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Bar Exam - FL > FL - Partnerships & LLCs > Flashcards

FL - Partnerships & LLCs Flashcards

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1
Q

NATURE OF A PARTNERSHIP

“Partnership” Defined

A

FL adopted Revised Uniform Partnership Act (RUPA)

Partnership is an association of 2 or more persons to carry on as co-owners a business for profit.

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2
Q

NATURE OF A PARTNERSHIP

Joint Venture is a Partnership

A

Joint Venture is an association of persons with intent to engage in a single business venture for joint profit.

Legal consequences of Joint Ventures almost identical to Partnerships.

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3
Q

NATURE OF A PARTNERSHIP

Governing Law (Default Rules)

A

MAY NOT BE WAIVED

Can agree to different rules in Partnership Agreements (RUPA Governs those not provided for).

(i) Rights and duties regarding execution, filing, and recording of PARTNERSHIP REGISTRATION except to eliminate the duty to provide copies of statements to all partners;
(ii) A Partner’s RIGHT OF ACCESS to books and records and to information reasonably required for the proper exercise of the partner’s rights and duties;
(iii) a Partner’s duties of LOYALTY AND CARE;
(iv) The Power to DISSOCIATE as a Partner;
(v) the Power of a Court to EXPEL a Parnter;
(vi) The Requirement that a partnership BE WOUND UP in the event of either the illegality of the business or certain judicial determinations that continuing the business is not practicable or equitable;
(vii) the RIGHTS OF THIRD PARTIES under the RUPA;
(viii) a Partner’s duty of GOOD FAITH AND FAIR DEALING; and
(ix) the law applicable to limited liability partnerships

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4
Q

FORMATION OF A PARTNERSHIP

How a Partnership is formed

A

As soon as two or more people associate to carry on as co-wners a business for profit.

THERE IS NO REQUIREMENT THAT THE PARTIES SUBJECTIVELY INTEND TO FORM A PARTNERSHIP, ONLY THAT THEY INTEND TO RUN A BUSINESS AS CO-OWNERS.

No Agreement or writing required.

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5
Q

FORMATION OF A PARTNERSHIP

Capacity

Who May Be Partner?

A

Anyone capable of entering into a binding contract.

MINORS

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6
Q

FORMATION OF A PARTNERSHIP

Capacity

Liability Where No Capacity

A

If lack capacity, NOT PERSONALLY LIABLE for the obligations of the partnerships or breaches of the partnership agreements.

  • Bound to the extent of her contribution of capital to the Partnership
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7
Q

FORMATION OF A PARTNERSHIP

Capacity

Consent

A

Unless otherwise provided, no one can become a partner in a partnership without the express or implied consent of ALL PARTNERS

(blackballing @ a frat)

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8
Q

FORMATION OF A PARTNERSHIP

Capacity

Statement of Partnership Authority

A

A Partnership may (but is NOT required to) file a registration statement with the department of state.

Statement can give CONSTRUCTIVE knowledge of the intent of the partner’s authority to enter into real estate contracts on behalf of the partnership.

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9
Q

FORMATION OF A PARTNERSHIP

Proof of Partnership Existence

A

Courts look @ INTENT OF THE PARTIES to carry on a business as co-owners. If so, there is a partnership even if they did not subjectively intend to be partners.

Where party intent is uncertain look to:
(1) Sharing profits raises presumption of partnerships unless if profits were received in payment of debt, rent, services, wages, annuity, interest, sale of goodwill

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10
Q

FORMATION OF A PARTNERSHIP

Purported Partners

A

No agreement and parties (as between themselves) are not partners, they may be held liable to 3rd parties as if they were partners

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11
Q

FORMATION OF A PARTNERSHIP

Purported Partners

Liability of Person Who is Held Out As Partner?

A

When a person, by words or conduct, represents herself as a Partner or consents to being represented by another as partner, she will be liable to 3rd parties who enter into transactions w/ the actual or apparent partnership in reliance on representation

–> no duty to deny partnership –> only liable if actually consents

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12
Q

FORMATION OF A PARTNERSHIP

Purported Partners

Liability of Person Who Holds Another Out As Partner?

A

Makes the alleged partner her agent with POWER TO BIND her to third parties as if the other were, in fact, a Partner.

  • If the person making the representation is in fact a member of an already existing partnership and the representation is to the effect that the would be partner is a member of this partnership, ONLY those partners who MADE or CONSENTED to the reprensentation will be bound (not necessarily all or even the partnership as a whole)
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13
Q

PROPERTY OF A PARTNERSHIP

Classifications of Property

Partnership Capital

A

Partnership capital consists of the PROPERTY OR MONEY CONTRIBUTED by each of the partners for the purpose of carrying on the Partner’s Business

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14
Q

PROPERTY OF A PARTNERSHIP

Classifications of Property

Partnership Property

A

Partnership Property embraces everything that the partnership owns consisting both of the capital contributed by its members AND the properties subsequently acquired in partnership transactions

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15
Q

PROPERTY OF A PARTNERSHIP

Rights of Partner in Partnership Property

A

A partner is not a co-owner of partnership property and has no interest in partnership property. Thus, a partner’s creditors may NOT reach partnership property to satisfy the personal (non partnership) obligations of a Partner

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16
Q

PARTNER’S INTEREST IN THE PARTNERSHIP

In General

A

A partners interest in the Partnership consists of (i) management and other rights and a right to share in the partnership profits and losses and receive distributions

A partner may NOT transfer his interest in management and other rights, BUT MAY transfer his interest in profits, losses and distributions.

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17
Q

PARTNER’S INTEREST IN THE PARTNERSHIP

Transferable Interest is Personal Property

A

Each partner has a TRANSFERABLE interest in the partnership, which consists of his share of the PROFITS AND LOSSES and the right to receive distributions. This interest is treated as personal property. Absent an agreement to the contrary, each partner is entitled to an EQUAL share of the partnership profits and must contribute toward the partnership losses in proportion to his share of the profits.

LOSSES FOLLOW PROFITS

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18
Q

PARTNER’S INTEREST IN THE PARTNERSHIP

Transfer of Transferable Interest

A

Because a partner’s transferable interest in the partnership is personalty, IT MAY BE TRANSFERRED by the partner voluntarily or involuntary at any time. Such a conveyance does not dissolve the partnership or cause the transferring partner’s dissociation.

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19
Q

PARTNER’S INTEREST IN THE PARTNERSHIP

Transfer of Transferable Interest

Transferee’s Rights

In Partnership

A

In absence of an agreement, a transfer does not entitle the transferee to interfere in the management or administration of the partnership business or affairs, to require any information or account of the partnership transactions, or to inspect the partnership books.

Rather, a transfer merely entitles the transferee to receive , in accordance with the contract, distributions to which the transferring partner would otherwise be entitled. However, a partnership need not give effect to an transferee’s rights until it has notice of the transfer

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20
Q

PARTNER’S INTEREST IN THE PARTNERSHIP

Transfer of Transferable Interest

Transferee’s Rights

At Dissolution

A

Transferee entitled to receive his transferor’s net amount distributable, and may require an accounting only from the date of the last accounting agreed to by all the partners.

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21
Q

PARTNER’S INTEREST IN THE PARTNERSHIP

Charge of Transferable Interest (Attachment)

A

Judgement creditor of a partner may charge (attach) the transferable interest of the debtor to satisfy the judgment. The charging order becomes a lien on the interest. The Court may also appoint a receiver of the debtor’s share of the distributions due or to become due from the partnership.

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22
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Right to Participate in Management

A

UOA, all partners have EQUAL RIGHTS in the management of the partnership business. Decisions regarding matters within the ORDINARY COURSE OF BUSINESS of the partnership may be controlled by a MAJORITY VOTE, but matters OUTSIDE THE ORDINARY COURSE OF BUSINESS require the consent of ALL PARTNERS

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23
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Fiduciary Duties

A

Partners owe the partnership and other partners two fiduciary duties: duties of loyalty and care. Partners must discharge these duties in good faith and fair dealing.

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24
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Fiduciary Duties

Duty of Loyalty

A

A partner’s duty of loyalty is three-fold:

(i) to account for profits, property, opportunities, or other benefits derived by the partner in conjunction with the partnership business;
(ii) the refrain from dealing with the partnership as or on behalf of a party having an interest adverse to the partnership; and
(iii) to refrain from competing with the partnership

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25
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Fiduciary Duties

Duty of Care

A

A partner’s duty of care to the partnership and the other partners is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct or knowing violation of law

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26
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Remuneration (working for Profits)

A

UOA, a partner is NOT entitled to remuneration except for reasonable compensation for services rendered in winding up the partnership’s business.

Unless the circumstances indicate otherwise, it is implied that each partner will devote her entire time and energy to the partnership business. Where a partner impliedly or expressly promises to devote time to the partnership business and fails to do so, she may be charged in an accounting for damages caused to the partnership. This includes the amount expanded by the partnership to replace the services she should have performed as well as any other loss caused by her breach of contract.

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27
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Indemnification and other Repayment

A

The partnership must indemnify partners for payments reasonably made and obligations reasonably incurred by a partner in carrying on the business of the partnership. Similarly, if a parter makes any payment or advance on behalf of the partnership beyond the amount the partner agreed to contribute, the partnership must repay the partner. In any case, such payments, obligations, and advances constitute loans to the partnership, which must be repaid WITH INTEREST.

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28
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Books and Information

A

The partnership books must be kept, subject to an agreement to the contrary, at the partnerships chief executive office and every partner has the RIGHT TO INSPECT AND COPY them. Each partner, upon demand of another partner/legal rep, must provide complete and accurate information concerning the partnership.

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29
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Legal Actions by and Against Partners

Partnership May be Sued

A

A partnership may sue or be sued in its own name. Note, however, that a judgment against the partnership is not itself a judgment against a partner.

To reach a partner’s personal assets, there must ALSO be a judgement against the partner. Actions may be brought against the partnership and the partners in the same action (due process must serve both).

30
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Apparent Authority

A

RUPA provides that:

(i) the act of ANY PARTNER;
(ii) for apparently carrying on IN THE ORDINARY COURSE the partnership business or BUSSINESS OF HTE KIND carried out by the partnership;
(iii) binds the partnership UNLESS:
(a) the partner had NO AUTHORITY to act for the partnership in the particular matter; AND
(b) the person with whom the partner was dealing KNEW OR HAD RECEIVED NOTIFICATION that the partner lacked authority.

31
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Fraud

A

The partnership is liable for any wrongful act or omission by a partner “acting in the ordinary course of the business of the partnership or with authority of his copartners”

32
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Breach of Trust

A

The partnership is liable if a parter misapplies money or property of a third person received by him WITHIN THE SCOPE OF HIS APPARENT AUTHORITY. The partnership is also liable off money or property received in the ORDINARY COURSE OF BUSINESS is misapplied by a partner while in the custody of the partnership.

33
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Liability of Partners

Civil Liability - Contract

A

Partners are liable on contracts made by the partnership in the scope of the partnership business and on any other contracts expressly authorized by partners

34
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Liability of Partners

Civil Liability - Tort

A

Partners are liable for any torts committed baby any partner or by an employee of the partnership IN THE ORDINARY COURSE OF PARTNERSHIP BUSINESS or with authority of the partnership.

This covers fraud committed by a copartner in the course of partnership business, even though the other partners have no connection with, knowledge of, or participation in the fraud

35
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Liability of Partners

Nature of Partner’s Liability

A

Jointly and Severally Liable for all obligations of the partnership, whether the obligations arise in contract or tort.

Must serve partners for personal liability.

Judgement creditor must generally EXHAUST PARTNERSHIP ASSETS before levying on a partner’s individual assets, and may not levy or execute against a partner’s individual assets to satisfy a judgment arising from a partnership obligation or liability unless:

(i) judgement based on same claim obtained against partnership and writ of execution on judgment returned unsatisfied;
(ii) partnership is a debtor in bankruptcy;
(iii) partner agreed that creditor need not exhaust partnership assets;
(iv) court grants judgement creditor to go against individual assets of a partner after finding that the assets of the partnership are insufficient, exhaust burdens, or grant of permission is appropriate; or (v) liability is imposed on the partner by law or contract independent of the existence of partnership

36
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Liability of Partners

Extent of Partner’s Liability

A

Each partner is PERSONALLY AND INDIVIDUALLY LIABLE for the entire amount of all partnership obligations, whether arising in tort or contact. Where 1 is compelled to pay or satisfy the whole of the partnership debt, he is entitled to indemnification from the partnership. He may also require the partner’s CONTRIBUTE THEIR PRO RATA SHARES of the payment if the partnership is unable to indemnify

37
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Liability of Partners

Change of Partnership Membership as Affects Partner’s Liability

Liability of Incoming Partner

A

A person admitted as a partner into an existing partnership is NOT PERSONALLY LIABLE for any partnership obligation incurred before the person’s admission as a partner (of course, any property or capital the incoming partner contributes to the partnership is at risk for satisfying existing partnership debts)

38
Q

RELATIONS BETWEEN PARTNERS ( DEFAULT RULES)

Liability of Partners

Change of Partnership Membership as Affects Partner’s Liability

Liability of Outgoing (Dissociated) Partner

A

An outgoing or dissociated partner remains liable on all obligations incurred by the partnership while a member of the partnership, unless there has been payment, release, or novation, or the creditor has agreed to a material alteration in the obligation without the partner’s consent. In general, the partner also is liable for acts done not only until he has withdrawn from the partnership, but also until 90 DAYS after he has filed a notice of dissociation with the department of state

39
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Dissociation

In general

A

RUPA provides the change in the relationship caused by a partner’s ceasing to be associated in the carrying on of the business. The dissociation does not necessarily cause a dissolution and winding up of the business of the partnership.

40
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Dissociation

Events of Dissociation

A

A partner is dissociated from the partnership upon:

(i) notice, which need not be in writing unless required under Partnership agreement, of the Partner’s EXPRESS WILL to withdraw as partner;
(ii) the HAPPENING OF AN EVENT AGREED to in the partnership agreement;
(iii) the EXPULSION OF THE PARTNER pursuant to the terms of the partnership agreement ;
(iv) the EXPULSION OF THE PARTNER by unanimous vote of the remaining partners if it is unlawful to carry on business with that partner;
(v) the EXPULSION OF THE PARTNER by judicial decree because the partner has engaged in wrongful conduct ;
(vi) the PARTNER’S BECOMING BANKRUPT;
(vii) the DEATH OF THE PARTNER;
(viii) the decision of a court that the PARTNER IS INCAPABLE OF PERFORMING a partner’s duties;
(ix) APPOINTMENT OF A RECEIVER for OR DISTRIBUTION of substantially all of the partner’s transferable in interest in the partnership; or
x) TERMINATION OF A PARTNER that is a business entity

41
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Dissociation

Consequences of Dissociation

Purchase of Dissociated Partner’s Interest

A

If the partnership continues after a partner dissociates, the partnership must purchase the dissociated partner’s interest based on the greater of (i) the partnership’s liquidation value or (ii) the value of the partnership business as a going concern without the dissociated partner. These values are determined as if the partnership assets were sold, and the partnership wound up, on the date of dissociation.

Interest must be paid on the buyout price from the date of dissociation to the date of payment.

Damages for wrongful dissociation reduce the amount due to the dissociated partner.

42
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Dissociation

Consequences of Dissociation

Indemnification of Dissociated Partner

A

When the partnership purchases a dissociated partner’s interest, it must indemnify the dissociated partner against all known partnership liabilities incurred before dissociation. The partnership must also indemnify the partner against all liabilities incurred after dissociation, except for liabilities incurred by the acs of the dissociated partner.

43
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Dissolution

Events Causing Dissolution

A

Partnership must be dissolved and wound up when any of the following occurs:

(i) NOTIFICATION BY A PARTNER IN A PARTNERSHIP AT WILL of an intent to withdraw;
(ii) in a partnership for a definite term or particular underrating: (a) within 90 days after partner’s death, bankruptcy, or wrongful dissociation, the EXPRESS WILL OF AT LEAST HALF OF THE REMAINING PARTNERS to wind up the business; (b) the EXPRESS CONSENT OF ALL PARTNERS to wind up the partnership; or (c) the EXPIRATION OF THE TERM or completion of the undertaking;
(iii) the HAPPENING OF AN EVENT AGREED TO IN THE PARTNERSHIP AGREEMENT resulting in the winding up of the business;
(iv) the HAPPENING OF AN EVENT THAT MAKES IT UNLAWFUL for the partnership to continue;
(v) ISSUANCE OF A JUDICIARY DECREE by a PARTNER that (a) the economic purpose is likely to be frustrated; (b) a partner engaged in conduct making it not reasonably practicable to carry on business; (c) the business cannot practicably be carried on in conformity with the partnership agreement; or
(vi) ISSUANCE OF A JUDICIAL DECREE on application by a TRANSFEREE of a partner’s transferable interest that is equitable to wind up

44
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Dissolution

Partners May Waive Dissolution and Continue Business

A

Any time after the dissolution of a partnership and before the winding up of the partnership’s business is completed, the partners (excluding any wrongfully dissolving partners) may decide BY UNANIMOUS VOTE to continue the partnership business. If they do so, the dissolution is retroactively nullified, and pre-waiver liabilities are determined as if the dissolution never occurred.

45
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Distribution of Assets - Final Accounting

Order of Distribution

A

Creditors, including partners who are creditors, must be paid before the non-creditor partner’s receive any payments

After creditors, each partner is entitled to a settlement of her account. If positive, balance is distributed to partner. If negative, partner must contribute amount of the deficiency to partnership.

46
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Distribution of Assets - Final Accounting

Partner who pays more tan his Share of Debt entitled to Contribution

A

If partner fails to contribute to partnership debt, All other partners must contribute in proportion i which the partners share losses. Where a partner is forced to pay more than his share of the partnerships debt, he is entitled to contribution from the others to equalize it.

47
Q

DISSOCIATION AND DISSOLUTION OF A PARTNERSHIP

Distribution of Assets - Final Accounting

Insolvency - Conflict b/w Partnership Creditors and Individual Creditors

A

Partnership creditors have PRIORITY over a partner’s separate creditors with regard to PARTNERSHIP ASSETS, and PARTIY with separate creditors as to SEPARATE PROPERTY

48
Q

LIMITED PARTNERSHIPS (LPs)

Formation

Certificate of Limited Partnership

A

A certificate of limited partnership signed by each general partner must be filed with the deparatment of state setting forth, among other things:

(i) the name and mailing address of the limited partnership;
(ii) the name and address of the agent for service of process;
(iii) the name and address of each GENERAL partner (limited partner’s names need not be included); AND
(iv) whether the limited partnership is a limited liability limited partnership (LLLP)

Each general partner that is a legal or commercial entity (not an individual) must be currently and actively registered with the dept of state.

The limited partnership;s legal existence begins at the time of filing, unless otherwise provided in the certificate.

49
Q

LIMITED PARTNERSHIPS (LPs)

Name of Partnership

A

The name of the limited partnership may contain the name of any partner.

The name of every domestic and limited partnership that is not a limited liability limited partnership must contain the phrase “limited partnership” or “limited” or the abbreviation “L.P.” or “Ltd.” or the designation “LP.”

The name must be distinguishable from the name of other entities on file with the division of corporations of the dept of state.

50
Q

LIMITED PARTNERSHIPS (LPs)

Liability of General Partner

A

Except as provided by statute or in the Partnership agreement, a general partner of a limited partnership is JOINTLY AND SEVERALLY LIABLE for all obligations of the limited partnership.

Note: a general partner may also be a limited partner and have the rights of a limited partner, but such a dual capacity does not relieve the general partner of his duties as general partner.

51
Q

LIMITED PARTNERSHIPS (LPs)

Liability of Limited Partner

A

A limited partner is NOT PERSONALLY LIABLE for an obligation of the limited partnership solely by reason of being a limited partner, EVEN IF THE LIMITED PARTNER PARTICIPATES IN THE MANAGEMENT AND CONTROL of the limited partnership

*Only liable for contributions

52
Q

LIMITED PARTNERSHIPS (LPs)

Rights of the Partners

On Basis of Contributions (Default)

A

UOA, distributions are made on the basis of the partner’s contributions (i.e. in proportion to the value of each partner’s contributions). Note that this is different from the general rule under RUPA which provides that profits and losses are to be shared equally.

53
Q

LIMITED PARTNERSHIPS (LPs)

Rights of the Partners

Derivative Action

A

A partner may maintain a derivative action to enforce a right of a limited partnership if:

(i) the partner first makes a demand on the general partners to bring an action to enforce the right and the general partners do not bring the action within a reasonable time; or
(ii) a demand would be futile

54
Q

LIMITED PARTNERSHIPS (LPs)

Rights of the Partners

Derivative Action

Property Plaintiff in Derivative Action

A

A derivative action may be maintained only by a person who is a partner at the time the action is commenced and:

(i) who was a partner when the conduct giving rise to the action occurred; or
(ii) whose status as a partner devolved upon him by operation of law or pursuant to the terms of the partnership agreement from a person that was a partner at the time of conduct.

Any proceeds or other benefits of a derivative action belong to the limited partnership. if a derivative action is successful in whole or in part, the court may award the plaintiff reasonable expenses, including reasonable attorney’s fees, fro the recovery of the limited partnership

55
Q

LIMITED PARTNERSHIPS (LPs)

One Who Erroneously Believes Herself to Be A Limited Partner

General Rule - Not Bound as A General Partner

A

A person who makes a contribution to a business enterprise and erroneously, but in good faith, believes that she has thereby become a limited partner rather than a general partner can avoid being held liable as a general partner if, on ascertaining the mistake, she:

(i) FILES AN APPROPRIATE CERTIFICATE of limited partnership or a certificate of amendment; or
(ii) WITHDRAWS FROM FUTURE EQUITY PARTICIPATION in the enterprise by executing and filing in the office of the department of state a certificate declaring withdrawal

56
Q

LIMITED PARTNERSHIPS (LPs)

One Who Erroneously Believes Herself to Be A Limited Partner

General Rule - Not Bound as A General Partner

Exceptions

A

Not-withstanding the above rule, a person who erroneously believes that she is a limited partner WILL be bound as a General Partner to any 3rd party who actually believed in good faith that the partner was a general partner and transacted business with the enterprise :

(i) BEFORE THE PARTNER WITHDREW and an appropriate certificate was filed to show the withdrawal; or
(ii) BEFORE AN APPROPRIATE CERTIFICATE WAS FILED to show that she was not a general partner

Note: if a person makes a diligent good faith effort but is unable to properly file a certificate, she has the right to withdraw from the enterprise even if the withdrawal would otherwise breach an agreement with others , that are, or have agreed to become ,co-owners of the enterprise

57
Q

LIMITED PARTNERSHIPS (LPs)

Foreign Limited Partnerships

Definition

A

A foreign limited partnership is a partnership formed by two or more persons under the laws of ANY STATE OTHER THAN FLORIDA, or of ANY OTHER COUNTRY, and having as partners one or more general partners and one or more limited partners.

58
Q

LIMITED PARTNERSHIPS (LPs)

Foreign Limited Partnerships

Registration

A

A foreign limited partnership MUST apply with the dept of state for a certificate of authority to transact business by filing an application setting forth:

(i) the name of the partnership if the name does not comply with Florida Law;
(ii) the jurisdiction and date of its formation;
(iii) the name and address of its appointed agent for service of process and the address of its florida office;
(iv) a statement designating the department of state as agent for service of process if no other agent has been appointed or its appointed agent cannot be found or served;
(v) the address of its home jurisdictional (or principal) office and a mailing address;
(vi) the name and address of each general partner; and
(vii) whether the foreign limited partnership is a foreign limited liability limited partnership

59
Q

LIMITED PARTNERSHIPS (LPs)

Foreign Limited Partnerships

Effects of Doing Business Without Registration

Barred from Bringing Suit

A

A foreign limited partnership transacting business without registration is barred from bringing suit AS A PLAINTIFF in any Florida court, but the bar is lifted upon registration.

An unregistered partnership is NOT barred from DEFENDING an action in the Florida courts.

60
Q

LIMITED LIABILITY PARTNERSHIPS (LLPs) (Most law firms)

Introduction

A

The RUPA allows the creation of LLPs. The major advantage of operation as a LLP is that the partners are NOT PERSONALLY LIABLE for the limited liability partnership’s obligations.

A limited liability partnership is governed by all of the rules of the RUPA: EXCEPT that if a limited liability partnership also is a limited partnership, the ULPA will govern all issues dealing with the limited partnership.

61
Q

LIMITED LIABILITY PARTNERSHIPS (LLPs)

Formation (Name)

A

The name of the limited liability partnership must end with the words “Registered Limited Liability Partnership” or “Limited Liability Partnership” or the abbreviation “R.L.L.P.” or “L.L.P.” or the designation “RLLP” or “LLP”. The name must be filed for purposes of public notice only. The filing creates no presumption of ownership beyond that created under the common law. The name must be recorded by the dept of state without regard to any other recordation.

62
Q

LIMITED LIABILITY PARTNERSHIPS (LLPs)

Limited Liability Limited Partnerships (LLLPs)

A

A limited partnership may become a limited liability limited partnership by:

(i) obtaining the approval by the vote necessary to amend the limited partnership agreement, or ,if specified, the vote necessary to amend the contribution obligations of the partners;
(ii) filing a statement of qualification; AND
(iii) complying with the name requirements.

A limited liability limited partnership counties to be the same entity that existed before the filing of the statement of qualification.

The limitations on liability of partners in a limited liability partnership apply to BOTH general and limited partners of a limited liability limited partnership.

63
Q

LIMITED LIABILITY COMPANIES (LLCs)

Characteristics

Management

A

By default, management of an LLC is vested in its MEMBERS.

The articles of organization or an operating agreement may provide for management by a manager or managers.

A decision of a MAJORITY IN INTEREST of the members or managers is controlling.

A manager may be chosen or removed by the consent of a majority in interest of the members.

A manager holds office until a successor has been chosen, unless the manager resigns, is removed or dies at an earlier time.

64
Q

LIMITED LIABILITY COMPANIES (LLCs)

Characteristics

Management

Declaration of Rights and Powers to Manage

A

A member or manager may delegate the power and authority to manage to others, such as a board of managers, an officer, a director, an employee, etc. Such a delegation does not cause the member or manager to cease to be a member or manager of the LLC.

65
Q

LIMITED LIABILITY COMPANIES (LLCs)

Characteristics

Limited Liability

A

Generally, NEITHER a member NOR manager of an LLC is PERSONALLY LIABLE for the debts of the company solely by reason of being a member or manager.

Creditors of an LLC must therefore look exclusively to the assets of the company to satisfy their claims.

66
Q

LIMITED LIABILITY COMPANIES (LLCs)

Characteristics

Limited Liability

Exception – Certain Acts or Omissions

A

A member or manager may be personally liable for damages to the LLC or any other person for acts or omissions, if the member or manger breached or failed to perform her duties AND this breach or failure to perform constitutes 1 of the following:

(i) a VIOLATION OF CRIMINAL LAW, unless the member or manager has reasonable cause to believe her conduct was lawful or no reasonable cause to be alive or conduct was unlawful ;
(ii) a transactions from which the member or manager derived an IMPROPER PERSONAL BENEFIT, either directly or indirectly;
(iii) an IMPROPER DISTRIBUTION;
(iv) Where the LLC or a member is the plaintiff, the act or failure to act constituted CONSCIOUS DISREGARD OF THE BEST INTEREST OF HTE LLC or willful misconduct ; or
(v) where a 3rd party is the plaintiff, the act or failure to act involved RECKLESSNESS or was committed in BAD FAITH, or with MALICIOUS PURPOSE, or in a manner exhibited a WANTON AND WILLFUL DISREGARD OF HUMAN RIGHTS, SAFETY, or PROPERTY

67
Q

LIMITED LIABILITY COMPANIES (LLCs)

Organizers

A

One or more persons may form an LLC – Person includes individuals and a variety of business entities such as partnerships and corporations

68
Q

LIMITED LIABILITY COMPANIES (LLCs)

Articles of Organization

Mandatory Contents (NAME; PRINCIPAL OFFICE, REGISTERED AGENT AND REGISTERED OFFICE)

Name

A

The name must include the words “Limited Liability Company” or the abbreviation “ “L.L.C.” or “LLC”. The name must be distinguishable from the name of there entities on file with the division of corporations of the deep of state.

Additionally the name may not state or imply that the LLC is:

(i) organized for a purpose other than that authorized by statute or the LLCs articles of organization or (ii) connected with a government agency, corporation or other entity

69
Q

LIMITED LIABILITY COMPANIES (LLCs)

Articles of Organization

Mandatory Contents (NAME; PRINCIPAL OFFICE, REGISTERED AGENT AND REGISTERED OFFICE)

Principal Office

A

The articles must state the mailing address and street of the LLC

70
Q

LIMITED LIABILITY COMPANIES (LLCs)

Articles of Organization

Mandatory Contents (NAME; PRINCIPAL OFFICE, REGISTERED AGENT AND REGISTERED OFFICE)

Registered Agent and Registered Office

A

An LLC must continuously maintain a registered agent in the state for service of process, as well as a registered office (which may or ma not be the same as its actual place of business). The articles must state the ahem and street address of the LLC’s initial registered agent in the state together with a written statement from the registered agent accepting appointment

71
Q

LIMITED LIABILITY COMPANIES (LLCs)

Agency Authority

Agents

A

An LLC has the power to appoint agents (including a general manager) and to define their duties and authority

Manager Bind

72
Q

LIMITED LIABILITY COMPANIES (LLCs)

Agency Authority

Members

A

The extent of an individual member’s agency power to act on behalf of an LLC and to bind it contractually depends on whether management authority is vested in the members or in the elected managers

Members Bind

Bar Exam - FL (7 decks)

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