Partnership Flashcards
What is a partnership?
2 or more people
associating
to carry on a business for profit
Contributing to create a GP
Contributing:
$
Services
Capital
(All evidence of a GP)
Req’s for LP or LLP
Written
Signed certificate
Filed w/ the secretary of state
Is the partnership liable?
The agents have to be acting w/ actual, apparent authority
Express authority
Must be approved by a majority of the general partners
Apparent authority
Did the action happen within the ordinary course of business?
Matters outside ordinary partnership business
Need unanimous vote of partners, must be express
Is each partner liable?
Each partner is liable for their own misconduct
*What type of partnership is it?
General partnership
Personally, vicariously, severally liable for debts & obligations of the partnership
Limited partnership
1 general partner
1 limited partner
*must file a certificate of formation w/ sec of state
gen partner is liable UNLESS limited partner is involved in managerial decisions
Incoming partners
Not liable for debts put in place before
but any $ contributed can be used to satisfy a pre-existing debt
Outgoing partners
Liable until they die unless:
Notice is given to all known & potential creditor’s of p’s withdrawal
General partnership’s by estoppel
Can’t represent that a partnership exists to a third party and then deny that one exists
Duties of a partner
Duty of care & loyalty
“Fiduciary duties”
Duty of care
Must refrain from
1) Grossly negligent/reckless conduct
2) Intentional misconduct AND
3) knowing violation of law
Duty of loyalty
Each P must
1) Act in good faith & fairly
2) refrain from competing w/ partnership within scope of business
usurping a business opp that belongs to the partnership
Use of partnership property
1) On behalf of partnership
2) Carry on business of partnership
unless you get consent
Transferability of P’s interest
Can transfer interests in profits/losses to a 3p
What happens when interests are transferred
Doesn’t terminate partnership and doesn’t make 3p a partner
Transferee becomes a partner
Upon unanimous agreement
Dissolution
A material change in the partnership that will trigger the winding up phase
Winding up phase
Period of time between dissolution and termination where the partner affairs are settled
Dissolution is triggered
Court order
Operation of Law
Partner actions
Partner actions under RUPAA
1) By agreement
2) At will
By agreement
A partnership is terminated upon the occurrence of an event stated in the partnership agreement
At will partnerships
A partner of an at will partnership can disassociate at any time
Rescinded dissolution under RUPA
The remaining partners must all consent to continuing
Dissociating P is entitled to a buyout
To Do’s during winding up phase
1) Partners are entitled to a salary
2) Continue to owe fiduciary duties
3) Liable to all K’s made w authority unless notice given
Priority of distribution
Creditors (outside, inside)
Capital contributions
Remaining profits/surplus equally absent an agreement
