Corporations

Question 1

Partnership (general definition)

Answer 1

A relationship between persons carrying on a business in common for profit

Question 2

Partnership: Characteristics

Answer 2

Informal - No strict requirements or formalities to form a partnership.

Registration – State registration only required prior to dissolving or filing a statement of authority.

*Exception: Limited Partnerships require the filing of a certificate with the Department of State

Question 3

Partnership: Liability to third parties

Answer 3

Partners are agents of the partnership and are liable for torts committed by other partners that are within the scope of the partnership.

*Exception: the partner so acting has in fact no authority to act for the firm in the particular matter, and…

the person with whom he or she is dealing either knows that the partner has no authority, or does not know or believe him or her to be a partner.

Question 4

True/False: Partnerships are not bound by the valid Ks entered into by other partners.

Answer 4

False. They are bound by valid Ks entered into by other partners.

Question 5

True/False: Partnerships are joint and severally liable for debts of the partnership

Answer 5

True!

Question 6

True/False: Creditors must deplete partnership assets before going after individual partner

Answer 6

True!

Question 7

True/False: A limited partner is never liable to the extent of his/her contribution.

Answer 7

False. A limited partner is only liable to the extent of his/her contribution.

Question 8

True/False: Outgoing partner can never be liable to existing creditors for one year, even in subsequent debts, unless notice of withdrawal is given to the creditors.

Answer 8

False.

Outgoing partner can be liable to existing creditors for one year, even in subsequent debts, unless notice of withdrawal is given to the creditors.

Question 9

Estoppel Partnership

Answer 9

Partner that represents that partnership exists will be liable regardless of whether it exists

Question 10

Relationship between partners

Answer 10

Partners are fiduciaries of each other, owe duty of loyalty (no self dealing), duty of good faith and fair dealing, and duty of care

Question 11

Partnership property: Generally

Answer 11

Property acquired in name of partnership constitutes the property of the partnership.

Property acquired in name of partner is partnership property if instrument transferring title suggests being acquired for partnership.

Property purchased with partnership assets presumed to be partnership property, although the presumption can be rebutted.

Question 12

Partner’s Rights in Partnership Property

Answer 12

Partners must approve of any transfer of partnership property

Without an agreement otherwise, each partner is entitled to equal control.

Without an agreement otherwise, partners get no salary (except to help wind up business)

Without an agreement otherwise, profits and losses are shared equally.

Question 13

Partnership: New partner

Answer 13

(Uniform Partnership Act) a new partner requires unanimous consent from current partners

Question 14

Partnership: Dissolution

Answer 14

A partnership can be dissolved in several ways:

if entered into for a set term, by the expiration of that term

if entered into for a single adventure or undertaking, by the termination of that adventure or undertaking

if entered into for an undefined time, by any partner giving notice to the other or others of his or her intention to dissolve the partnership.

on the death or bankruptcy of a partner.

by power of a court.

Question 15

Partnership: Assets after dissolution

Answer 15

1st: Pay for partnership debts
2nd: Spread amongst partners

Question 16

Characteristics of a Limited Partnership

Answer 16

Consists of one or more persons who are general partners, and one or more persons who are limited partners.

Formed when there is filed with the registrar a certificate, signed by each person who is, on the formation of the partnership, to be a general partner.

A limited partner may contribute money and other property to the limited partnership, but not services.

A limited partner is not liable for the obligations or liabilities of the limited partnership except in respect of the amount of property he or she contributes or agrees to contribute to the capital of the limited partnership.

Question 17

Limited Partnership Dissolution

Answer 17

The bankruptcy, retirement, death, mental incompetence or dissolution of a general partner dissolves a limited partnership unless the business is continued by the remaining general partners.

Question 18

Limited Liability Partnerships

Answer 18

Formation: Filing a registration statement with the state.

A partner in a limited liability partnership…
(a) is not personally liable for a partnership obligation merely because that person is a partner, and

(b) is not personally liable for an obligation under an agreement between the partnership and another person

Question 19

In what circumstances are partners in LLPs personally liable for a partnership obligation?

Answer 19

(a) the obligation was an obligation of a corporation, and

(b) they were directors of that corporation

Question 20

In what circumstances are partners in LLPs liable for their own or another partner’s conduct?

Answer 20

(a) the partner’s own negligent or wrongful act or omission or
(b) for the negligent or wrongful act of another partner or an employee of the partnership if the partner knew of the act and did not try to prevent it.

Question 21

LLP Dissolution

Answer 21

Must submit a form with the registrar of the state