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Partnership > Partnership > Flashcards

Partnership Flashcards

1
Q

Partnership: Definition

A

An association of two or more persons to carry on as co-owners of a business for profit (RUPA)

*“Persons” include individuals, another partnership, a corporation, or other association

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2
Q

Applicable Law

A

-RUPA (revised uniform partnership act) (Entity theory)

-Agency principles
BLL: each partner is the principal and agent of the others

-Contract principles

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3
Q

Form Partnership: Contract Capacity

A
  • Needed because contract law applies

- Issue: partner not competent - then liability limited to his/her capital contribution, if any

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4
Q

Form Partnership: Intent

A
  • Express; OR
  • Implied
    • based on conduct
    • facts to show intent:
      • profit sharing
      • agreement to share losses
    • no intent if repayment, rent, wages, interest
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5
Q

Form Partnership: By Estoppel

A

One who acts or represents self to third party as a partner is liable as a partner

*Third party must reasonably & detrimentally rely

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6
Q

Effect of Partnership

A
  • Joint & several liability
  • Share profits and losses
  • Property acquired by a partnership is property of the partnership
    • **Intent is controlling; otherwise look to:
    • title
    • funds
    • improvements
    • relation of property to business
    • use
    • designation in books
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7
Q

Partner v. Partner

A

BLL: RUPA allows actions against other Ps for equitable or legal relief (must be relevant to partnership or partnership rights)

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8
Q

Liability of Partnership

A

Partnership liable for acts committed:

  • within scope of partnership; AND
  • acts committed with authority
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9
Q

Liability of Partnership: Applicable Law

A

Apply:

  • agency law
  • contract law
  • tort law
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10
Q

Right and Obligations: Notes

A
  • Partners have EQUAL rights to manage and control (if mgmt rights are not equal, then not a general partnership)
  • Partnership interest is construed as personal property
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11
Q

Rights and Obligations: Assignment of Interest

A
  • Partners can assign their partnership interest (absent contrary agreement)
  • Assignee gets ONLY a share of profits
  • Assignor retains all other rights and duties as a partner (e.g. to be a partner, to participate in management, to obtain information (inspect books))
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12
Q

Notice (Actual)

A

Actual

  • actual knowledge; or
  • delivery of notification; or
  • reason to know
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13
Q

Notice (Implied)

A

Implied
BLL: knowledge/notice imputed if partners would have had such with exercise of reasonable diligence (except if partner with knowledge committed or consented to fraud)

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14
Q

Authority (Apparent)

A

Act of partner binds partnership (if act within scope or within authority)

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15
Q

Authority (Actual)

A

BLL: Each partner is an agent of the partnership when conducting business in the usual way

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16
Q

Dissociation

A

Dissociation: Termination of a partner’s rights AND duty to refrain from competition

Wrongful Dissociation: A partner who wrongfully dissociates is liable for damages caused by the dissociation

17
Q

Dissociation: Causes

A
  • Notice (each partner can withdraw at any time)
  • Agreement
  • Judicial Termination
  • Partner’s bankruptcy
  • Assignment to creditor
  • Incapacity
  • Not an entity/person under the law (e.g. incorrectly formed LLC)
18
Q

Dissociation: Effect

A

Partnership continues despite dissociation. Partnership does not end until winding up is complete.

19
Q

Dissolution/Winding Up

A

Unlike dissociation, dissolution generally requires the partnership business to be wound up

20
Q

Distribution

A
  1. Creditors paid; including creditor partners (though outside creditors paid first)
  2. Then pay off positive balances in partners’ accounts (e.g. capital contributions at creation or throughout)
  3. Cover negative balances
  4. If failure to pay (to cover negative balances), other partners must contribute then sue
21
Q

Other Forms of Partnerships

A

LLP: all partners elect limited liability

LP: general partners + limited partners

LLC: entity run by owners and managers

Partnership (1 decks)

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