Forming a Partnership

Question 1

What is a partnership?

Answer 1

An association of two or more persons to carry on a for-profit business as co-owners

Question 2

Who can form a partnership?

Answer 2

Anything, human or otherwise, that has the capacity to contract. Not including minors and those who are incapacitated

Question 3

What is the intent required to form a partnership?

Answer 3

The specific intent to carry on a for-profit business

Question 4

When is a partnership presumed?

Answer 4

If two or more persons agree to share profits

*NOTE: Not every division is a division of profits. Splitting gross income, debt payments, interest charges, rent, wages, good will payments, or annuities will not form a partnership

Question 5

T or F: there does not need to be an division of control to form a partnership

Answer 5

False

Question 6

Two examples that look like a division of profits and a division of control that are not partnerships

Answer 6

1. Employer/employee
2. Lender/borrower

Question 7

In Georgia, are partnerships considered separate entities?

Answer 7

Yes, Georgia courts have interpreted UPA partnerships to operate as entities. Therefore, a partnership may acquire and hold title to property, as well as sue and be sued in its own name

Question 8

T or F: Partnerships have limited liability

Answer 8

False

Question 9

Can a partner sue the partnership for contribution?

Answer 9

Yes

Question 10

T or F: Partnerships are taxed

Answer 10

False, the partners are taxed, but not the partnership

Question 11

Partnership Agreement

Answer 11

Governs the dealings of a partnership. Where the partnership agreement is silent on an issue, default rules will govern.

Question 12

T or F: When the partnership agreement conflicts with mandatory state law, state law governs

Answer 12

True

Question 13

Which state laws are mandatory?

Answer 13

1. Liability to third parties
2. Access to records
3. Fiduciary Duties