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Constitution Law Bar Prep > partnership > Flashcards

partnership Flashcards

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1
Q

partnership

A

an association of two or more people that carry on as co-owners a business for profit.

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2
Q

factors for partnership

A 
sharing profits (presumption)
right to participate in control (presumption)
non-presumption:
property held in TiC or JT
relationship designated as partnership
joint venture req extensive activity
sharing of gross returns
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3
Q

partnership by estoppel

A

if parties words or conduct reps as a partner, that person is liable as partner to third parties that extend credit in reliance of representation

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4
Q

can someone hold out another as a partner?

A

yes (I know it is weird) can be liable to third party even if not aware. Therefore you have duty to make sure others aren’t holding you out as a partner to the world if you’re not

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5
Q

partnership req consent of all partners

A

yes

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6
Q

voting for partnership

A

req maj for ordinary actions

req unanimous for business outside ordinary course

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7
Q

do partners have a right to compensation

A

no, have a right to co-ownership

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8
Q

profit sharing

A

equal amongst partners
losses are the same

unless stipulated otherwise in partnership agreement

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9
Q

liability to third parties

A

each partner is an agent of the partnership

actual and apparent authority

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10
Q

liability in tort

A

partnership is liable for partners conduct while in ordinary course of business OR with partnership authority

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11
Q

liability in contract

A

partnership liable for all contracts entered into by a partner in scope of ordinary business OR with actual or apparent authority

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12
Q

actual authority

A

Actual authority is the authority a partner reasonably believes
they have based on the communications between the partnership and the partner

can come from the partnership agreement or vote

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13
Q

apparent authority

A

partner has 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 (unless the third party is aware that the partner lacks actual authority to act).

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14
Q

what is the limitation on apparent authority

A

when the third party had notification or knowledge of the partner’s lack of authority to act

notification: effective when comes to attn or when it is delivered
knowledge: actual subjective knowledge; should have known is irrelevant

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15
Q

joint and several liability

A

partners liability

creditor must first exhaust all partnership assets, then go after partners

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16
Q

is each partner resp for all partnership liabilities

A

yes, if only one partner pays all liability, then can seek indemnification from other partners

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17
Q

liability for newly admitted partners and dissociating partners

A

newly admitted: only liable foe their investment

dissociating: liable for preexisting debts unless payment, release, or novation

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18
Q

fiduciary duties of partners

A

loyalty (each other and partnership)
care (each other and partnership)
disclosure
obedience

19
Q

duty of care

A

don’t engage in grossly negligent or reckless conduct

20
Q

duty of disclosure

A

complete and accurate info concerning the partnership

without demand: info regarding partnership affairs req for exercise of rights

with demand: all other info regarding business affairs

21
Q

duty of obedience

A

not act outside authority and comply with directions of partnership

22
Q

partners rights in partnership property

A

no right to ownership, only right to use in connection with partnership business

23
Q

partnership interest

A

comprised of financial rights and management rights

no unilateral transfer of management right; must have unanimous vote by partners for new partner

CAN unilaterally transfer financial rights (recieve profits)

24
Q

dissociation

A

by:

  • oral/written
  • happening of agreed event
  • valid expulsion
  • bankruptcy
  • death/incapacitation
  • court
  • term of org that is the partner
25
Q

terms for partnerships

A

at will (most partnerships)

term

26
Q

what happens when a partner dissociates

A

partnership is dissolved and wind up OR

partnership continues and partner bought out

27
Q

when is partnership dissolution req

A

at will partnership when a partner expressly dissociates

term partnership: partner dissociates wrongfully orbc of death/bankrupty is req ONLY IF within 90 days reamining partners vote to dissolve. otherwise partnership remains

28
Q

liability and authority of dissociated partner

A

up to two years after dissociation if

  1. third party reasonbly believed still a partner
  2. no notice of dissociation

same test for authority to bind partnership, but must be something the partner could have bound the partner with previously

29
Q

priority of distribution

A
  1. creditors of the partnership
  2. capital contributions of partners
  3. profits or losses
30
Q

can a legal rep of a deceased partner wind up business

A

yes

31
Q

can dissolution be waived

A

yes by unanimity

32
Q

LP

A

The general
partner(s) is personally liable for partnership obligations, while
the limited partner(s) generally does not have any liability
beyond the liability to make agreed-upon contributions.

must be filed with sec of state and include:

  • name of partnership (must have LP orLLP)
  • name/address for service of process
  • name/address of GP(s)
  • if an LP or LLP
33
Q

when is vote of LPs req

A

extraordinary matter

to: (1) amend
the partnership agreement; (2) convert the partnership to
a limited liability limited partnership; (3) dispose of all or
substantially all of the limited partnership’s property outside
the usual and regular course of the partnership’s activities; (4)
admit a new partner; or (5) compromise a partner’s obligation
to make a contribution or to return an improper distribution

34
Q

distribution rights of LP’s

A

based on contribution NOT equal split like in a GP

any contribution: money, property, services

35
Q

does dual LP and GP statuts in an LP save someone from liability

A

no

36
Q

does an LP have fiduciary duties to the LP

A

no

37
Q

dissocaiton rules for LP

A

same as for GP, except

dissociation of an LP turns LP into transferee of LPs transferable interest

38
Q

power to bind LP after dissolution

A

bound for actions by GP for business related to wind up, not any other business

39
Q

formation of an LLP

A

statement of qualification with the sec of state

  • name/address of LLP
  • statement of election for LLP business type
  • deffered eff date

llp formed at time of filing or the date on form, whichever is later

40
Q

limited liability company

A

A limited liability company (“LLC”) is a hybrid business organization
between a corporation and a partnership that (1) is
taxed like a partnership (except for a single-member LLC),
(2) offers its owners (called members) the limited liability
of shareholders of a corporation, and (3) can be run like
either a corporation or a partnership.

41
Q

forming an LLC

A

cert of organization with the sec of state

name of LLC
address of registered office
name/address of registered agent

42
Q

operating agreement

A

like the bylaws for a corp or the partnership agreement for GP/LP/LLP

43
Q

distributions in an LLC

A

most states: based on the contribution of the members

44
Q

fiduciary duties of members in an llc

A

care

loyalty

Constitution Law Bar Prep (16 decks)

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