Marbes Questions- Partnerships Flashcards
How is a partnership formed?
It merely requires that 2 or more persons carry on as co-owners a business for profit. No intent is necessary. No formal agreement nor writing is required. The sharing of profits raises a presumption that a partnership was formed.
What are the characteristics or key elements of a partnership?
- Each partner contributes something to the enterprise
Each partner co-owns the enterprise
- Each partner co-manages the enterprise; and
- Each partner shares in the profits of the enterprise
What is a partnership by estoppel?
When a person represents himself as a partner in an existing partnership or with one or more persons not actually partners, he is liable to any person to whom such representation was made who has, in good faith reliance, given credit to the actual or apparent partnership.
What duties do partners owe to the partnership and to each other during and after the partnership?
During: Duty of loyalty and duty of care.
Duty of loyalty includes: account for a hold as trustee any partnership property; refrain from acting as or on behalf of adverse party; refrain from competing with partnership before dissolution
After: Unless winding up only duty of loyalty for accounting & non-competition & duty of care for providing partnership info as to matters arising before disassociation. UPA 603.
What rights to manage the partnership business do partners possess? Are those rights transferable?
Each partner has an equal right to:
- information about the partnership business
- be involved in conducting partnership business
- bind the partnership to 3rd parties
- participate in partnership decision making, including vetoing certain matters
Conveyance by a partner of his partnership interest does not entitle assignee to interfere in management but merely entitles assignee to receive profits assigning partner would otherwise be entitled.
When a partnership ends, what rights do partners have to distribution of partnership assets and how will those distributions be calculated?
Waterfall for liabilities in order of payment:
Those owing to creditors other than partners
Those owing to partners other than for capital and profits
Those owing to partners in respect of capital
Those owing to partners in respect of profits.
What obligations do partners have to fund losses upon dissolution? The partners shall contribute [according to his share of the profits and losses] the additional amount necessary to pay any liabilities
