General Partnerships Flashcards
What are the three requirements to form a general partnership?
1) 2 or more persons
2) Carrying on a business
3) With a view to make a profit
If it’s unclear whether the parties have formed a partnership, what would generally constitute prima facie evidence that there is a partnership?
Sharing of profits
Every partner is an _____ of the partnership and can bind the partnership in contract when they act with ______ or _______ authority
agent, actual, apparent
In what 3 situations would a partner have actual authority granted to them?
- Expressly in the partnership agreement
- Expressly from a vote of the partners
- Impliedly from the partners to allow a partner to regularly do an act
A partner has apparent authority to carry on in the usual way ________ __ ____ ____ carried out by the partnership. This is an ________ test
Apparent authority is the authority of an agent as it appears to ______
business of the kind, objective, others
What are 3 circumstances in which apparent authority will not apply?
- Partner had no actual authority to act; or
- Third party knew the partner lacked actual authority or
- Third party didn’t know they were dealing with a partner
If a contract is outside the ______ of partnership business, the partnership generally will ___ __ _____ unless the partner has ________ authority
scope, not be bound, actual
What type of liability do partners have for the debts of the partnership if it lacks the sufficient funds to pay?
Unlimited liability
Is a new partner personally liable for obligations of the partnership incurred before they were admitted?
No
Does an outgoing partner remain liable on all obligations the partnership incurred before the partner retired from the firm?
Yes
When will an outgoing partner be liable for obligations incurred after they retire for:
1. Existing suppliers
2. New/unfamiliar suppliers
(2 requirements)
If they don’t give:
1. Actual notice to existing creditors/suppliers; and
2. Publication notice in the London Gazette to new/unfamiliar suppliers
If a person holds themselves out as a partner even when they’re not, they may be ______ as if they were a partner to any _____ ____ who has given ______ to the partnership on the strength of holding out
liable, third party, credit
What three things constitute partnership property?
- Property/money intentionally contributed to the firm by a partner
- Money the partnership has earned
- Items purchased with partnership money
Partners have no right to use partnership property for ______ ___
personal use
A personal creditor of an individual partner has no right to _____ partnership property to satisfy the individual partner’s debt
attach
Does a partner’s property which they allow the partnership to use remain their own separate property?
Yes
Property owned by one of the partners before the partnership was formed will be treated as their individual property unless what?
Unless the parties agree otherwise
Is a partner entitled to be paid for work done for the partnership?
No - unless partners agree otherwise
Is a partner entitled to be indemnified by the partnership for payments made on behalf of the business?
Yes
In the absence of an agreement otherwise, each partner has an _____ ____ in decision making
equal vote
Which 4 management decisions require unanimous consent from all partners?
- Admission of a new partner
- Expulsion of a partner (if stated in PA)
- Change in the nature of business
- Altering the partnership agreement
No majority of the partners in a general partnership can expel a partner unless such power has been…
conferred to the partners via the partnership agreement
What three fiduciary duties do partners owe each other?
- Disclose information relevant to the firm
- Not compete with firm’s business
- Account to the firm for any benefit/profit from any transaction concerning the partnership
What 5 things will cause a partnership to dissolve?
- Expiry of term/accomplishment of goal in p’ship agreement
- Partner giving notice to withdraw in a partnership at will
- Death/bankruptcy of a partner
- Partnership becomes unlawful
- Court order
What is a partnership at will?
A type of general partnership in which no fixed duration has been agreed
Does a general partnership at will have perpetual succession?
What does this mean in terms of a partner who wishes to withdraw?
No - GPs don’t have perpetual succession
A partner can withdraw from a GP at any time without the other partners consent (although in theory, it means that the partnership will dissolve)
What must happen if a partner wishes to leave a fixed term partnership?
The remaining partners must agree to amend the p’ship agreement to allow the partner to leave
Do partners continue to have authority to bind the partnership after dissolution?
Yes - to wind up the partnership’s business
Will a partnership be bound for other contracts made by a partner during dissolution?
Yes - unless notice was given of the dissolution
In which order must 3 x assets be distributed when a partnership is dissolved?
- Outside creditors
- Loans made by partners
- Return of partner’s contributions
