Partnership

Question 1

What is a partnership?

Answer 1

an association of two or more legal persons who Carry on for profit business as co-owners

Question 2

who can form a partnership?

Answer 2

any individual or company

Question 3

who has the capacity to create a partnership?

Answer 3

anyone who is not incapacitated, includes any legal entity or persons

Question 4

How to determine co-ownership?

Answer 4

when two or persons share profits, there is a presumption of paternship relationship

presumption will not apply to: payment of debt, interest payment, rent, goodwill

Question 5

How do demonstrate that partnership is carry on for-profit business

Answer 5

intent is not requires,
sharing profits (presumption unless exceptions apply)

Question 6

How do demonstrate that partnership is carry on for-profit business

Answer 6

intent is not requires,
sharing profits (presumption unless exceptions apply)

Question 7

What are consequences of valid partnership

Answer 7

can hold property, sue, and be sued
there is no limited liability, partners are personally liable for partnerships obligations

no entity level taxation

Question 8

What is Partnership Agreement?

Answer 8

law that governs the partnership agreement, doesn’t need to be written

if add’l terms will be apart of the partnership

Question 8

What happens if there is no partnership agreement?

Answer 8

State law will govern terms

Question 9

when will the partnership agreement not govern over state law?

Answer 9

cant agree to remove 3rd party liability

cant deny partner access to books & records

cant contract away fud. duties

Question 10

What are fiduciary duties for partnership?

Answer 10

every partner is a fiduciary of the partnership and owes a fiduciary duty of loyalty and care to p’ship

Question 11

what are limitations on duty of loyalty

Answer 11

cant

interfere with p’ship business
advance adverse interest
usurp a p’ship opportunity

Question 12

Can the partner limit the duty of loyalty?

Answer 12

can’t eliminate duty of loyalty

can limit: by describing it differently as long as they are unreasonable

Question 13

What violates duty of care?

Answer 13

engage in grossly negligent or reckless conduct
engage in intentional misconduct
engage in knowing violation of the law

cant unreasonable limit duty of care

Question 14

scope of duties of loyalty and care?

Answer 14

doesn’t apply to prospective or former partners

Question 15

scope of duties of loyalty and care?

Answer 15

doesn’t apply to prospective or former partners

Question 16

How to determine the division of profit and losses

Answer 16

determined by agreement, if no p’ship agreement default rule is that distributions are divided equally

profits are not divided equally, they follow profits

Question 17

When can partners be allowed to receive distribution?

Answer 17

partners cant demand (default rule)

can agree otherwise

Question 18

can a partner transfer their interest?

Answer 18

default rule is that you may transfer, Partners are still allowed to agree otherwise

Question 19

What is disassociation?

Answer 19

when a partner ceases to be associated with p’ship this can be voluntary or involuntary

Question 20

what is voluntary dislocation?

Answer 20

gives notice that partner wants to withdraw

Question 21

what is involuntary dissociation?

Answer 21

event triggered by agreement
expulsion
unlawful to carry on
court order
bankruptcy
incapacitated
death
one of the entities dissolves

Question 22

What happens if partner disassociated?

Answer 22

p’ship doesn’t dissolve, the partner no longer has duty and has no right to participate in management.

if p’ship continues must buy out their shares

Question 23

What Is liability for p’ship?

Answer 23

every partner acts as an agent for the p’ship, the partners may be liable for the other partners actions so long as they hav authority

Question 24

Express Authority

Answer 24

granted in
p’ship agreement
statement of authority is filed
an ad hoc authorization by the partners meeting

Question 25

Implied Authority

Answer 25

Exist on partners reasonable belief their actions is necessary

Question 26

Apparent Authority

Answer 26

p’ship bound based on the partner acting with ordinary course of business

Question 27

How does liability work?

Answer 27

a partner can be jointly or severally liable for all obligation. take p’ship funds then individual funds

Question 28

Is an incoming partner liable to p’ship?

Answer 28

not for the obligation that arise prior, will not be liable

MAY be liable for their capital contribution

Question 29

Is an outgoing partner liable to p’ship?

Answer 29

yes

Question 30

How do terminate p’ship?

Answer 30

dissolution & winding up

Question 31

How does dissolution occur?

Answer 31

By partner or operation of law. If the partners are at will and any partner chooses to disassociate. If P’ship for a term or undertaking,

Question 32

Can transferee recieve distributions?

Answer 32

yes if partnership rights like profits and losses were transferred to them