppel
The following are disqualified to form a universal partnership, except one:

a. Those guilty of the same offense, if the partnership is entered into in
consideration of the same
b. Husband and wife
c. Brother and sister
d. Those guilty of adultery or concubinage
The correct answer is: Brother and sister
Arises if all the partners consented to the misrepresentation of a third

person who is not a real partner. This creates a partnership obligation.
a. Limited partnership
c. General partnership
d. Partnership by estoppel
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Law on Partnership
It means the dissociation by a partner inclusive of resignation withdrawal,

from the partnership that thereby dissolves it.
a. Termination
b. Dissolution
c. Retirement
d. Liquidation
The correct answer is: Retirement
A, B and C are partner in ABC partnership. A and B contributed P10,000

each while C contributed his service. After payment of the partnership
liabilities to creditors, only P15,000 remains. In the absence stipulation to
the contrary the share of C shall be:
a. P5,000
b. P5,000
c. P10,000
d. Zero
The correct answer is: Zero
The change in the relation of the parties caused by any partner ceasing to be
associated in the carrying on, as might be distinguished from the winding up
of, the business.
a. Dissolution
b. Liquidation
c. Termination
d. Winding up
The correct answer is: Dissolution
Who can demand true and full information?

a. Legal representative of any partner under legal disability
b. Legal representative of any deceased partner
c. All of the above.
d. Any partner
The correct answer is: All of the above.
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Law on Partnership
Where a partnership not duly organized has been recognized as such in its
dealings with certain persons.
a. Partnership by estoppel
b. De jure partnership
c. De facto partnership
d. Ordinary partnership
It is one where there is at least one general partner and one limited partner.
b. Limited partnership
c. De jure partnership
d. General partnership
The correct answer is: Limited partnership
It compromises all that the partners may acquire by their industry or work
during the existence of the partnership.
a. None of the above
b. Universal partnership of all present property
c. Universal partnership of all profits
d. Particular partnership
The correct answer is: Universal partnership of all profits
The correct answer is: Z shall share the P1,000 with his co-partners X and
Y.
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Law on Partnership
When two or more persons bind themselves to contribute money, property,

or industry to a common fund, with the intention of dividing the profits
among themselves.
a. Sole proprietorship
b. Corporation
c. Cooperative
d. Partnership
The correct answer is: Partnership
Those who manage actively business or affairs of the partnership

a. Managing partner
b. Silent partner
c. Dormant partner
d. Ostensible partner
The correct answer is: Managing partner
A, B and C are partners contributed the following: A-P6,000.00; B-

P4,000.00; and C-industry. They agreed that the profits and losses shall be
distributed as follows to wit: A-35%; B-25% and C-40%. Suppose it is a
profit of P10,000, how shall it be distributed?
a. A- P 3,500; B- P2,500; C-P4,000
b. A- P6,000; B- P4,000; C- none
c. A- P3,333; B- P3,333; C- P3,333
The correct answer is: A- P 3,500; B- P2,500; C- P4,000
The following are the rights of an assignee, except:

a. To receive the profits to which the assigning partner would otherwise
be entitled;
b. In case of dissolution, to receive the assignor`s interest; and
c. In case of fraud in the management of the partnership, the assignee
ay avail himself of the usual remedies provided by law;
d. In case of dissolution, the assignee may require an account from the
date of liquidation
The correct answer is: In case of dissolution, the assignee may require an
account from the date of liquidation
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Law on Partnership
A partnership is dissolved, except:

a. Death of a partner
b. Partnership business can only be carried on at a loss.
c. Insolvency of a partner or of the partnership
d. Partnership business has become unlawful.
The correct answer is: Partnership business can only be carried on at a

loss.
Those who takes active part and known to the public as a partner in the
partnership.
b. Liquidating partner
c. Secret partner
d. Dormant partner
The correct answer is: Ostensible partner

a. Right to demand a formal1account.
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b. Right to ask for the dissolution of the partnership at the proper time.
c. Right to have access to and inspect and copy partnership books on
Sundays and holidays.
d. Right to associate with another person in their share.
The correct answer is: Right to have access to and inspect and copy
partnership books on Sundays and holidays.
A, B, C, and E are partners. They contributed to the capital as follows: A-

P50,000; B-P100,000; C-P150,000; and E as the industrial partner, his
services. The partnership obligation to outsiders exceeds the total net assets
byP200,000. Who and by how much will the partners be liable for the payment
of the P200,000?
a. A-P45,000; B-P45,000; C-P55,000; E-P55,000
b. A-P50,000; B-P50,000; C-P50,500; E-P50,000
c. A-P33,333; B-P66,666; C-P100,000; E-zero
d. A-zero; B-zero; C-zero; E-zero
The correct answer is: A-P50,000; B-P50,000; C-P50,500; E-P50,000
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Law on Partnership

a. General- limited partner
b. Industrial partner
c. Capitalist-industrial partner
d. Capitalist partner
The correct answer is: Capitalist-industrial partner
Those who takes charge of the winding up or liquidation of the partnership

affairs after dissolution.
a. Secret partner
b. Dormant partner
c. Ostensible partner
The correct answer is: Liquidating partner

a. Obligation of a managing partner to credit to the partnership the
payment made by a debtor who owes them and the partnership.
b. Not to engage in any business which is of the kind in which the
partnership is engaged.
c. Pay for damages suffered by the partnership without their fault.
d. Obligation to share with the other partner the share of the partnership
credit which they have received from an insolvent partnership debtor.
The correct answer is: Pay for damages suffered by the partnership
without their fault.
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 profits, they will be shared by A and the partnership.
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b. If there are profits, A shall give them to the partnership.
c. If there are losses, the partnership will bear the losses.
d. A may be excluded from the partnership with liability for damages.
The correct answer is: If there are profits, A shall give them to the
partnership.
Law on Partnership
Regulatory
1 0 Framework for Business Transactions

agreement as to the profits and losses. The partnership suffered loss in the
amount of P150,000, the share of the capitalist partners in the loss shall be:
a. In accordance with their loss sharing agreement.
b. Equally among them.
c. In proportion to their capital contribution.
d. In accordance to their profit-sharing agreement.
The correct answer is: In proportion to their capital contribution.
A, B and C formed a commercial partnership, D represented himself as a

partner in the partnership to E who, on the belief of such representation,
extended credits of P50,000 to the partnership. Assuming only B and C
consented to such representation, who shall be liable to E?
a. Only D who made the representation is liable to E.
b. All of A, B, C, and D are liable because of partnership liability for the
credit extended to the partnership by E.
c. Only partners A, B and C are liable to E for the benefit extended to
them.
d. B, C and D are partners by estoppel and thus, are liable to E.
The correct answer is: All of A, B, C, and D are liable because of

partnership liability for the credit extended to the partnership by E.

a. Capitalist-industrial partners
b. Limited partners
c. Industrial partners
d. General partners
The correct answer is: Capitalist-industrial partners
A partnership that does not fix its term.

a. Partnership at will
1 0
Law on Partnership
The following are the legal relations created by a contract of partnership,

except:
a. Relations between the partners on one hand and the partnership on
the other hand.
b. Relations between third persons.
c. Relations between the partner on one hand and third persons on other
hand.
d. Relations between the partnership and the third persons.
The correct answer is: Relations between third persons.

a. Rights in specific partnership property
b. Right to participate in the 1management.
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c. Appraisal right
d. Interest in the partnership
The correct answer is: Appraisal right
X and Y verbally agreed to form a contract of partnership 18months from

today, each one to contribute P15,000. At the arrival of the said date, if one
refuses to go ahead with the agreement, can the other enforce the
agreement?
a. No, because the agreement was merely verbal.
b. Yes, because the prior agreement was voluntarily made.
c. Yes, since the agreement is to be enforced after one year from the
making thereof, the same should be inwriting to be enforceable.
d. Yes, because the contract of partnership is not governed by the statute
of frauds.
The correct answer is: No, because the agreement was merely verbal.
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 partner-debtor
d. Pro-rata between the separate creditors and the partnership creditors.
The correct answer is: Separate creditors of the partner-debtor
1 0
Law on Partnership
Those who contribute only their industry or labor to the common fund
a. Industrial partners
b. Limited partners
c. Capitalist-industrial partners
d. General partners
The correct answer is: Industrial partners
It is one where persons, by words spoken or written or by conduct

represents themselves, or consents to another representing them to anyone,
as partners I an existing partnership or with one or more persons not actual
partners.
a. Partnership sole
b. Closed partnership
c. Partnership by estoppel
d. Partnership by prescription
The following are disqualified to form a universal partnership, except one:

a. Those guilty of the same offense, if the partnership is entered into in
consideration of the same
b. Husband and wife
c. Brother and sister
d. Those guilty of adultery or concubinage
The correct answer is: Brother and sister

1 0
Arises if all the partners consented to the misrepresentation of a third
person who is not a real partner. This creates a partnership obligation.
a. Limited partnership
c. General partnership
d. Partnership by estoppel
1 0
Law on Partnership
It means the dissociation by a partner inclusive of resignation withdrawal,

from the partnership that thereby dissolves it.
a. Termination
b. Dissolution
c. Retirement
d. Liquidation
The correct answer is: Retirement
A, B and C are partner in ABC partnership. A and B contributed P10,000

each while C contributed his service. After payment of the partnership
liabilities to creditors, only P15,000 remains. In the absence stipulation to
the contrary the share of C shall be:
a. P5,000
b. P5,000
c. P10,000
d. Zero
The correct answer is: Zero
The change in the relation of the parties caused by any partner ceasing to be
associated in the carrying on, as might be distinguished from the winding up
of, the business.
a. Dissolution
b. Liquidation
c. Termination
d. Winding up
The correct answer is: Dissolution
Who can demand true and full information?

a. Legal representative of any partner under legal disability
b. Legal representative of any deceased partner
c. All of the above.
d. Any partner
The correct answer is: All of the above.
1 0
Law on Partnership
Where a partnership not duly organized has been recognized as such in its
dealings with certain persons.
a. Partnership by estoppel
d. Ordinary partnership

1 by
0 estoppel
It is one where there is at least one general partner and one limited partner.
b. Limited partnership
c. De jure partnership
The correct answer is: Limited partnership
It compromises all that the partners may acquire by their industry or work
during the existence of the partnership.
a. None of the above
b. Universal partnership of all present property
c. Universal partnership of all profits
d. Particular partnership
The correct answer is: Universal partnership of all profits
The correct answer is: Z shall share the P1,000 with his co-partners X and
Y.
1 0
Law on Partnership
When two or more persons bind themselves to contribute money, property,

or industry to a common fund, with the intention of dividing the profits
among themselves.
a. Sole proprietorship
b. Corporation
c. Cooperative
d. Partnership
Those who manage actively business or affairs of the partnership

a. Managing partner
b. Silent partner
c. Dormant partner
d. Ostensible partner
The correct answer is: Managing partner
A, B and C are partners contributed the following: A-P6,000.00; B-

P4,000.00; and C-industry. They agreed that the profits and losses shall be
distributed as follows to wit: A-35%; B-25% and C-40%. Suppose it is a
profit of P10,000, how shall it be distributed?
1 0
a. A- P 3,500; B- P2,500; C-P4,000
b. A- P6,000; B- P4,000; C- none
c. A- P3,333; B- P3,333; C- P3,333
The correct answer is: A- P 3,500; B- P2,500; C- P4,000
The following are the rights of an assignee, except:

a. To receive the profits to which the assigning partner would otherwise
be entitled;
b. In case of dissolution, to receive the assignor`s interest; and
c. In case of fraud in the management of the partnership, the assignee
ay avail himself of the usual remedies provided by law;
d. In case of dissolution, the assignee may require an account from the
date of liquidation
The correct answer is: In case of dissolution, the assignee may require an
account from the date of liquidation
1 0
Law on Partnership
It means that each partner must contribute money, property, or industry of

course, a partner can contribute one, some or all of these.
a. Consensual
b. Onerous
c. Nominate
d. Preparatory
The correct answer is: Onerous
X and Y orally agreed to form a partnership. Each contributed cash worth

P15,000 to common fund. But they didn’t register the partnership with the
securities and exchange commission.
a. The partnership is valid and unenforceable
b. The partnership is still valid
c. The partnership is voidable
d. The partnership is void
The correct answer is: The partnership is still valid
Those who do not take active part in the business or affairs of the
partnership though they share in the profits or losses.
a. Managing partner
b. Ostensible partner
c. Dormant partner
d. Silent partner
The correct answer is: Silent partner
A, B and C are partners in a partnership with each contributing P100,000

each. D is admitted as a new partner with a contribution of P50,000. At the
time of his admission, the partnership has a pre-existing obligation to E in
the amount of P150,000.
a. D is liable up to P16,667
b. D is liable up to P50,000.
c. D is liable up to P25,000
d. D is not liable to E for this obligation incurred when he was not yet a
1 0
partner.
The correct answer is: D is liable up to P50,000.
Law on Partnership
It is one where all the partners are general partners.

a. De jure partnership 1 0
b. De facto partnership
c. Limited partnership
The correct answer is: General partnership
The partners contribute all the property which actually belongs to them to a
common fund, with the intention of diving the same among themselves, as
well as all the profits which they may acquire therewith.
a. Particular partnership
b. Universal partnership of all profits
d. Universal partnership of all present property
The correct answer is: Universal partnership of all present property
An entity created by law and given certain legal rights and duties of a human
being or a being, real or imaginary, who for the purpose of legal reasoning is
treated more or less as a human being.
a. Juridical person
b. Natural person
c. Normal person
d. None of the above
The correct answer is: Juridical person
A, B, and C formed a partnership. They contributed P250,000 each. They

also agreed on equal distribution of profit. After 5 years of operation
however, C conveys her whole interest in the partnership D, without
knowledge and consent of A and B. Which of the following is correct?
a. D can take part in the control of the business.
b. D can participate in the management of the partnership.
c. D cannot inspect the books.
d. D can inspect the books because he is a partner and therefore there is
a fiduciary relationship.
The correct answer is: D cannot inspect the books.
1 0
Law on Partnership
Those who contribute money or property or both money and property to the
common fund.
a. Industrial partner
b. General partner
c. Capitalist partner
d. Limited partner
The correct answer is: Capitalist partner
A particular partnership has for its object determinate things, their use or
fruits, or specific undertaking, or exercise of a profession vocation.
a. Particular partnership
b. Universal partnership of all profits
d. Universal partnership of all present property
1 0
The correct answer is: Particular partnership
Those whose connection with the partnership is not known to the public.
a. Dormant partner
b. Ostensible partner
c. Secret partner
The correct answer is: Secret partner
The following are requisites of partnership, except;

a. There must be a contribution of money, property, and industry to a
common fund;
b. The partnership must be organized for gain or profit; and
c. There must be a valid contract;
d. The partnership should have a lawful object or purpose, and must be
established for the common benefit or interest of the partners.
The correct answer is: There must be a contribution of money, property,

and industry to a common fund;
1 0
Law on Partnership
May contribute money, property, or industry to a common fund.

a. Both limited and industrial partner
b. Limited partner
c. General partner
d. Both limited and general partner
The correct answer is: General partner
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 the
partners?
a. The contract must be in the name of the partnership
b. The partner must have the authority to bind the partnership
c. The partner must act on behalf of the partnership.
d. The partners bind the partnership by consenting for obligations he may
have contracted in good faith.
The correct answer is: The partner must have the authority to bind the
partnership
It is one which has not complied with all the legal requirements for its
creation.
a. Ordinary partnership
d. Real partnership
The correct answer is: De facto partnership
A kind of contract which has a name in law.

a. Preparatory 1 0
b. Onerous
c. Consensual

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Law on Partnership

Regulatory Framework for Business Transactions

It is one where it will exist until the purpose is accomplished

The correct answer is: Partnership for a particular undertaking

ARTICLE 1783. A particular partnership has for its object:

The correct answer is: Partner by estoppel

1. Managing Partner − manages the business or the affairs of the

It means that the contribution of each partner, whether money, property, or

The correct answer is: Commutative

6. Preparatory − Means by which other contracts will be entered

It is one where it will exist until the purpose is accomplished

The correct answer is: Partnership for a particular undertaking

The correct answer is: Partner by estoppel

5. Secret partner − Takes active part but is not known to be a

Those partner in an existing legal partnership.

The correct answer is: Real partner

The correct answer is: Partnership with a fixed term

A group of men pursuing learned art as a common calling in the spirit of

The correct answer is: Profession

The correct answer is: Partnership at will

The correct answer is: Dormant partner

A, B and C are general partners in ABC partnership. X is a debtor to their

The correct answer is: None, he being an industrial partner.

It is one where it will exist until the purpose is accomplished,

The correct answer is: Partnership for a Particular undertaking

In extra-judicial liquidation, the following will wind-up the partnership

The following are obligations of partners, except:

Where a partnership contract is rescinded on the ground of fraud or

The correct answer is: Right of dissolution

A and B capitalist partners while C is an industrial partner, both A and B

A, B, and C formed a partnership. They contributed P250,000 each. They also

A and B are partners with A as the managing partner. C owes A P100,000

Those who became members of the partnership after its establishment.

The correct answer is: Incoming partner

A, B, and C formed a partnership. They contributed P250,000 each. They also

The correct answer is: If A and B want to dissolve the partnership, C as a

Three of the following are property rights of a partner. Which is not?

The correct answer is: Right to demand formal accounting of partnership

This is the order of priority in general partnership liabilities:

The correct answer is: Industrial partner

A and B are partners with A as the managing partner. C owes A P100,000

The correct answer is: The payment shall be applied proportionately to

The three final stages of a partnership are the following except:

The correct answer is: None of the above

A is a capitalist partner and B the industrial one. Supposed B engages in

The following are instances, except one, when a partnership is unlawful.

X and Y verbally entered into a partnership with each of them contributing

The correct answer is: Valid

A, B, C, and D organized a general partnership with A and B as industrial

A and B are capitalist partners while C is an industrial partner. There is no

A, B, C, and D organized a general partnership with A and B as industrial

A partnership is dissolved, except:

The correct answer is: Partnership business can only be carried on at a

The correct answer is: Ostensible partner

The following are the rights of partners, except:

A, B, C, and E are partners. They contributed to the capital as follows: A-

The correct answer is: A-P50,000; B-P50,000; C-P50,500; E-P50,000

Those who contribute money or property and industry or both money,