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Agency & Partnerships (BizOrgs) > Partnership > Flashcards

Partnership Flashcards

1
Q

No formalities are required to form a…

A

general partnership.

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2
Q

What is the definition of a general partnership?

A

An association of two or more persons who are carrying on as co-owners of a business for profit.

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3
Q

A __________ ___________ is not a basis of a partnership.

A

lending arrangement

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4
Q

If there is a dispute as to whether a general partnership has been formed, this is a key factor for determination.

A

Sharing of Profits

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5
Q

The contribution of money or services in return for a share of profits creates….

A

creates a presumption that a general partnership exists.

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6
Q

The existance of a general partnership is never tested alone on the exam. It’s usually coupled up with….

A

the liabilities of general partners to third parties.

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7
Q

Partners are _______ of the partnership when apparently carrying on usual partnership business.

A

agents

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8
Q

The general partnership becomes liable for each partner’s torts when…

A

in the scope of the partnership business and for each partner’s authorized contracts.

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9
Q

Each partner is personally liable for…

A

all debts of the partnership and for each co-partner’s torts.

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10
Q

What is the rule regarding a brand new partner’s liability for pre-existing debts?

A

Brand new incoming partners are not liable for prior debts. But, any capital paid into the partnership by that incoming partner can be used by the partnership to satisfy those prior debts.

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11
Q

A partner who leaves the partnership, by withdrawing or even dying, is a:

A

dissociating partner.

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12
Q

Dissociating partners retain liability on future debts, until…

A
  1. actual notice of their dissociation is given to creditors, or
  2. Until 90 days after filing a notice of dissociation with the state.
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13
Q

What is general partner liability by estoppel?

A

One who represents to a third party than a general partnership exists will be liable as if a general partnership exists.

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14
Q

How does one “represent” to a third party that a general partnership exists?

A

Bar is low, can even just call each other partners in front of the third party.

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15
Q

The other alleged partner is not liable if…

A

they didn’t represent that a partnership existed.

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16
Q

General partners are _____________ of each other and the Partnership.

A

fiduciaries

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17
Q

General partners owe to each other and the partnership a duty of…

A

loyalty.

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18
Q

In a partnership, what does the duty of loyalty entail?

A
  1. General partners:
    1. may never engage in self-dealing
    2. may never usurp partnership opportunities,
    3. and may never make a secret profit at the partnership’s expense.
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19
Q

What is the remedy if a partner breaches the duty of loyalty?

A

The partnership can pursue an action of accounting, where:

  • the partnership may recover losses caused by the breach, and
  • the partnership may disgorge profits made by the breaching partner.
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20
Q

Assets like land, leases, or equipment which are owned only by the partnership itself are called…

A

specific partnership assets.

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21
Q

Specific partnership assets may not be transferred by individual partners without…

A

partnership authority.

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22
Q

The shares of profits is property owned by…

A

individual partners.

(personal property)

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23
Q

Therefore, shares of profits may be…

A

transferred by individual partners to someone else.

24
Q

Since shares of profits may be transferred from partners to third parties,

A

partners can sell their shares in a partnership to someone else.

25
Q

Share in management is an asset owned by…

A

only the partnership itself.

26
Q

Share in management (can/cannot) be given to a third party.

A

Cannot.

27
Q

Since a share in management cannot be given to a third party, the right to ____ in a partnership cannot be given either.

A

vote

28
Q

In order to determine whether the fact pattern involved property owned by the partnership or personal property owned by an individual partner, the test is:

A

Whose money was used to buy the property?

  1. If personal funds were used to buy it, it becomes personal property
  2. If, by contrast, partnership funds were used to buy it, it becomes partnership property
29
Q

Absent an agreement, each partner is entitled to _____ control.

A

equal (one partner, one vote)

30
Q

For ordinary matters, ________ vote governs; _________ _________ is needed for fundamental partnership matters.

A

majority; unanimous consent

31
Q

Absent an agreement, partners get _______ salary.

A

No salary.

32
Q

What is the exception to the no salary for partners rule?

A

Partners receive compensation for helping to wind up the business.

33
Q

What are the rules distributing a partner’s share of profits and losses?

A
  1. Absent an agreement, PROFITS ARE SHARED EQUALLY
  2. Absent an agreement, LOSSES ARE SHARED LIKE PROFITS
  3. Profits are NEVER shared like losses. They will be shared equally unless an agreement exists.
34
Q

In the absence of an agreement that sets forth events of dissolution or that limits the partnership length or undertaking:

A

A general partnership dissolves upon notice of the express will of any one general partner to dissociate.

35
Q

What is dissolution?

A

The first step in getting rid of partnership. Like an announcement.

36
Q

The real end of the partnership is called ___________.

A

termination

37
Q

What is “winding up”?

A

The period between dissolution and termination in which the remaining partners liquidate (sell) the partnership’s assets to satisfy the partnership’s debts.

38
Q

What is the partnerships liability for pre-dissolution contracts during the wind-up phase?

A

The partnership, and therefore its individual general partners, retain liability on all transactions entered into to wind up old business by satisfying creditors who existed when winding up began.

39
Q

What is the partnership’s liability for contracts entered into after the winding-up phase began?

A
  1. The partnership and therefore its individual general partners retain liability on brand new transactions during winding up until:
    1. actual notice of dissolution is given to creditors, or
    2. until 90 days after filing a statement of dissolution with the state.
40
Q

What is the priority order for distribution of liquidated assets?

A
  1. All creditors
  2. all capital contributions
  3. profits
41
Q

Each level of priority must be _____ __________ before beginning the next level.

A

fully satisfied

42
Q

Creditors include:

A
  1. All outside non-partner trade creditors, plus all partners who have loaned money to the partnership and have become creditors thereby.
  2. Priority within this level is the same. No extra priority for non-partners or partners.
43
Q

The partnership is liable to its own partners for the full repayment of their:

A

capital contributions.

44
Q

Profits, if any, are shared…

A

equally if there is no agreement to the contrary.

45
Q

If all creditors can’t be paid, this must be used to pay them.

A

each partner’s individual assets.

46
Q

What is the rule for repayment of partners?

A

Each partner must be repaid his or her loans and capital contributions, plus that partner’s share of any profits, or minus that partner’s share of any losses.

47
Q

What is a limited partnership?

A

A partnership with at least one general partner and at least one limited partner.

48
Q

Limited partners have a limitation on…

A

liabilities.

49
Q

Unlike a general partnership, there are formalities when forming a limited partnership. The partnership must:

A

Must file a limited partnership certificate that includes the name of the partnership and the names of all general partners.

50
Q

In a limited partnership, a general partner is liable for…

A

all limited partnership obligations.

51
Q

In a limited partnership, a general partner has a right to…

A

manage the business of the partnership.

52
Q

In a limited partnership, a limited partner (is/is not) liable for the underlying debts and obligations of the partnership itself.

A

is not.

53
Q

Limited partners can ____ ______ it gives to the partnership.

A

lose money.

54
Q

Limited partners can become liable for the underlying debts and obligations of the partnership if….

A

They manage the business to third parties who believe reasonably that they were general partners

55
Q

To form a registered limited liability partnership (RLLP), the partnership must…

A

register with the state by filing a statement of qualification with the state and annual reports.

56
Q

What are the liabiltiies of registered limited liability partners?

A

No partner is liable for the debts and obligations of the partnership itself.

57
Q
A

Agency & Partnerships (BizOrgs) (3 decks)

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