Partnership

Question 1

Definition of Partnership

Answer 1

Voluntary association of two or more people with legal capacity to carry on as co-owners of a business for profit

Question 2

Burden of proof

Answer 2

Party alleging the existence of the partnership must generally prove it by preponderance of the evidence.

However, if the parties are relatives, then the standard is clear and convincing evidence

Question 3

Indica of Partnership

Answer 3

Look at:

• profit-sharing (this is prima facie evidence that the person is a partner in the business, unless the prof was given to repay a debt, to pay a wage, etc)
• contributing capital
• how title to property is held
• mutual agency and joint liability

Question 4

Rights of Partners

Answer 4

Equal rights to co-manage in ordinary affairs
-each partner can bind the partnership

Extraordinary matters require a unanimous vote

Profits and losses shared equally unless agreed other wise

Right to be repaid if one pays or makes a contribution on behalf of the partnership

Right to inspect books

Outgoing partners are still liable to creditors unless released by creditors

Question 5

Fiduciary Duties

Answer 5

Partners are in fiduciary relationship with one another and must act with honesty and in good faith
-charged with the duty to render information, the duty of loyalty and the duty to account for any profits and hold them as trustee for the partnership

Question 6

Liability of Partners in General

Answer 6

• All partners are jointly liable for the contractual obligations of the partnership and all must be named defendants
• Partners are jointly and severally liable in tort