Partnership

Question 1

Partnership

Answer 1

A partnership is an association of two or more persons to carry on as co-owners a business for profit.

Governed by the Revised Uniform Partnership Act (RUPA), contract law, and agency.

Question 2

Partnership formation requirements

Answer 2

1. No need for formal writing requirement, can be implied by conduct;
2. Consent of all parties for new partners;
3. Sharing of profits raises presumption of partnership
4. Right to participate in control

Question 3

Partners have equal rights to:

Answer 3

1. Participate in management and control of the partnership
2. Share in profits and losses
3. Receive distributions
4. Inspect books and records

Question 4

Do partners have indemnification for payments and obligations?

Answer 4

Yes, if carrying out the business of the partnership.

Question 5

Partner’s duty of loyalty

Answer 5

Account for all profits/benefits derived by partner in connection with the partnership business

No competing with the partnership

Question 6

Partner’s duty of care

Answer 6

Refrain from negligent, reckless, or unlawful conduct, and from intentional misconduct

Question 7

Partner’s duty of obedience

Answer 7

Obey the reasonable directions of the partnership

Refrain from acting outside the scope of partner’s actual authority

Question 8

When does real or personal property belong to the partnership?

Answer 8

If titled in the partnership name, or the name of the partnership and the instrument transferring title notes the title holder’s capacity as partner or existence of partnership.

Presumed partnership property if purchased with partnership funds.

Question 9

Property is presumed separate property of the partner if:

Answer 9

1. Held in partner’s name;
2. Instrument transferring title does not indicate person’s capacity as a partner or mention partnership’s existence;
3. Partnership funds not used

Question 10

When is untitled property considered partnership property?

Answer 10

Common law:

1. Used partnership funds
2. Use of property by the partnership
3. Listed as an asset in the books
4. Close relationship between property and business
5. Improvement and maintenance with partnership funds

Question 11

Partner’s rights in partnership property

Answer 11

Partners are not co-owners of partnership property and have no transferable interest in partnership property.

Partners have no right to use the property other than for the benefit of the partnership.

Question 12

Partner liability

Answer 12

Each partner is an agent of the partnership, and the actions of any partner binds the partnership unless the partner had no authority & a 3rd party knew or had notice of partner’s lack of authority.

Question 13

When will a partnership not be bound to contracts entered into by a partner?

Answer 13

When the contract is outside the scope of the business, despite the partner’s apparent authority.

Question 14

Partner’s contract liability

Answer 14

Partners are liable on contracts made by a partner in the scope of the partnership business and any other contracts expressly authorized by partners.

Question 15

Partner’s tort liability

Answer 15

Partners are liable for the torts committed in the ordinary course of business.

Question 16

A partner is dissociated from the partnership when:

Answer 16

1. Notice of partner’s express will to withdraw;
2. Happening of an agreed upon event;
3. Valid expulsion;
4. Death of individual partner; or
5. Court decision that partner is incapable of performing duties

Question 17

In a partnership at will, a partnership is dissolved when:

Answer 17

A partner gives notice of her express will to withdraw

Question 18

In a partnership for a definite term, a partnership is dissolved when:

Answer 18

1. Within 90 days after a partner’s death, bankruptcy, or wrongful dissociation and at least half the he remaining partners express a will to wind up the business;
2. All partners express a will to wind up the business;
3. The term expires or the undertaking is done

Question 19

A partnership is dissolved when:

Answer 19

1. The happening of an agreed upon event;
2. The happening of an event that makes it unlawful for the partnership to continue; or
3. Judicial decree