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N.C. Partnership > Parnterships > Flashcards

Parnterships Flashcards

1
Q

Partnership Formation Requirements

A
  1. Association of ≥ 2 persons;
  2. to carry on as co-owners;
  3. An on-going business for profit.

No formal agreement needed.
Intent of the parties does not matter.

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2
Q

Liability of Partners

A

Unlimited Liability

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3
Q

How can a partnership’s formation occur

A
  1. Express formation by oral or written agreement; or,

2. Implied by the parties conduct.

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4
Q

Limited Partnership Formation

A
  1. Meets the requirements of a partnership
  2. Has at least one general partner; and,
  3. Has at least one limited partner.
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5
Q

A limited partner’s liability is

A

limited to his contributions

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6
Q

A general partner’s liability is

A

unlimited

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7
Q

A limited partner is?

A

partner contributes capital and shares in profits, but typically takes no part in the control or management of the business.

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8
Q

The dissolution of a partnership is the change in the relationship of the partners caused by

A

any partner ceasing to be associated with the carrying on the business

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9
Q

What is dissolution?

A

The point when the partners cease to carry on business together

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10
Q

Winding up is the process of?

A

Settling partnership affairs after dissolution

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11
Q

Termination?

A

The point in time when all partnership affairs are wound up.

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12
Q

Reconstitution allows

A

For the remaining partners to continue the business

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13
Q

Dissolution events that do not violate the P’Ship agreement

A

(1) For partnerships for a term (or specific undertaking): the termination of the definite term or particular undertaking specified in the agreement, such as the expiration of the term.
(2) For partnerships at will: the express will of any partner
(3) The agreement of the parties to dissolve because a partnership is a voluntary association
(4) The expulsion of any partner from the business as provided in the partnership agreement.

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14
Q

Partners can expel other partners if

A

The P’Ship agreement gives the partners a right to do so.

No right by default

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15
Q

Death of a partner

A

Dissolves partnership

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16
Q

Effect of bankruptcy of a partner or partnership

A

Dissolve partnership

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17
Q

If the business becomes unlawful, effect?

A

Dissolve Partnership

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18
Q

Court will grant a dissolution if (3)

A

the business of the partnership: can only be carried on at a loss

2) a partner has been: declared incompetent in any judicial proceeding or is shown to be of unsound mind
3) a partner becomes: incapable of performance of duties under partnership agreement

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19
Q

A dissolution not in contravention of p’ship gives what right to each partner

A

to liquidate and get paid out if there are net profits or contribute if there are net losses.

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20
Q

After dissolution, a partner can still bind by what acts

A

a partner still has the ability to bind the partnership only while engaging in any act appropriate for winding up partnership affairs.

21
Q

When does partnership liability end?

A

At termination of partnership

22
Q

Winding up is the process by which

A

a. Assets are sold
b. Debts are Paid
c. Balance is distributed to partners

23
Q

Outside creditors

A

those owing to creditors other than partners (paid first)

24
Q

Inside Creditors

A

Loans made by partners to company

25
Q

Capital Contribution

A

What partners initally puts in and is repaid in winding up

26
Q

Order of payment in winding up?

A
  1. Outside Creditors
  2. Partner Creditors
  3. Capital Contributions
  4. Surplus paid out
27
Q

What happens when a limited partner withdrawals? General partner?

A
  1. Limited partner can leave without dissolution.

2. General partner leaving dissolves.

28
Q

3 characteristics of a general partnership

A

(1) a general partner’s right to co-manage the business;
(2) a general partner’s fiduciary duties to the other partners and the partnership itself; and
(3) the sharing of profits and losses.

29
Q

What governs the relation among partners & between the partnership?

A

In general, relations among the partners & between the partners and the partnership are governed by the partnership agreement or if the agreement is silent: NC Uniform Partnership Act

30
Q

What governs if a partnership agreement is silent?

A

N.C. Uniform Partnership Act

31
Q

What can a partnership agreement not do? (4)

A
  1. Restrict access to books and records
  2. disclaim duty of loyalty,
  3. disclaim duty of care,
  4. and right to dissociate
32
Q

Rights of partners to conduct partnership business

A

Unless agreed otherwise,

  1. each partner has a right to manage and conduct the partnership’s business
  2. Each partner is an agent of the partnership in the conduct of it’s business
  3. A partner’s action outside the ordinary course of business requires the consent of all general partners
33
Q

If a partner’s action is outside the ordinary course of business, can they bind the partnership

A

Only if they get the consent of all of the general partners

34
Q

What does the duty of care require of partners?

A

Partners must refrain from engaging in
grossly negligent or
reckless conduct,
intententional misconduct, or knowing violation of the law

35
Q

What does the duty of loyalty require of partners?

A

The partners must account for any benefit and hold as trustee any profit derived from any transaction connect with the partnership’s business or any use of the partnerships property

36
Q

What are the partnerships fiduciary duties? When are they discharged?

A

Loyalty and care

Discharged at termination or withdrawal

37
Q

Rule when Partnership Agreement does not provide a profit split formula

A

Unless agreement, each partner is entitled to share equally in the profits

38
Q

Rule when Partnership Agreement does not provide a profit loss split formula

A

Unless agreed, partner’s share in losses in proportion to their profits

39
Q

When a limited partner participates in the management or control of the business, do they lose liability shield?

A

No, they do not become personally liable.

40
Q

What is the liability of a minor who enters into a partnership?

A

Up to the amount of contribution

41
Q

What must a limited liability partnerships name contain

A

L.L.P, R.L.L.P, LLP, RLLP or the words spelled out

42
Q

The liability of a partner in an LLP?

A
  1. Liable for debts arising out of their own negligent or wrongful acts;
  2. Not liable for debts and obligations of the LLP
43
Q

What is an incoming partner’s liability for debts owed before arrival?

A

Liable for the prior debts up to the amount of capital contribution.

44
Q

When is a partnership liable for torts?

A

When they occur in the ordinary course of busienss

45
Q

A partner acting with apparent authority can

A

Bind the partnership if in the ordinary course of business

46
Q

How can a partnership dissolve when one of the partners assign their interest to a third party?

A

Unanimous consent of the original partners

47
Q

If partners are liable for debts and one of the partners is insolvent, what happens?

A

The remaining partners are reapportioned their share of debts as if the other partner never existed

48
Q

When a partner leaves a partnership there are entitled to

A

Their share of profits - losses incurred by breach (if applicable)

49
Q

What events will automatically dissolve a partnership?

A

Death of a partner
Bankruptcy of a partner or the pship
Business becomes illegal

N.C. Partnership (1 decks)

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