MEE - Partnerships Flashcards
Formation of general partnership
Two or more persons associate for the purposes of carrying on a business for profit. Court will consider outwardly manifested intent, not subjective intent
Formation of a general partnership - presumption
Where intention of parties not clear, courts will look at factors. Existence of profit sharing creates a presumption in favour of a partnership (cf. payment of debts, wages)
Formation of partnership - other factors
Other factors tending to show partnership: sharing of control, management, joint ownership of property.
Partnership by estoppel
Where no partnership exists, parties may be held liable under partnership by estoppel where they hold themselves out as partners
Partnership property - presumptions
Presumed partnership property where purchased with partnership funds, held in partnership name or in name of partner in capacity of partner
Partnership property - other factors
Use of property
Whether property in partnership books
Improvement of property with partnership funds
Profits vs salaries
No entitlement to salary on profit sharing, profits presumed equal unless otherwise agreed
Profits vs losses
Losses presumed to be shared equally, but if profits are changed losses will follow profits. If losses are changed, profits remain equal unless changed.
Voting
Presumed to be equal, like all else, in the absence of agreement
Pick your partner rule
A partner cannot be admitted into the partnership without the unanimous support of the other partners (cf. can assign profit rights etc)
Fiduciary duties
Owed to partnership AND other partners
Duty of due care and diligence
Duty of loyalty
Duty of obedience
Duty of disclosure
Books and information
All partners have the rights to inspect books and information
Contractual liability - ordinary course of business
The partnership will be liable where the contract is made in the ordinary course of the business unless there is no approval AND the other side knows this
Tort liability
Partnership liable for all torts by partners and employees where it is committed: (i) in the ordinary course of the partnership OR (ii) with the authority of the partnership
Land transaction liability
Any party contracting with re to land will be charged with the knowledge represented in the land register
Debts liability
Partners are jointly and severally liable for the debts incurred by the partnership (and will be personally liable where the assets of the partnership cannot satisfy the debts)
Liability after dissociation
Partner remains liable for acts while tenured as partner; however, may remain liable for up to 2 years form the date of dissociation unless they file a “notice of dissolution” which becomes effective 90 days after filing.
Wrongful dissociation
Wrongful dissociation is presumed where a partner dissociates in breach of term, becomes bankrupt. A wrongfully dissociating partner will be liable for all LOSSES FLOWING from dissociation
Buying out after dissociation
If the partnership continues after dissociation by one partner that partner has a right to be bought out
Dissolution - at will partnership
Any one partner can call for dissolution, partnership AUTOMATICALLY ends and can only carry out WINDING UP business, but will bind partnership with apparent authority
Dissolution - termed partnership
Dissociation of one partner will not end entire partnership unless, within 90 days of dissociation, 1/2 of the rest of the partners vote to dissolve
Judgment creditors
Judgment creditors must first seek to exhaust the partnership assets before suing partners personally, partners must be added to any suit
