CAS Bar Business Associations

Question 1

Under the California Uniform Partnership Act, what is the default rule for sharing profits among partners when no agreement exists?

Accepted Answer

Profits are shared equally regardless of capital contribution

Answer

Under California's Uniform Partnership Act, absent an agreement to the contrary, partners share profits equally regardless of their respective capital contributions.

Question 2

Which type of agency authority arises from a principal's conduct that leads a third party to reasonably believe the agent is authorized to act?

Accepted Answer

Apparent authority

Answer

Apparent authority arises when the principal's words or conduct reasonably lead a third party to believe the agent has authority, even if actual authority is absent.

Question 3

Under California law, a general partner in a limited partnership is:

Accepted Answer

Personally liable for all partnership debts and obligations

Answer

General partners in a limited partnership bear unlimited personal liability for all debts and obligations of the partnership, distinguishing them from limited partners.

Question 4

Under the undisclosed principal doctrine in agency law, once the principal's identity is revealed, the third party may:

Accepted Answer

Elect to hold either the agent or the principal liable

Answer

When a principal is undisclosed, the third party may elect to pursue either the agent or the principal upon discovering the principal's identity, but cannot recover from both.

Question 5

Under the California Uniform Partnership Act, a general partnership is formed when:

Accepted Answer

Two or more persons carry on a business for profit as co-owners

Answer

A general partnership is automatically formed when two or more persons carry on a business for profit as co-owners, without requiring any formal filing or written agreement.

(CAS Bar) California State Bar Exam Practice Test

(CAS Bar) California State Bar Exam Practice Test

CAS Bar Business Associations