Partnership Flashcards

1
Q

Formation of Partnerships

A

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

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2
Q

Presumption of partnershpi

A

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

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3
Q

General partnership

A

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

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4
Q

Partnership agreement

A

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

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5
Q

Partnership by estoppel

A

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

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6
Q

Partnership duties

A

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

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7
Q

Partner rights

A

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

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8
Q

Profits and losses

A

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

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9
Q

Transfer

A

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

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10
Q

Ownership of property

A

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

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11
Q

Addition of a partner

A

requires assent of all partners

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12
Q

Dissociation

A

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

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13
Q

Post dissociation action

A

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.

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14
Q

Power to bind the partnership

A

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

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15
Q

actual authority

A

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

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16
Q

Apparent authority

A

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

17
Q

Partner’s tortious acts

A

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

18
Q

At will partnership

A

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

19
Q

Winding up

A

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

20
Q

Limited Liability Partnership (LLP)

A

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

21
Q

Limited Partnership (LP)

A

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