Agency and Partnerships Flashcards
Actual authority is
the authority a partner reasonably believes they have based on the communications between the partnership and the partner.
If there has been no communication between the partnership and the partner, there can be no actual authority.
For ordinary business decisions in a partnership, a ____ vote is required. For extraordinary decisions, a ____ vote is required.
Majority - for ordinary
Unanimous - for extraordinary
In a partnership, a partner has apparent authority
to bind the partnership to transactions within the ordinary course of the partnership’s business or business of the kind carried out by the partnership UNLESS the 3P knows that the partner lacks the actual authority.
When a partner enters into a K without the requisite authority, then
They alone are liable, the partnership has no obligation
A partnership is formed
At soon as two parties
Carry own as co-owners
of a business for profit
(No intent to create a partnership required)
Factors raising a presumption that a partnership does exist and other factors to consider
Creates a presumption
-Sharing profits
-participating in control
Supports finding
-Property held together
-Parties called it a partnership
-Sharing of gross returns
Voting rights in a partnership are
Equal unless otherwise agreed
Profits and losses are shared
-Profits - equally, unless otherwise agreed
-Losses - in the same manner as profits
In terms of liability, each partner is
J&S liable for the entire partnership obligation
For liability, a new partner is
not liable for debts pre-existing their admission
Fiduciary duties in a partnership are
owed by every partner to the partnership
Care
Loyalty
Disclosure
Obedience
Property obtained by a partner may/may not be partnership property if
May be
-Purchased with partnership funds
-Indication it is for the partnership
-Close relationship of the property/business
-Improvement/maintenance w/ partnership $
Rebuttable presumption of separate prop
-Held by a partner AND
-Instrument transferring title doesn’t indicate action for the partnership AND
-Partnership funds were not used
In terms of property right, a partner
Is not a co-owner and can only use the property for partnership purposes
A partner’s rights include
Management - transferrable only w/ unanimous vote
Financial - unilaterally transferrable
There are two types of partnerships
At will - default form, continues indefinitely
Term - explicit or implicit agreement to be partners for a term or to complete a task
In an at will partnership, disassociation by _____ triggers _____
Express will (only in at will pships)
Automatic dissolution
Methods of dissociation:
-Express will (auto in at will)
-Occurrence of event as agreed
-Valid expulsion
-Partner’s bankruptcy, death, incapacity
-By law
When dissociation occurs, there are two options
-Partnership is dissolved and liquidated
-Partnership continues, dissociated partner is entitled to a buyout
In a term partnership, dissociation by _____ triggers _____ ONLY IF ____
Wrongful dissociation, P death, or P bankruptcy
Dissolution and winding up
w/in 90 days at least 1/2 of the partners agree to wind up
A partnership is liable post dissociation for its disassociated partner’s acts
for two years IF
-The act would have been binding
-The other party reasonably believed they were still a partner OR didn’t know of dissociation
Filing of statement of dissociation will protect
Auto trigger dissolution events:
-Express Will in At Will Pship
-Wrongful diss, death, bankruptcy in Term
-Occurrence of event set out at auto ending in Partnership agreement
-Pship becomes unlawful
-Judicial decree on Partner request (frustrated, unreasonable conduct, can’t conform to Pship agreement)
-90 days w/o at least two partners
Judicial decree auto winds up a partnership if shown
By a partner’s request that
-The economic purpose has been frustrated
-A partner has made it not reasonably practicable to continue, or the business can’t be carried in accord with the partnership agreement
Repayment order of partnership liabilities
-Outside creditors
-Inside creditors (capital contributions)
-Profits and losses distributed to partners
LP reqs/benes
-Filing
-Name includes LP
-GPs liable/power of management/owe Fid Duties
-LPs not liable/no management/no Fid Duties owed
