Partnership - MANAGEMENT AND OPERATION OF A GENERAL PARTNERSHIP

Question 1

In absence of an agreement all partners have equal rights in what?

Answer 1

the management of the business and equal votes

Question 2

How many votes are given to each partner (in absence of an agreement)

Answer 2

one partner, one vote

Question 3

What is the required voting for decisions regarding matters within the ordinary course of the partnership business?

Answer 3

a majority vote of the partners

Question 4

What is the required voting for decisions regarding matters outside of the ordinary course of the partnership business?

Answer 4

Matters outside of the ordinary course of business require the consent of all partners

Question 5

A, B, and C contribute 60%, 30%, and 10% of the capital respectively to the partnership. They also agree to split profits and losses 60-30-10. On an ordinary business matter, A votes “against” while B and C vote “for.” Who prevails?

Answer 5

B and C prevail because they are a majority.

Question 6

A, B, and C contribute 60%, 30%, and 10% of the capital respectively to the partnership. They also agree to split profits and losses 60-30-10. What if the matter was outside of the ordinary course of business (e.g., amending the partnership agreement)?

Answer 6

A would prevail because unanimity was required.

Question 7

Does a partner have a right to salary or other compensation?

Answer 7

Unless otherwise agreed, partners get no compensation

Question 8

What is the one exception that allows a partner to be compensated?

Answer 8

The right to reasonable compensation for services rendered in winding up the partnership business.

Question 9

A and B are partners. A works 96 hours a week. B sleeps all day. Does A have a right to a salary?

Answer 9

No. Partners do not have a right to compensation