Partner Liability Flashcards
Who is liable in an LP?
General partners are jointly & severally liable for all obligations.
Limited partners are not personally liable – they can only lose the value of their investments.
Everyone is liable for their own torts!
What is a partnership’s liability in tort?
Liable for loss or injury caused to a person as a result of the tortious conduct of a partner or employee actin gin the ordinary course of business of the partnership or with authority of the partnership.
What is a partnership’s liability in contract?
Liable for all contracts entered into by a partner in the scope of partnership business or with actual or apparent authority of the partnership.
How does a partner get actual authority to enter into contracts on behalf of the partnership?
From the partnership agreement or from a vote of the partners (majority for ordinary biz, unanimous for extraordinary biz).
What is the extent of a partner’s apparent authority?
To bind the partnership to transactions within the ordinary course of the partnership’s business or business of the kind carried out by the partnership.
Who is liable in a GP?
Each partner is jointly and severally liable for all of the partnership’s obligations.
But the plaintiff must first exhaust partnership resources before seeking to collect from an individual partner’s assets.
What are the liabilities of a newly admitted partner?
Not personally liable for obligations that arose before their admission. Can only lose the amount of their investment.
What vote is needed to admit a new partner?
Unanimous, unless otherwise agreed.
What can a partner recover if they pay the entire amount of a partnership debt?
They can require the other partner(s) to contribute their pro rata share of the payment (based on how they split losses).
