Partnership

Question 1

Formation of Partnership

Answer 1

Only requires an association of two or more persons to carry on as co-owners of a business for profit– look at intent of the parties

Agreement to share profits raises presumption of an intent to create a partnership

Question 2

Authority in General

Answer 2

Every partner is an agent of the partnership, so the act of any partner apparently carrying on the usual business of the partnership will bind the partnership

Question 3

Partnership Property

Answer 3

A partner does not have an ownership interest in the specific items of partnership property, so it cannot be used to secure a personal debt of partner

Question 4

Fiduciary Duties of Partners

Answer 4

• Deal fairly with each other and with the partnership
• Refrain from competing with the partnership
• Use their best efforts to ensure that the partnership succeeds
• Disclose important information to their co-partners
• Account to the partnership for any profits that they make from partnership activities
• Exercise partnership powers for the benefit of the partnership and not for themselves alone

Question 5

Partnership Interest

Answer 5

• Treated as personal property
• Transferable without dissolving the partnership
• Attachable

Question 6

Rights of Partners

Answer 6

• Management: equal right to participate
• Distributions: according to agreement, or equally
• Remuneration: no right except for winding up
• Indemnification: for expenses on behalf of partnership
• Contribution: when partner pays more than his share
• Inspection: right to inspect and copy books
• Lawsuits: can sue partnership and be sued by partnership

Question 7

Determining if Property Belongs to Partnership

Answer 7

Consider:

• Intent
• Title name
• Funds used to purchase
• If item is closely related to partnership’s business

Question 8

Liability

Answer 8

Partner can be personally and individually liable on all partnership contracts and for all torts committed by partner or partnership while acting within the scope of the partnership business

Question 9

Charging Lien

Answer 9

A person may only become partner with consent of all partners, so creditor can get a court order only for the partner’s shares in the partnership’s profits

Question 10

Liability of Incoming Partner

Answer 10

Liability for obligations existing before he became a partner is limited to contributions he made to partnership property, cannot touch personal assets

Question 11

Liability of Outgoing Partner

Answer 11

Liable for all obligations incurred before she retired and for all subsequent obligations unless she gives proper notice of withdrawal

Question 12

Dissolution

Answer 12

Dissolved if :

• purpose becomes illegal
• act

Must give proper notice of dissolution

• Current and past creditors must be given personal notice
• All others get general notice (newspaper)

Then wind up

Question 13

Dissociation

Answer 13

Change in relationships of partnership

Question 14

Order of Distributions

Answer 14

• Creditors

- Partner’s accounts

Question 15

Four Types of Entities

Answer 15

General Partnership
Limited Liability Partnership
Limited Partnership
Limited Liability Company