Partnership Flashcards
Partnership
2 or more persons associate to carry on as co-owners a business for profit
gross returns, make partners?
revenues of business. No, profits do.
Partnership formation factors
profit sharing
right to participate in control of business
loss sharing
partnership by estoppel
partner liability impound when a party is not a partner in fact
voting default rule
1 partner = 1 vote
Ordinary business matter = majority vote
extraordinary business decision = unanimous vote
(absent agreement)
Profit/loss sharing default
profits shared equally
loss same as profits
Tort liability?
Yes if within the scopeC
Contract liability
Yes if actual or apparent liability
New partner? (vote)
unanimous!
partners are held? (damages)
jointly and severally liable.
duty of loyalty
utmost fairness
- account to partnership for any benefit
- no taking adverse positions
- no competing with partnership
duty of care
not grossly negligent or reckless conduct
(ordinary negligence excused)
Which duty can be eliminated
duty of disclosure
partnership property
if for partnership or indicates acting for partnership
presumed partnership prop if using partnership funds.
Is a partner a co-owner of partnership property?
NO
Partnership interest
partner’s ownership stake in the partnership
- financial rights
- management rifhts
Can partner transfer management rights uninanimously?
No. unanimous.
Can partner transfer financial rights?
yes.
Dissociation
Partner
withdraw from partnership
express will - voluntary
CAN ALWAYS leave (may have damages)
Dissolution (partnership)
Limited partnership
at least one limited partner and one general (managed by general partners)
- file certificate of limited partnership with the state
- profits based on contribution
- limited partner = limited liability (can only lose the value of their investment) & OWN torts obvi.
Limited Liability Partnership
- all partners are limited partners
- partners not liable for debts of business
- statement of qualification w/ state
- must have LLP at end of name
Limited Liability COMPANY
hybrid of corporation and partnership where owners have limited liability and partnership tac treatment.
members - owners of LLC
- name to include LLC
- operating agreement
management? = all members
- member manages LLC - management by member
- Manager member LLC - management not by members
Financial rights - contributions
- not personally liable (OWN TORTS, yes obvi.)
- pass through taxation - business entity does not pay taxes as an entity - instead owners pay tax.
