Formation of a Partnership Flashcards
When is a partnership formed?
as soon as two or more people associate to carry on a business as co-owners for profit.
Is a partnership agreement necessary to form a partnership?
no
Is a writing required to form a partnership?
no
Who can enter into a partnership?
anyone capable of entering into a binding contract can be a partner.
When must there be a writing in a partnership?
where the partners intend to enter into a partnership that is enforceable for longer than one year.
A would-be partner who lacks capacity is liable only for how much?
only for their capital contribution.
Is someone who lacks capacity to enter into a contract but who nonetheless has contributed funds to a partnership a partner?
yes, until steps have been taken to dissolve the partnership.
For what purposes can a partnership be established?
any legal purpose
Unless otherwise agreed, no one can become a partner to a partnership unless what?
unless all of the partners impliedly or expressly consent.
If partners want to solidify their rights and responsibilities to a partnership, what might the partners do?
file a statement of partnership authority with the secretary of state, which gives constructive knowledge of the partners’ authority with regard to the partnership.
What do courts look at to determine whether a partnership exists?
the intent of the parties.
When will a partnership be found by a court despite the parties never intending to enter into a partnership?
where the parties agree to be co-owners of a business for profit; i.e. they meet the requirements for a partnership.
What creates a presumption of partnership?
sharing of profits, unless they were received as payment for a debt, services rendered, interest on a loan, etc.
What other kinds of evidence can be used to show a partnership exists?
title to property in joint tenancy or tenancy in common; the parties’ designating their relationship as a partnership; the venture undertaken requiring extensive activity; sharing of gross returns.
Can a partner be represented by a third party?
yes, with the partner’s authorization.
