Partner as Agent

Question 1

Partner As Agent

Answer 1

-Partner agent of partnership when authority for those acts and done in ordinary course of business.

Question 2

Fiduciary Duties

Answer 2

Partner owes partnership duty of care and duty of loyalty.

Question 3

Duty of Loyalty

Answer 3

• Partner account to partnership for conduct, partner not engage in deals that are adverse to partnership’s interest, and partner must not compete with partnership.
• Can’t be eliminated unless an agreement that certain actions or activities will not constitute a violation of the duty or set up a safe harbor process in Partnership Agreement so transactions that would otherwise breach can be approved. Approval comes after all material facts fully disclosed.

Question 4

Duty of Care

Answer 4

• Duty to ensure you don’t act reckless or negligent and carry out your duties with reasonable diligence.
• Carry out duties in good faith and with fair dealing.

Question 5

Partnership Profits and Losses

Answer 5

• Split profits and losses equally unless agree otherwise.
• Partners split in proportion to their share of the profits.
• Each partner have partnership account of contribution minus liabilities, plus partner’s share of profits minus any distributions to the partner and the partner’s share of losses.
• Partner can’t demand distribution.
• Partnership not required to make a distribution to its partners during the life of the partnership.
• Partner’s account must be credited with his share of the profits.

Question 6

Partner’s Partnership Interest

Answer 6

• Right to receive share of the profits, losses, distributions.
• Interest can be transferred either in whole or in part.
  
  • transferree receive distributions partner would have
  • doesn’t include right to share in the management or the partnership or to get access to records.
  • Agreement may restrict transfer in which case any attempt to transfer a partnership interest will be ineffective so long as the transferree has notice of the restriction.
• Creditor can enforce a judgment against a partner’s interest.

Question 7

Property Ownership

Answer 7

• Property acquired by partnership is partnership property even if it’s contributed by a single partner.
• Includes property acquired in the partnership’s own name and property that is taken out in the name of one or more of the partners so long as the property is in that partner’s capacity as a partner and the name of that partnership is indicated on the instrument that transfers title of the property.
• Intent of the parties control. Two presumptions, property presumed to be partnership property if purchased with partnership assets and property not presumed if it’s acquired in the name of a partner, title to the property doesn’t indicate person’s role as as partner or the existence of the partnership and partnership assets were not used.

Question 8

New Partner

Answer 8

-consent of all existing partners.

Question 9

Management

Answer 9

• partner equal right to manage affairs of the business.
• Ordinary business decisions decided by majority
• Outside ordinary course of business, consent of all

Question 10

Remnueration

Answer 10

• Not entitled to remuneration for his services except for services involved with winding up the business.
• Partner entitled to have account credited with his share of profits instead of salary.

Question 11

Reimbursement

Answer 11

• If partner makes loan or advance to the partnership, entitled to reimburse with interest.
• Partner not entitled to get back capital contribution.

Question 12

Indemnification

Answer 12

-Partnership to indemnify a partner for liability that is incurred in the ordinary course of business.

Question 13

Partnership Property and Records

Answer 13

• Partner may use partnership property but if gets a personal benefit from the use she is supposed to compensate the other partners for that benefit.
• Partner entitled to access the books and records of the partnership during normal business hours.

Question 14

Lawsuits

Answer 14

• Partnership may sue partner for breaching the partnership agreement or for violating his or her duty.
• Partner may sue partnership to enforce her rights under partnership act or agreement.
• Partner may sue to get an accounting of the business at any time.

Question 15

Dissociation

Answer 15

-Process of walking away from a partnership or ceasing to be associated.
-Events that Trigger:
Notice of desire to dissociate
expulsion from a partnership
partner’s bankruptcy
partner’s death
partner’s termination
-partner power to dissociate at any time, agreement can’t prevent.
-Dissociation wrongful if:
unlimited partnership represents a breach of partnership agreement.
partnership with definite term, being expelled by the court, filing for bankruptcy, withdrawal.
-Wrongful dissociation, partner will be liable to the partnership and partners for damages.
-Dissociation doesn’t automatically trigger dissolution of partnership.
-Dissociated partner can’t participate in management except with winding up. Terminated fiduciary duty. Still liable of breach duty in context of actions that occurred before dissociation unless release.
-Partnership must buy out disassociated partner’s interest. if partnership doesn’t make any payment, partner can bring an action to compel payment.
-Dissociation terminates partner’s actual authority to bind partnership. Apparent authority might still exist so dissociated partner can enter into transactions and the partnership may be held liable long as 3d party reasonably believes dissociated partner still a partner, 3d party has no notice of dissociation, and 3d party no knowledge of lack of authority. Extends to transactions 2 years after dissociation.
-Partnership or dissociated partner can file a statement of dissociation. Treated as giving notice as of 90 days after filing.