Partnership Flashcards
What are the formation requirements of forming a partnership?
No formalities required.
What is the definition of a partnership?
Association of two or more persons carrying on as co-owners of a business for profit
Is a general partner liable for the other partner’s torts in the scope of the partnership business and for each partner’s authorized contracts?
YES. They are also liable for all debts of the partnership
Are incoming partners liable for existing debts of the partnership?
No they are not but the money they put in can be used to pay it off.
When are partners liable until for debts/
Until actual notice of dissociation is given to all known creditors and there is publication to potential creditors.
What if I represent to a third party that a general partner exists but it doesn’t?
You will be liable as a general partner exists.
General partners are fiduciaries of each other and the partnership. What duty of loyalty do they owe?
They cannot self deal, usurp partnership opportunities and can never make a secret profit at the partnership’s expense.
Can individual partners have specific assets transferred to them?
They cannot without authorization.
Can I transfer my share in management of partnership?
No you cannot transfer it. It is an asset owned by the partnership itself. Profits however are personal property.
Absent of an agreement what are the management rights?
Each partner entitled to equal control or vote.
Who takes share in profits and losses?
Absent an agreement partners share profits equally and losses are shared like profits
Do partners get salaries?
Absent an agreement they do not get a salary, however can be compensated to wind up a business.
When is a partnership dissolved?
When there is any material change in partnership including death or dissociation of any single general partner.
What is the period between dissolution and termination called?
Winding up. which is where the remaining partners liquidate assets to satisfy creditors.
Is liability retained during wind up?
Yes, until actual notice of dissolution given to all known creditors and publication notice given to potential creditors.
