Partnership Flashcards

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1
Q

Formalities of formation of general parnership

A

None

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2
Q

Definition: general partnership

A

Association of two or more persons who are carrying on as co-owners of a business for profit. Contribution of money or services in return for a share of profits is prima facie evidence of general partnership

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3
Q

Liabilities of general partners to third parties

A

(1) agency principals apply

(2) generally liable for each co-partners torts

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4
Q

Incoming partner’s liability for pre-existing debts

A

(1) generally not liable for prior debts (pre-investment)

(2) can use money to pay prior debt

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5
Q

Disassociating partner’s liability for subsequent debts

A

(1) retain liability until actual notice of dissociation is given to known creditors and publication notice is given to potential creditors

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6
Q

General partnership liability by estoppel

A

One who represents to a third party that a general partnership exists will be liable as if the general partnership exists

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7
Q

Duties of general partners

A

(1) loyalty: (i) self-dealing; (ii) no usurping; (iii) secret profit

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8
Q

Remedy for partner’s breach of duty

A

(1) Action for accounting: losses caused by breach and disgorge profits

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9
Q

Partners’ rights in partnership property

A

(1) specific partnership assets: may not be transferred without partnership’s authority
(2) share of profits and surplus: personal property owned by each individual partner and may be transferred by individual partners
(3) share in management: may not be transferred by individual partners

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10
Q

Management (who controls?)

A

Absent agreement each partner entitled to equal control

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11
Q

Salary

A

absent an agreement partners get no salary

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12
Q

Profits and losses

A

(1) absent agreement, profits are shared equally

(2) absent agreement, losses are shared like profits

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13
Q

Dissolution

A

Automatically upon any material change in partnership caused by death or withdrawal of any single general partner

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14
Q

Termination

A

Real end of partnership

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15
Q

Winding up

A

period between dissolution and termination where remaining partners liquidate partnership’s assets to satisfy creditors

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16
Q

Liability for old business (pre-dissolution)

A

Individual partners are liable on all transactions entered into to wind up old business by satisfying creditors who existed when winding up began

17
Q

Liability for new business

A

liable until actual notice of dissolution is given to known creditors and publication to potential creditors

18
Q

Priority of distribution

A

(1) outside creditors must be paid
(2) inside creditors must be paid
(3) capital contributions by partners must be paid
(4) profits and losses are shared equally

19
Q

Limited partnership

A

(1) at least one general partner and at least one limited partner
(2) must file a limited partnership certificate that includes names of all general partners
(3) general partners are liable for all obligations; limited partners have limited liability and may not manage

20
Q

Registered limited liability (RLLP)

A

(1) formed by filing a certificate of registration with label of RLLP
(2) no partner is liable for debts and obligations of this partnership

21
Q

Limited liability company (LLC)

A

(1) hybrid between corporation and partnership (corporation liability, partnership tax)
(2) must file articles of organization and must publish a summary of articles in at least 2 newspapers; may adopt operating agreement
(3) owners may control, but can also delegate to managers
(4) limited liquidity: full membership interest may not be transferred w/o majority consent of membership interest or as provided in op agreement
(5) limited life: company will dissolve upon majority vote of membership interest or as provided in operating agreement