Partnership: Liability

Question 1

Liability of General Partners to 3Ps

Answer 1

The GP is liable for each partner’s torts in the scope of partnership business and for each partner’s authorized contracts (because partners are the agents of the principal GP)

Question 2

Personal Liability of General Partners: General Rule + Incoming and Leaving Partners

Answer 2

Each gen. partner is personally liable for all debts of the partnership and for each co-partner’s torts.
Incoming partners are not liable for prior debts, but any capital paid in by incoming partners can be used to satsify those prior debts.
Withdrawing partners retain liability on future debts until actual notice of their withdrawal is given to creditors or until 90 days after filing a notice of dissolution within the state.

Question 3

GP Liability by Estoppel

Answer 3

One who represents to a 3P that a GP exists will be liable as if a GP exists

Question 4

Duties Owed by General Partners

Answer 4

General partners owe to each other AND the partnership (1) the DOL (no self-dealing/secret profits/usurping of partnership opps), and; (2) action for accounting (GP may recover losses caused by breach including indemnity and may disgorge profits)

Question 5

Partners’ Rights in Partnership Property and Liquidity

Answer 5

Special partnership assets and shares in mgmt. may not be transferred by individual partners w/o partnership authority; share of profits may be transferred

Question 6

Special Partnership Assets

Answer 6

Assets like land, leases, or equipment which are owned by the partnership itself and therefore may not be transferred by the individual partners without partnership consent

Question 7

Mgmt. of Partnership

Answer 7

Absent an agreement, each partner is entitled to equal control (one partner, one vote).
The majority vote governs ordinary affairs; unanimous consent is required for fundamental partnerships [??]

Question 8

Salaries of Partners

Answer 8

Absent an agreement, partners get no salary unless they are helping wind up the business

Question 9

Partner’s Share of Profits and Losses

Answer 9

Absent an agreement, profits are shared equally. Absent an agreement, losses are shared like profits. [so if an agreement states that losses are shared 60-40 but is silent on profits, profits are shared 50-50)