Agency and Partnerships

Question 1

Actual authority is

Answer 1

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.

Question 2

For ordinary business decisions in a partnership, a ____ vote is required. For extraordinary decisions, a ____ vote is required.

Answer 2

Majority - for ordinary
Unanimous - for extraordinary

Question 3

In a partnership, a partner has apparent authority

Answer 3

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.

Question 4

When a partner enters into a K without the requisite authority, then

Answer 4

They alone are liable, the partnership has no obligation

Question 5

A partnership is formed

Answer 5

At soon as two parties
Carry own as co-owners
of a business for profit

(No intent to create a partnership required)

Question 6

Factors raising a presumption that a partnership does exist and other factors to consider

Answer 6

Creates a presumption
-Sharing profits
-participating in control

Supports finding
-Property held together
-Parties called it a partnership
-Sharing of gross returns

Question 7

Voting rights in a partnership are

Answer 7

Equal unless otherwise agreed

Question 8

Profits and losses are shared

Answer 8

-Profits - equally, unless otherwise agreed
-Losses - in the same manner as profits

Question 9

In terms of liability, each partner is

Answer 9

J&S liable for the entire partnership obligation

Question 10

For liability, a new partner is

Answer 10

not liable for debts pre-existing their admission

Question 11

Fiduciary duties in a partnership are

Answer 11

owed by every partner to the partnership

Care
Loyalty
Disclosure
Obedience

Question 12

Property obtained by a partner may/may not be partnership property if

Answer 12

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

Question 13

In terms of property right, a partner

Answer 13

Is not a co-owner and can only use the property for partnership purposes

Question 14

A partner’s rights include

Answer 14

Management - transferrable only w/ unanimous vote

Financial - unilaterally transferrable

Question 15

There are two types of partnerships

Answer 15

At will - default form, continues indefinitely

Term - explicit or implicit agreement to be partners for a term or to complete a task

Question 16

In an at will partnership, disassociation by _____ triggers _____

Answer 16

Express will (only in at will pships)

Automatic dissolution

Question 17

Methods of dissociation:

Answer 17

-Express will (auto in at will)
-Occurrence of event as agreed
-Valid expulsion
-Partner’s bankruptcy, death, incapacity
-By law

Question 18

When dissociation occurs, there are two options

Answer 18

-Partnership is dissolved and liquidated
-Partnership continues, dissociated partner is entitled to a buyout

Question 19

In a term partnership, dissociation by _____ triggers _____ ONLY IF ____

Answer 19

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

Question 20

A partnership is liable post dissociation for its disassociated partner’s acts

Answer 20

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

Question 21

Auto trigger dissolution events:

Answer 21

-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

Question 22

Judicial decree auto winds up a partnership if shown

Answer 22

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

Question 23

Repayment order of partnership liabilities

Answer 23

-Outside creditors
-Inside creditors (capital contributions)
-Profits and losses distributed to partners

Question 24

LP reqs/benes

Answer 24

-Filing
-Name includes LP
-GPs liable/power of management/owe Fid Duties
-LPs not liable/no management/no Fid Duties owed

Question 25

Profits in an LP are split

Answer 25

according to partner contributions (losses likely the same)

Question 26

For voting in an LP

Answer 26

GPs typically vote, but LPs have a vote for extraordinary business decisions

Question 27

LLP reqs/benes:

Answer 27

LLP is a general partnership where the partners are NOT liable

-Filing w/ SoS
-Name includes LLP
-Gen Partnership rules apply

Question 28

LLLP is

Answer 28

A LP where both GPs and LPs are not liable

Question 29

LLC is formed by

Answer 29

Filing Articles of Org w/ SoS Including:
-Name (including LLC)
-Registered Office
-Registered agent

Question 30

An LLC can be operated either as

Answer 30

member managed
manager managed

Question 31

Financial rights in an LLC are

Answer 31

Distributions are allocated on basis of contributions

Question 32

In terms of LLC liability, members and managers are

Answer 32

not liable for LLC obligations