Business Associations - Partnerships

Question 1

When does a partner have apparent authority to bind the partnership?

Answer 1

• Carries on in the ordinary course of p’ship business

- UNLESS: had no actual authority, and the third party knew the partner had no actual authority

Question 2

How can a partner withdraw from a partnership?

Answer 2

Deliver written notice to the other partners

Question 3

Is a withdrawn partner liable for p’ship debts incurred before the withdrawal? After?

Answer 3

• Before&raquo_space;> YES

- After&raquo_space;> NO — UNLESS within 2 years, and the third party reasonably believed he was still a partner

Question 4

How long can a withdrawn partner’s apparent authority last?

Answer 4

One year after withdrawal, if third party:

• Didn’t have notice of the withdrawal
• Had conducted p’ship business with that partner before
• Reasonably believed he was still a partner

Question 5

What are the “buy out” rules for a partner who withdraws rightfully? Wrongfully?

Answer 5

• Entitled to a buy out
• Entitled to a buy out— but liable for damages, and p’ship can defer payment until the end of the term/objective if it wasn’t a p’ship at will

Question 6

When does a partner have actual authority to bind the partnership?

Answer 6

When he acts in accordance with:

• Partnership agreement, OR
• Vote of the partners (ordinary stuff, just need majority vote; non-ordinary stuff, need all)

Question 7

When is the partnership liable for a tort committed by a partner or an employee of the partnership?

Answer 7

Partner&raquo_space;> If committed within ordinary course of business

Employee&raquo_space;> If within scope of employment (apply regular master-servant rules)

Question 8

A and B are partners. A commits a tort. How can creditors get to B’s personal assets?

Answer 8

• Apply agency rules to see if the p’ship is liable for A’s tort (ordinary scope of business).
• If p’ship is bound, creditors can reach B’s personal assets AFTER they exhaust all p’ship assets first.