One of your questions on partnerships is not at all well worded in the mock exam, namely “An architect has entered into a partnership with two other architects. Their firm is sued and judged to be at fault, so they must pay a monetary judgment. How is the monetary judgment divided among the three partners in the firm?”
First of all we are not told what kind of partnership this is, General or LLP. So it’s difficult to judge the outcome. Secondly most of the answers are correct in different instances.
Can I ask that you reword these questions - they are frustrating to get wrong when we are not given all the facts
Hi @avatarlucas thanks for writing in! I had to redact your comment because we don’t allow copying and pasting of our paid content here.
We are in the difficult position of trying to prepare our members for an exam that we hear often has complicated, ambiguous, and misleading questions. We have two options:
- Make our questions similar to the actual exam, with all of the inherent ambiguity, so folks can prepare for the real thing.
- Make our questions the way we wish the questions were - all required information provided, no assumptions necessary, clear and concise.
We think it’s better to try to prepare members for the actual exam, so they’re not surprised on test day. You need to practice for these types of questions so that you can be successful on the actual exam.
Regarding this specific question - A general partnership is the default type of partnership, so in the absence of specific information about a specific type of partnership (like an LLP) you should assume that a question that talks about a ‘partnership’ is talking about a GP. This type of thing happens a lot on the ARE - you’re not always told what delivery method a project is (assume DBB), you’re not always told what the project’s contracts are (assume B101, A101, A201), etc.
With a GP, a creditor can go after partner’s assets as they see fit, if the firm doesn’t have assets to cover the debt. Percentage ownership doesn’t matter. So, if a partnership has three partners with equal shares, owes a debt, and doesn’t have any assets - the debtor likely will just go after the personal assets of the partner who has the most assets, or has the most easily available assets to go after. Therefore, the percentage ownership doesn’t matter - though in the absence of specific information, if I was told that a firm has three partners I would assume they’re equal partners.
I know that these types of questions are frustrating but we include them so our members don’t have a false sense of what the exam is on test day.
Good luck on your next exam!
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