partnership

Question 1

partnership

Answer 1

an association of two or more persons to carry on as co-owners a business for profit.

Question 2

joint venture

Answer 2

treated like a partnership, but requires an express agreement on how the losses will be shared.

Question 3

Partnership property

Answer 3

If apparent from the document the partner is acting for a partnership, it is partnership property. If partnership funds are used, it’s presumed partnership property. If partner acquires in her name without partnership funds and there’s no sign she’s acting for a partnership, it’s presumed to be a partner’s property.

Question 4

losses and profits

Answer 4

UOA, profits split equally and losses follow profits

Question 5

management rights

Answer 5

UOA, partners have equal management rights. But matters of ordinary business are decided by a majority in interest (profit share).

Question 6

agent’s duties

Answer 6

Agent is a fiduciary. Owes principal duties of loyalty, care (sliding scale depending on expertise), and obedience.

Question 7

partner’s duties

Answer 7

care, loyalty, and good faith (may eliminate duties of care and good faith)

Question 8

conveying real property

Answer 8

partnership can get the property back from the initial transferee but not subsequent BFP.

Question 9

partner’s liability

Answer 9

joint and several, but P must first exhaust partnership resources. Partners personally liable for partner’s tort committed in ordinary course of business.

Question 10

withdrawn partner’s authority

Answer 10

apparent authority to bind to innocent third party for one year, but partnership can notify creditors.

Question 11

liability of withdrawn partner to subsequent creditors

Answer 11

liable for 2 years to subsequent creditors who were unaware of the withdrawal and reasonably believed she was still a partner, but partner can notify them.

Question 12

partnership’s capital account

Answer 12

contributions plus profits minus losses (pay creditors first)

Question 13

partnership creditors’ rights

Answer 13

partnership creditors have priority over a partner’s creditors on partnership property, and equal claims on a partner’s separate property.

Question 14

LLC profits/losses

Answer 14

split in proportion to capital contribution, UOA

Question 15

Benefit of LLP and LLC

Answer 15

flexible management (all owners can exercise control) and less tax to pay (income is passed through to the owners, unlike a corporation, which is subject to double taxation. Corp pays tax on income, and shareholders pay tax on corporate income distributed to them as a dividend).