Partnership

Question 1

Formation of Partnerships

Answer 1

Association of Two or more persons with the intent to carry on a for-profit business as** co-owners**

Question 2

Presumption of partnershpi

Answer 2

there is a presumption of a partnershp if there is the sharing of profits,
excpetions: payments of a loan, rent, wages, retirement or health benefits

Question 3

General partnership

Answer 3

is a separate legal entity that can hold property, sue, and be sued
there is no limited liability, the partners are personally liable for partnership obligations

Question 4

Partnership agreement

Answer 4

none required but if one is made it is subjec tto SOF, will control but cannot get rid of fiduciary duties

Question 5

Partnership by estoppel

Answer 5

case 1: partnership does not exist, but a person is treated as a partner of a purported partnership
case 2: Partnership exists and a person who is not a partner is treated as a partner
elements of purported partner:
representation that a person is a partner
the person makes or consents to the representation
a third party reasonably relied on the representation
3P suffered damages

Question 6

Partnership duties

Answer 6

to the partnership and each other: duty of loyalty (don’t compete, self-deal), duty of care (don’t violate the law), duty of good faith and fair dealing
to third parties: a partner is jointly and severally liable for all partnership obligations, incoming partners liability for pre-existing obligations is limited to capital contribution

Question 7

Partner rights

Answer 7

Equal management and control, unless otherwise in partnership agreement
Ordinary business: requires approval by a majority of the partners
Special business: requires approval by all partners
Right to inspect and copy
Indemnification is required if a partner incurs liability while preserving partnershp property

Question 8

Profits and losses

Answer 8

default is profits and losses are shared equally
losses are shared like profits unless agreement says otherwise
Distributions: no right to a distribution

Question 9

Transfer

Answer 9

transfer of partnership interest: a partner can transfer their interest (right to share profits, losses, distributions) and it does not cause a dissolution or dissociation
transfer of partnership property: transfer without authority can be recovered unless transferee was without notice

Question 10

Ownership of property

Answer 10

property is presumed to be partnership property if purchased with Partnershp assets
Can be rebutted with title, type of funds used, and intent of the partners
a partner does not have the right to use partnership property for personal ues

Question 11

Addition of a partner

Answer 11

requires assent of all partners

Question 12

Dissociation

Answer 12

voluntary or involuntary withdrawal of a partner
can withdraw by providing notice, or may be expelled per the agreement, by a unanimous vote if it is unlawful to carry on business with the partner, or death, bankruptcy, incapacity, or termination of an entity
Partnershp must purchase back partner’s interst, will only trigger dissolution if at will partnership

Question 13

Post dissociation action

Answer 13

a dissociated partner can still bind the partnershp if the other party reasonable believes the dissociated partner is still a partner, does not have notice of the dissociation, and does not know of the lack of authroity.

Question 14

Power to bind the partnership

Answer 14

a partner can contractually bind the partnershp if the partner acts wtih actual or apparent authority

Question 15

actual authority

Answer 15

express: arises from the partnership agreement, authorization of the partners, or statement of authority filed with the state
Implied: basedon a partners reasonable belief that an action is necessary to carry out his express authority

Question 16

Apparent authority

Answer 16

a partner must perform the unauthorized act in the ordinary course of business and the third party did not know tha tthe partner lacked authority

Question 17

Partner’s tortious acts

Answer 17

the partnership is liable for the tortious acts committed in the ordinary course of partnership business or with apparent authority

Question 18

At will partnership

Answer 18

IF there is no fixed term or undertaking, an at will partnership dissolves when any partner dissociates

Question 19

Winding up

Answer 19

a partnership continues after dissolution until winding up is complete
a statement of dissolution must be filed with the state and serves as notice after 90 days
creditors have priority over partners to the assets

Question 20

Limited Liability Partnership (LLP)

Answer 20

partners have no personal liability for partnership obligations
created by filing statement with the state and name must have LLP in it
if converting, must have approval of all partners
a partner is only liable for their own misconduct
can cancel the statement to return to a general partnership

Question 21

Limited Partnership (LP)

Answer 21

reduces a limited partner’s liability to capital contribution, but the at least one general partner is still personally liable
created by filing certificate with the state
limited partners: admission requires unanimous written consent, can only vote to extent allowed under partnershp agreement, right to inspect and copy, and liable only if she** participates in the control **of the business and 3P believes she is a general partner
general partner: requires unanimous written consent , same rights and liabilites as in a general partnership
profits and losses: according to partner’s contributions
priority of distribution: creditors, partners not yet paid accrued distributions, return of contributions, final distributions to partners