Partnership

Question 1

Partnership

Answer 1

Formed as soon as 2 or more persons associate to carry on as co-owners a biz for profit, regardless of whether pty’s subjectively intend to form a p/s
Once formed, considered to be a legal entity distinct from partners

Question 2

Factors implying an agmt

Answer 2

Sharing of profits

Intent of the pty’s

Question 3

Sharing of profits

Answer 3

Presumed to be a partner unless profits were rec’d in payment of a debt, as wages/other compensation, as rent, or as interest on a loan
Can rebut w/ ∑ suggesting lack of co-ownership, such as no rt to control or no sharing of losses, something that owners would typically share

Question 4

Writing

Answer 4

Not req by p/s law, but may be req by SOF

Question 5

P/S by estoppel

Answer 5

If no p/s was formed in fact, pty’s may still be liable as if they were partners to protect reas reliance by 3rd pty’s

Question 6

P/S agmt

Answer 6

Not req

Watch out for bc p/s law allows partners to K around almost all statutory provisions

Question 7

Voting

Answer 7

UOA, all partners have equal rt’s in the mgmt of the biz and equal votes
Decisions re matters w/in the ordinary course of the biz req maj vote of the partners
Matters outside the ordinary course of the biz req consent of all partners

Question 8

Sharing profits and losses

Answer 8

UOA, profits are shared equally among partners (by #)

UOA, losses are shared in same manner as profits

Question 9

Tort liability

Answer 9

P/S is liable for loss or injury caused to a person as a result of the tortious conduct of a partner acting in the ordinary course of the p/s biz or with auth of the p/s

Question 10

K liability

Answer 10

Actual auth

Apparent auth

Question 11

Actual auth

Answer 11

Can be created by

• p/s agmt or by requisite vote of partners (maj vote for ordinary course of biz matters) or
• p/s filing stmt of p/s auth w/ Sec of St

Question 12

Apparent auth

Answer 12

P/S stat states that a partner has apparent auth to bind p/s to transaxn’s w/in the ordinary course of the biz, unless partner had no auth to act for p/s in the particular matter and the 3rd pty is aware that partner lacks actual auth
Exists if p/s holds a partner out as possessing certain auth, thereby inducing others to reas believe that auth exists

Question 13

Liability of partners

Answer 13

Each partner is jointly and severally liable for all p/s obligations, whether arising in tort or K
π must exhaust p/s resources before seeking to collect from an individual partner’s assets
Where 1 partner pays a p/s obligation, he’s entitled to indemnification from p/s
Partners can’t limit 3rd pty rt’s w/o 3rd pty’s consent - limiting liability to 3rd pty’s
A newly admitted partner isn’t personally liable for p/s obligations that arose before his admission

Question 14

FD’s

Answer 14

Duty of loyalty
Duty of care
Duty of disclosure

Question 15

Duty of loyalty

Answer 15

Good faith and fair dealing

1. acct to p/s any benefit derived by partner in conducting p/s biz, using p/s’s prop or appropriating p/s opportunity
2. refrain from dealing w/ p/s in the conduct of its biz as, or on behalf of, a pty having an interest adverse to the p/s
3. refrain from competing w/ p/s in conduct of its biz

Question 16

Duty of care

Answer 16

Each partner must refrain from engaging in grossly neg or reckless conduct, intentional misconduct or a knowing violation of the law

Question 17

Duty of disclosure

Answer 17

Statutory
Each partner and p/s shall furnish to a partner
- w/o demand, any info re p/s’s biz affairs reas req for proper exercise of partner’s rt’s or duties
- on demand, any other info re p/s’s biz or affairs - except to the extent demand or info is unreas or otherwise improper under the circumstances

Question 18

Mgmt rt’s

Answer 18

Partner’s rt to participate in mgmt of the biz, to obtain info about the biz and to be recognized as a partner
UOA, partner can’t unilaterally xfer his mgmt rt’s and thereby make xferee a partner

Question 19

Financial rt’s

Answer 19

Partner’s rt to rec his share of any profit distributions made by p/s
UOA, partner can unilaterally xfer his financial rt’s
- xferee merely has rt to rec profit distributions from p/s that would have otherwise gone to partner and isn’t a partner
- xferor is still a partner and retains all mgmt rt’s

Question 20

Dissociation

Answer 20

W/D from p/s
Events
- partner giving notice to p/s of his desire to w/d
- partner's expulsion, death or BK
- agreed upon event

Question 21

Wrongful dissociation

Answer 21

Breach of an express term of p/s agmt
Liable for damages
At will p/s - partners haven’t agreed to remain partners until expiration of a definite term or the completion of a particular undertaking
Term p/s - partners have agreed, explicitly or implicitly, to remain partners for a definite term or until completion of a particular undertaking

Question 22

Consequences of dissociation

Answer 22

P/S is dissolved and its biz will be wound up (liquidated) or
P/S continues w/ dissociated partner becoming entitled to a buyout of his interest

Question 23

Liability of dissociated partner

Answer 23

Generally, remains liable for pre-dissociation p/s obligations
May also be liable for post-dissociation p/s obligations incurred w/in 2 yrs of dissociation

Question 24

Apparent auth of dissociated partner

Answer 24

Can bind p/s for a period of 2 yrs after dissociation
P/S can protect itself by notifying creditors directly of the dissociation (effective immediately) or by filing a public stmt of dissociation (becomes effective 90 days after filing)

Question 25

Dissolution

Answer 25

P/S assets must be applied to discharge p/s liabilities
If assets are insuff, individual partners are req to contribute in accordance w/ loss shares
Excess assets are distributed to partners in accordance w/ profit shares

Question 26

Priority of distribution for dissolution

Answer 26

1. p/s must pay all creditors, both outside and inside
2. p/s must repay all capital contributions paid into p/s by partners
3. profits or losses, if any