Which of the Following Statements Is TRUE with Respect to the Risk

question 60

Multiple Choice

Which of the following statements is TRUE with respect to the risk of liability under a partnership?

• A) Because of their special position within partnerships, managing partners cannot be held liable for torts and breaches of contract that are committed by other partners.
• B) A partner cannot be held liable for torts and breaches of contract that another partner committed while acting in an unauthorized way.
• C) A person may be held liable as a partner, as long as the reasonable person would believe that that person was a partner in the partnership.
• D) Under a limited liability partnership, a partner may avoid liability if another partner commits a tort of negligence.
• E) None of the above.

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Definitions:

Articles of Incorporation

Legal documents filed with a governmental body to legally document the creation of a corporation.

Corporation

A legal entity recognized by law as separate from its owners, capable of owning property, entering contracts, and being sued.

Par-value Share

A type of share that has a face value or nominal value assigned to it, which is the minimum price at which the shares can be issued.

Secured

A status indicating that a loan or credit has collateral attached to it, ensuring the lender's investment is protected.