Partnership Flashcards

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1
Q

what is the effect of dissolution on partnership authority?

A

terminated all authority of any partner to act for the partnership

*except authority necessary to wind-up partnership affairs/ unfinished business

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2
Q

what are the 3 levels of priority that must be satisfied during “winding-up” phase?

A
  1. 1st: creditors (including paying off internal loans fr partners)
  2. 2nd: full re-payment to its own partners for capital contributions
  3. 3rd: profits & surplus, if any, shared equally among partners (unless partners agree otherwise)
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3
Q

How long does a partnership retain liability on new business during dissolution/ winding-up phase?

A

until notice of dissolution is given to all known & potential creditors

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4
Q

what is the winding up period of partnership dissolution?

A

period b/w dissolution & termination where remaining partners liquidate partnership assets to satisfy creditors

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5
Q

what are examples of material changes a court will use to justify dissolution of a partnership?

A
  1. partners withdrawal/ death
  2. partners incompetency
  3. partners bankruptcy
  4. violation of partnership agreement
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6
Q

When will a GENERAL PARTNERSHIP be automatically dissolved?

A

any MATERIAL change in the partnership caused by DEATH or WITHDRAWAL of any single GENERAL PARTNER

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7
Q

When may an assignee become a LIMITED partner?

A

if assignor gives assignee that right according to agreement OR ALL partners consent in WRITING

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8
Q

If a SUCCESSOR decides not to join partnership, what are her rights?

A

right to receive a share of compensation deceased/ withdrawn partner would have received upon departure fr partnership

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9
Q

When will a SUCCESSOR have a right to JOIN a partnership? (2)

A
  1. prescribed by partnership agreement
  2. all partners CONSENT in WRITING

*usually occurs upon death or withdrawal of existing partner

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10
Q

What are the 3 general rules for the ASSIGNMENT of partnership INTERESTS to 3 rd parties?

A
  1. specific P assets (land, equip.) may not transfer w/o partnership authority
  2. Profits & surplus (may transfer to 3rd parties)
  3. Share in Management (cant transfer to 3rd party)
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11
Q

What are a partner’s fiduciary responsibilities?

A
  1. fiduciaries of each other
  2. Owe a duty of loyalty
    - no self-dealing
    - no usurping partnership opps
    - no secret profits

*an action for accounting is the only form of action that 1 partner can bring against other for breach of duty

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12
Q

How long do OUTGOING partners retain liability of future debts?

A

until notice of withdrawal is given to all known & potential creditors

  • death of outgoing P terminates all liability
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13
Q

Are incoming partners liable fr prior debts?

A

NO, but $ incoming partners pay into partnership maybe be used to pay prior debts

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14
Q

What are the 3 general rules for partners liability?

A

Every General Partner is liable for

  1. own actions
  2. actions of other partners when w/in scope of partnership
  3. actions of employees w/in scope
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15
Q

How are partnership profits handled?

A

Shared equally

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16
Q

How are partnership losses handled?

A

Shared like profits (equally)

17
Q

How are partnership salaries handled?

A

Partners get NO salary. They receive compensation for winding-up partnership business (dissolution)

18
Q

What 3 types of K’s are partnerships bound by?

A
  1. K’s entered by partners w/ authority
  2. K’s for usual business of partnership (w/in scope)
  3. K’s for business outside partnership scope that ALL partners ratify
19
Q

What torts are partnerships bound by?

A

Torts committed by partners in the scope of the partnerships business

20
Q

In a LIMITED PARTNERSHIP, what are GENERAL partners personally liable for?

A

Personally liable for ALL partnership obligations

  • also has right to manage
  • *limited P’s NOT liable for partnership obligations & NO right to manage
21
Q

What are the 3 types of partnerships?

A
  1. General P- 2 or more ppl as co-owners for profit
  2. Limited P- at least 1 general P & 1 limited P
  3. Limited liability P- no partner liable for debts/ obligations of partnership; partners liable for PERSONAL wrongdoing