Partnership Flashcards
what do you need for a partnership
literally just intent for two or more persons to carry on for profit business as co owners
profit sharing rule
if there is profit sharing, presumed to be a P
exceptions:
debt
interest payment
rent
wages
goodwill payments from sale of biz
annuities or retirement
health benefits
partner by estoppel elements
person may be treated as a partner if
there is representation that person is a partner
person makes or consents to the representation
third party reasonably relied on representation
third party suffered damages as a result
duty of loyalty of partner to P
duty of loyalty: no competing, advancing adverse interests, usurping
exception: PA can designate stuff that is ok or provide safe harbor to authorize or ratify after disclosure of facts
duty of care of partner to P
duty to refrain from engaging in grossly negligent or reckless conduct, intentional conduct, or knowing violation of law
PA may not unreasonably reduce this duty
what if PA is silent on profits and losses
silent on profit: equal share of profits
silent on loss: same as profit
can partner transfer interest to third party
yes but transferor partner retains all rights and duties except for interest in distributions
transferee can only get the money
who owns property
the partnership, not the partners
property is presumed to be partnership if bought with its assets, if unclear, look at factors like use, source of funds
how do you add a new partner
consent of all existing partners
how many partners needed to make ordinary and extra ordinary decisions
ordinary - majority
extraordinary - all
can partner use partnership property for own benefit
no, must compensate partnership if they do
when can a post dissociation partner bind himself and the partnership to a transaction
if other party reasonably believes dissociated partner is still la partner and
does not have notice and
is not deemed to have knowledge of dissociated partner’s lack of authority
*only works for 2 years
when can partner bind partnership as its agent
when acting with actual or apparent authority
is partner’s knowledge and notice imputed to partnership
yes unless fraud
when is partnership liable for partner’s torts
if committed in ordinary course of partnership biz or with partnership authority
