Ch. 41 Partnerships Flashcards
The law sees what you do
If a person represents a non-partner as a member of the partnership, that creates an ostensible partnership or partnership by estoppel, and the “ostensible” partner has apparent authority
Partnership by Estoppel
an association of two or more persons to carry on as co-owners in a business for profit
Partnership
-Formed by agreement contract express or implied
-Formal written agreements are generally not required
Formation of Partnership
-Natural persons with capacity
-other entities, corporations, LLC, limited partnerships
Persons who can be partners
-persons lacking capacity, children and mental incompetents
people who cant be partners
- control-yes
- sharing profit/loss yes
- gross returns no
- contribution of skill/ labor no
- fixed payment
Determining existence of a partnership
what is the strongest evidence for the existence of a partnership?
Sharing profits and losses
Partnership agreements are
express
implied
based on estoppel
Partnership authority is
express
customary/ implied
and based on estopple
partnership property
property belongs to the partnership not individual partners
creditors seeking payment
creditors of an individual partner can not reach partnership assets but must rely upon a charging order
- cessation of business
- suretyship
- arbitration
- confession of judgemnt
- assignment for creditors
- personal obligations
Prohibited transactions of partnerships
- cessation of business
- suretyship
- arbitration
- confession of judgemnt
- assignment for creditors
- personal obligations
Prohibited transactions of partnerships
- management
- inspection of books
- share of profits
- compensation
- repayments of loans
- payment of interest
- contribution and indemnity
- distribution of capital
Rights of Partners
Personal liability is generally limited to liabilities arising after joining the partnership
Liability of new Partners
