III. Relations Among Partners

Question 1

Governance Generally

Answer 1

Statute supplies the default rule but partners can contract around it

Thus, partnership agreement usually governs

Question 2

Profits and Losses Split Equally

Answer 2

• UNLESS OTHERWISE AGREED UPON:
  
  • profits are split equally, even if they are not in proportion to capital contributions
  • Losses are sahred the same way they share pforits : equally
• LIMITING RIGHTS TO 3P: partners cannot limit rights to a 3P without that 3P consent (e.g. Partner C is not liable to 3Ps)
  
  • however, an agreement of that sort, would be effecitve AMONG THE PARTNERS in dividing liability

Question 3

Equal Management Rights

Answer 3

• Unless otherwise agreed, voting rights are equal.
• This applies even if the partnership has different capital additions AND if the partnership had agreed to different percentage profit shares
• mUst alos agree to vote division specifically

Question 4

No Right to Compesnation

Answer 4

No right to compensation for services rendered to the partnership (e.g. one who is the CEO)

only exception is if someone is WINDING UP PARTNERSHIP Affairs at the end of partnership lifecylce

Question 5

Right to Indemnification with Interest

Answer 5

• If a partnership pays a creditor of hte partnership out of personal money, the partnership must PAY HER BACK WITH INTERST
• like a loan to the partnership

Question 6

Duties of the partnership

Answer 6

Partner owes the partnership

• duty of care
• duty of loyalty
• duty to render full information, whether a dmeand is made or not–that’s a minority rule

Question 7

Admission of a new partner

Answer 7

Unless otherwise agreed:

• ADMISSION new partner can be admitted ONLY WITH UNANIMOUS CONSENT
• PREEXISTING OBLIGATIONS if admitted, liable for partnership debts incurred BEFORE admission but he’s given leeway b/c he wasn’t around when those obligations were incurred.
  
  • He can lose his economic interest in the partnership but nothign more–no personal liability beyond that

Question 8

Outgoing Partner

Answer 8

• Exiting partner continues to be liable for outstanding debts of the company unless RELEASED by particular creditor