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Bar Prep > Partnership > Flashcards

Partnership Flashcards

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1
Q

Law governing partnerships

A
  • The Revised Uniform Partnership Act (“R.U.P.A.”) provides default rules for
  • general contract rules
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2
Q

does formation of a partnership require a writing?

A

no

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3
Q

who may enter into a partnership

A

anyone capable of entering a binding contract

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4
Q

requirements to form a partnership

A
  • intent
  • capacity to contract
  • no illegal purpose
  • consent of all partners
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5
Q

the sharing of profits raises a _____ or partnership

A

presumption

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6
Q

what factors raise a presumptions that a partnership has been formed

A
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7
Q

factors that do not raise a presumption (but are evidence) that a partnership has been formed

A
  • Title to property is held jointly
  • Parties designate their relationship as a partnership
  • venture requires extensive activity
  • sharing of gross returns
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8
Q

Under RUPA when does property belong to a partnership?

A
  • titled in partnership name
  • transferring title notes the titleholders capacity as a partner or references the partnership
  • purchased with partnership funds
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9
Q

Under RUPA when is property presumed NOT to be held by the partnership

A
  • held in the name of a partner
  • instrument transferring title does not reference a partner or the partnership
  • partnership funds not used to purchase
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10
Q

Common Law factors to determine ownership of untitled property

A

a. Used partnership funds
b. Use of property by partnership
c. Listed in partnership books as an asset
d. Close relationship between property and the business
e. Improvement with partnership funds
f. Maintenance with partnership funds

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11
Q

are partners considered co-owners of partnership property?

A

no

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12
Q

do partners have a transferable interest in partnership property

A

no

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13
Q

partners may only use partnership property

A

for the benefit of the partnership

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14
Q

rights of partners in a general partnership

A
  • participate in management
  • equal right to share profits
  • equal right to share loses
  • reasonable compensation for services rendered in winding up partnership business
  • indemnification for payments reasonably made and obligations reasonably incurred in carrying out partnership business
  • contribution from other partners for payment of partnership debt
  • inspection of books and records
  • sue or be sued in the partnerships name
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15
Q

duties of partners in a partnership

A

loyalty
care
obedience
provide complete and accurate information

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16
Q

duty of loyalty

A

a. account for all profits or other benefits
b. may not deal with partnership as one with an adverse interest
c. may not compete with the partnership

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17
Q

duty of care

A

refrain from engaging in negligent, reckless, or unlawful conduct
refrain from engaging in intentional misconduct

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18
Q

duty of obediance

A

obey all reasonable directions of the partnership refrain from acting outside the scope of the partner’s actual authority

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19
Q

is a partner an agent of the partnership?

A

yes, and the act of any partner binds the partnership

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20
Q

when will a partners action not be binding on the partnership?

A

the partner had no authority and the third party knew or had notice that the partner lacked authority

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21
Q

contract lability of a partnership

A

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

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22
Q

tort liability of a partnership

A

partners are liable for any torts committed by a partner or an employee of the partnership in the ordinary course of partnership business

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23
Q

A partner is dissociated from a partnership upon:

A

a. Notice of the partner’s express will to withdraw
b. The happening of an agreed upon event
c. The valid expulsion of a partner
d. The partner becoming bankrupt
e. The death of an individual partner, or the termination of a partner that is a business entity, or
f. A court decision that a partner is incapable of performing her duties

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24
Q

When must a partnership be dissolved in a partnership at will?

A

when a partner gives notice of her express will to withdraw

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25
Q

When must a partnership be dissolved in a partnership for a definite term or particular undertaking

A

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

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26
Q

other times when a partnership must be dissolved

A

c. Upon the happening of an agreed upon event
d. Upon the happening of an event that makes it unlawful for the partnership to
continue, or
e. Upon a judicial decree

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27
Q

What law governs Limited Partnerships

A

Uniform Limited Partnership Act
(“U.L.P.A.”)

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28
Q

Requirements for a Limited Partnership

A
  • Need one or more general partners plus at least one limited partner
  • Need to file a certificate of limited partnership with the secretary of state
29
Q

when does a partner in a Limited Partnership have a right to a distribution

A

when the partner has made a contribution.

may be in the form of any benefit to the partnership (e.g., money,
property, services, and promises to make such contributions

30
Q

liability of a limited partner in a Limited Partnership

A

no personal liability for obligations of the partnership

31
Q

liability of a general partner in a Limited Partnership

A

General partners are jointly and severally liable for all partnership obligations

General partners may also be limited partners but they still have all of the liabilities and duties of a general partner

32
Q

duties of general partners in a limited partnership

A

fiduciary duties of care and loyalty

33
Q

duties of a limited partner in a limited partnership

A

no fiduciary duty to the partnership and are free to compete with the partnership, except as otherwise provided in the partnership
agreement

34
Q

in a limited partnership who has a right to distributions

A

both general and limited partners

35
Q

in a limited partnership who may transact business with the limited partnership

A

both general and limited partners

36
Q

in a limited partnership who may maintain a derivative action on behalf of the partnership if the
partner first makes demand on the general partners or the demand would be futile

A

both general and limited partners

37
Q

in a limited partnership apply for a decree of dissolution whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement

A

both general and limited partners

38
Q

in a limited partnership who has equal rights to mange

A

general partners

39
Q

in a limited partnership who has a right to the partnership’s business information

A

general partners

40
Q

is a general partner in a limited partnership entitled to remuneration for services performed for the partnership

A

no (assumption do not have a salary because you are getting a percentage of the profits)

41
Q

is a general partner entitled to indemnification for liabilities incurred in the ordinary
course of the partnership’s activities

A

yes

42
Q

do limited partners have a right to inspect and copy certain partnership records that
are required to be kept in the records office

A

yes

43
Q

when may a general partner in a limited partnership dissociate?

A

same as in a general partnership

a. Notice of the partner’s express will to withdraw
b. The happening of an agreed upon event
c. The valid expulsion of a partner
d. The partner becoming bankrupt
e. The death of an individual partner, or the termination of a partner that is a business entity, or
f. A court decision that a partner is incapable of performing her duties

44
Q

May a limited partner in a limited partnership dissociate before the termination of the limited partnership?

A

no

45
Q

A limited partnership may be judicially and administratively dissolved; otherwise, a
limited partnership may be dissolved only by the occurrence of one of the following:

A

a. The happening of an agreed upon event
b. The consent of all the partners holding a majority in interest
c. After dissociation of a general partner and the consent of the majority in interest
d. if no general partner remains, after 90 days unless a new partner is admitted, or
d. 90 days after dissociation of the last limited partner, unless a new limited partner is admitted

46
Q

how are the assets in a limited partnership distributed upon dissolution of the partnership

A

first to creditors (including partners who are creditors) and
then to the partners as a distribution

47
Q

Requirements for formation of a limited lIbility Partnership (LLP)

A
  1. must be approved by whatever vote is necessary to amend
    the partnership agreement
  2. Requires statement of qualification (registration) filed with the secretary of state
48
Q

what must an LLPs filing with the secretary of state contain

A

a. Name and address of partnership
b. Statement of election to be an L.L.P

49
Q

Liability of partners in an LLC

A
  1. A partner is not personally liable for the obligations of the partnership
  2. However, a partner remains personally liable for her own wrongful acts
50
Q

Rights of Partners in an LLP

A

identical to those of general partners in a general partnership

  • participate in management
  • equal right to share profits
  • equal right to share loses
  • reasonable compensation for services rendered in winding up partnership business
  • indemnification for payments reasonably made and obligations reasonably incurred in carrying out partnership business
  • contribution from other partners for payment of partnership debt
  • inspection of books and records
  • sue or be sued in the partnerships name
51
Q

If partnership assets are insufficient to indemnify a partner for an L.L.P

A

each partner forfeits a right to receive contributions in exchange for being relieved
of the obligation to contribute to the personal liability of other partners

52
Q

What is the governing law for a Limited Liability Company (LLC)

A
53
Q

what must an LLP include in their name

A

the letters LLP or Limited Liability Partnership

54
Q

what is the governing law for Limited Liability Companies (LLC)

A

Revised Uniform Limited Liability Company Act of 2006
(“R.U.L.L.C.A.”),

55
Q

How is an LLC taxed?

A

like a partnership

56
Q

An LLC is an entity ____ from its members

A

distinct

57
Q

what is the liability of members in an LLC

A

members are not personally liable, but are liable for their own tortious conduct

not liable for the tortious conduct conduct of other LLC members

58
Q

must an LLC file a certificate with the secretary of state

A

yes (certificate of organization)

59
Q

In an LLC who participates in management?

A

all members unless otherwise specified in the operating agreement

60
Q

member-managed LLC

A

Each member of a member-managed LLC has authority to bind the company to contracts, unless the member lacks actual authority to do so and the other party has
notice of same

members subject to duty of care and loyalty

members must o discharge their duties consistently with the contractual obligation of good faith and fair dealing

61
Q

Manager-managed

A

a. In manager-managed LLCs, only the managers are subject to the duties of care and loyalty

b. Only the members may authorize or ratify an act by a manager that would otherwise violate the duty of loyalty

62
Q

may a court pierce the LLC veil to reach personal assets of members?

A

yes under circumstances similar to those justifying piercing in a corporation

63
Q

Distributions in an LLC

A

uniform act = distributions in equal shares unless the operating
agreement provides otherwise,

most states = allocate distributions on the basis of contributions unless the operating agreement provides otherwise

64
Q

in a member managed LLC who has a right to inspect and copy any
record concerning the LLC’s business

A

members if the records are material to the members rights and duties

65
Q

in a manager managed LLC who has a right to inspect and copy any
record concerning the LLC’s business

A

the managers have a right to information and duty to furnish information a

66
Q

When may a member disassociate?

A

at any time

67
Q

what happens if a member wrongfully disassociates?

A

A wrongfully dissociating member may be liable to the LLC for damages

68
Q

An LLC will dissolve when any of the following occurs:

A

a. An agreed upon event of dissolution
b. The consent of all the members
c. The passage of 90 consecutive days during which the LLC has no members
d. Judicial decree
e. Administrative dissolution by the secretary of state

Bar Prep (10 decks)

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