The Partnership Act Provides for the Following Rule: "All Partners

question 45

Multiple Choice

The Partnership Act provides for the following rule: "all partners are to share equally in the capital and profits of the business and must contribute equally to the losses." Which statement best exemplifies this rule?

• A) The losses are restricted to the capital investments made by each partner.
• B) This rule is optional and may be varied by written agreement.
• C) This rule is mandatory and cannot be modified by agreement.
• D) The rule applies only to limited liability partnerships.

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Definitions:

Contractual Obligations

Duties that are legally required to be performed under the terms of a contract.

Foreseeable Loss

Losses that could have been anticipated or predicted as a consequence of an action or inaction, relevant in determining liability.

Non Est Factum

A defense in contract law where a party claims they were mistaken about the nature of the document signed, not merely its terms.

Caveat Emptor

A Latin phrase meaning "let the buyer beware," placing the responsibility on the buyer to perform due diligence before making a purchase.