MEE - Partnerships

Question 1

Formation of general partnership

Answer 1

Two or more persons associate for the purposes of carrying on a business for profit. Court will consider outwardly manifested intent, not subjective intent

Question 2

Formation of a general partnership - presumption

Answer 2

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)

Question 3

Formation of partnership - other factors

Answer 3

Other factors tending to show partnership: sharing of control, management, joint ownership of property.

Question 4

Partnership by estoppel

Answer 4

Where no partnership exists, parties may be held liable under partnership by estoppel where they hold themselves out as partners

Question 5

Partnership property - presumptions

Answer 5

Presumed partnership property where purchased with partnership funds, held in partnership name or in name of partner in capacity of partner

Question 6

Partnership property - other factors

Answer 6

Use of property
Whether property in partnership books
Improvement of property with partnership funds

Question 7

Profits vs salaries

Answer 7

No entitlement to salary on profit sharing, profits presumed equal unless otherwise agreed

Question 8

Profits vs losses

Answer 8

Losses presumed to be shared equally, but if profits are changed losses will follow profits. If losses are changed, profits remain equal unless changed.

Question 9

Voting

Answer 9

Presumed to be equal, like all else, in the absence of agreement

Question 10

Pick your partner rule

Answer 10

A partner cannot be admitted into the partnership without the unanimous support of the other partners (cf. can assign profit rights etc)

Question 11

Fiduciary duties

Answer 11

Owed to partnership AND other partners
Duty of due care and diligence
Duty of loyalty
Duty of obedience
Duty of disclosure

Question 12

Books and information

Answer 12

All partners have the rights to inspect books and information

Question 13

Contractual liability - ordinary course of business

Answer 13

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

Question 14

Tort liability

Answer 14

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

Question 15

Land transaction liability

Answer 15

Any party contracting with re to land will be charged with the knowledge represented in the land register

Question 16

Debts liability

Answer 16

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)

Question 17

Liability after dissociation

Answer 17

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.

Question 18

Wrongful dissociation

Answer 18

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

Question 19

Buying out after dissociation

Answer 19

If the partnership continues after dissociation by one partner that partner has a right to be bought out

Question 20

Dissolution - at will partnership

Answer 20

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

Question 21

Dissolution - termed partnership

Answer 21

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

Question 22

Judgment creditors

Answer 22

Judgment creditors must first seek to exhaust the partnership assets before suing partners personally, partners must be added to any suit