Partnership

Question 1

Partnership

Answer 1

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

Question 2

Ownership of Property by Partnership v. Partner

Answer 2

Factors:

1. Whose name is the title
2. Who maintains it
3. Who possesses it
4. Who insures it
5. Where partnership funds used to purchase? (most important

Question 3

Sharing Profits and Losses

Answer 3

Profits are shared equally, losses are shared the same way they share profits; BUT in the absence of profit sharing agreement, profits are not necessarily shared the same way as losses (equally if silent)

Question 4

Liability of Partnership CONTRACTS:

Answer 4

Partnership bound on contracts with 3d parties if the partner making contract acted carrying out ordinary course of biz OR biz of the kind carried on by the partnership (all agency theories apply)

Question 5

Formation of GP, LP, LLC

Answer 5

Agreement to enter into a business for profit.

• For LP/LLP: Must file Certificate of LP/LLC
• Must be signed by all GENERAL PARTNERS
• LP must contain at least 1 Gen Partner and 1 Limited Partner

Question 6

Liability for LP

Answer 6

1. General Partners are Jointly and Severally liable for all obligations of the entity PERSONALLY
2. Limited Partners are liable only to the extent of their capital contributions.
   * Law suits must name the entity AND individuals personally liable to succeed in reaching the personal assets of the partners

Question 7

Dissociation & Liability

Answer 7

If a partner wishes to leave they can by giving notice.

• If agreement specifies a time for the partnership to end and partner leaves early, this constitutes WRONGFUL Dissociation
• Notice must be given to the world or P. still liable for the obligations of Entity
• Notice filed in writing: liability remains for 90 days
• No Notice: Liability remains for 2 years

Question 8

New Partner Liability

Answer 8

1. Liable for previous obligations to the extent of capital investment
2. Liable for subsequent obligations fully/personally

Question 9

Dissolution/Winding Up

Answer 9

Profits shared equally if agreement is silent, so losses will be too
*HYPO: A contributes $60, B contributes $30, C $0
and PSHP has $45 at dissolution; A gets $45, B gets $15, C pays $15 at Winding Up. Initial Capital = $90, so there has been $45 Loss, since losses shared equally (1/3) each has $15 loss (60-15= 45 to A; 30-15=15 to B; 0-15= -15 to C)