NYLE Business Relationships 2

Question 1

Under New York law, a general partner who withdraws from a partnership before its term expires is liable for damages caused by the wrongful withdrawal. Which statement best describes the withdrawing partner's continued liability to third parties?

Accepted Answer

The partner remains liable for partnership obligations incurred before withdrawal and those incurred within 90 days after creditors receive notice.

Answer

Under NY partnership law, a withdrawing partner remains liable for pre-withdrawal obligations and obligations incurred within 90 days after creditors receive actual notice of the withdrawal.

Question 2

Alice and Bob form an LLC in New York. The operating agreement is silent on management. Under the New York LLC Law, which default rule applies?

Accepted Answer

The LLC is member-managed, with each member having equal rights in management.

Answer

NY LLC Law § 401 defaults to member-managed operation where each member has equal management rights when the operating agreement does not specify otherwise.

Question 3

Under New York's Business Corporation Law, what is the minimum number of directors required to form a quorum for a board meeting in the absence of a contrary bylaw provision?

Accepted Answer

A simple majority of the entire authorized board.

Answer

BCL § 707 provides that a majority of the entire board constitutes a quorum unless the certificate of incorporation or bylaws fix a different proportion, but not less than one-third.

Question 4

A New York limited partnership fails to file a certificate of limited partnership. What is the status of a person who invested capital believing they were a limited partner?

Accepted Answer

They are treated as a general partner with unlimited personal liability.

Answer

Under NY Partnership Law, without a properly filed certificate, the limited partnership does not exist and all partners—including intended limited partners—bear general partnership liability.

Question 5

A New York corporation's shareholder agreement restricts stock transfer without board approval. A shareholder transfers shares in violation of this restriction to a buyer who had actual notice of it. What is the legal effect of the transfer?

Accepted Answer

The transfer is void because the buyer had actual notice of the restriction.

Answer

Under BCL § 627, a transfer made in violation of a lawful restriction is ineffective against a transferee who has actual knowledge of the restriction.

NYLE - New York Law Exam Practice Test

NYLE - New York Law Exam Practice Test

NYLE Business Relationships 2