3. Relationship Between Partners Flashcards
What governs the relations among the partners and between the partners and the partnership?
The partnership agreement
To the extent that the partnership agreement does not otherwise provide, the UPA governs.
What are partners entitled to be repaid for?
Contributions made by way of capital or advances to the partnership property.
Each partner shares equally in the profits and surplus remaining after all liabilities are satisfied.
How are losses shared among partners?
According to their share in the profits
Partners may agree to share profits in a different ratio, in which case losses would be shared in the same ratio unless agreed otherwise.
What right does a partner have regarding indemnity?
The partnership must indemnify every partner for payments made and personal liabilities incurred in the ordinary conduct of business
This includes preservation of business or property.
When is a partner entitled to receive interest on capital contributions?
Only from the date when repayment should be made
Interest on payments or advances made beyond the agreed capital is payable from the date of the payment.
Under what conditions can a partner receive compensation?
Generally, a partner is not entitled to compensation except for a surviving partner in winding up affairs
An agreement may provide for salaries and should specify the source of payments.
When does a partner have the right to a formal accounting of partnership affairs?
In several situations including wrongful exclusion from partnership business
Other situations include agreement terms, improper secret profits, or when circumstances render it just.
What are the property rights of a partner?
Rights in specific partnership property, interest in the partnership, and right to participate in management
These rights include co-ownership of specific partnership property.
What must a partner do with partnership property?
Use it only for partnership purposes unless all partners consent otherwise
Rights in specific property are not assignable without consent from all partners.
How is a partner’s interest in the partnership treated?
As personal property
A partner’s interest includes their share of profits and surplus.
What happens to a partner’s interest in the event of a conveyance?
It does not dissolve the partnership, but the assignee has limited rights
The assignee cannot interfere with management or require information about transactions.
What can a court do regarding a debtor-partner’s interest?
Charge the interest with payment of the unsatisfied judgment debt
The interest charged may be redeemed or purchased by partners with separate property or partnership property.
What fiduciary duty do partners owe to each other?
A duty of loyalty and to act in the best interests of the partnership
This includes refraining from self-dealing and usurping business opportunities.
What is the duty to disclose for partners?
To provide complete and accurate information about partnership matters
This duty applies to any partner or legal representative of a deceased or incapacitated partner.
What must partners do regarding the partnership books?
Keep them at the main business location and allow access for inspection
Every partner must have the right to inspect and copy the records.
